Marico Says Volumes Rose In Q2 Aided By Revival In Demand

Marico Ltd. said consumer demand revived for most of its core business in the quarter ended September, resulting in increased volumes.

Volumes for Parachute, the company's hair oil brand, grew above the medium-term outlook of 5-7% that it had projected for in the quarter ended June, the consumer goods maker said in a pre-quarterly results update.

The company also said its edible oil brand, Saffola, delivered “strong volume growth” in the quarter, while the company's value-added hair oils business showed resilience and returned to a growth trajectory in the quarter from a sharp decline in the June quarter.

“Foods portfolio, riding the tailwind and on the back of innovations, continued its momentum and registered exponential growth in line with the company's near-term expectations,” the company said. That came amid increased demand during the lockdown, with people opting for packaged foods as they were forced to stay indoors.

“Discretionary portfolios of premium hair nourishment and male grooming performed better than Q1 but continued to face headwinds,” the company said.

Marico's new product launches in the health and hygiene segment are performing well across most channels and have strengthened their position in the health foods and immunity boosting segment with the launch of Saffola InnumiVeda range—including products like turmeric milk mix.

The company said it witnessed partial revival of consumer sentiment in the second quarter, with rural segment performing better than urban areas aided by government's relief packages and relatively lower impact of the pandemic in those areas.

Localised lockdowns caused intermittent supply chain disruptions across locations, Marico said, with the distribution network back to near pre-pandemic levels.

Traditional trade and e-commerce continued to drive growth, but modern trade's performance took a hit even as it improved sequentially. Sales through Canteen Stores Deparment, too, witnessed a steep decline.

However, Marico increased investments on brand-building and advertising spends were back to the pre-pandemic levels.

While the prices of key raw materials rose towards the end of the quarter, Marico expects to deliver healthy earnings growth on the back of robust volume growth and cost cuts.

Among its international markets, Marico registered double-digit growth in Bangladesh in constant currency terms. Its other markets witnessed sequential growth.

The company maintains positive outlook for the rest of the year as lockdown rules ease and the economy opens up, and the pandemic doesn't escalate further.

“Given that the medium-term potential of the franchises remains firmly intact, we believe the company is on track to deliver sustained profitable volume-led growth, through focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass,” Marico said.