Marico Stays Firm On Growth In January-March Quarter Despite Soaring Copra Prices

Consumer goods manufacturer Marico Ltd. reported a profit growth despite higher raw material costs as the company spent less on advertising and promotions in the fourth quarter of the financial year 2016-17.

The parent of the Parachute brand saw its net profit in the March-ended quarter grow 25 percent to Rs 171 crore compared to a year ago, according to its stock exchange filing. Revenue rose 2 percent from last year to Rs 1,322 crore. Both the bottomline and topline comfortably beat the Bloomberg consensus estimates.

Operating profit in the fourth quarter grew 21 percent to Rs 259 crore. Operational profit margins expanded 300 basis points to 19.6 percent despite a 27 percent increase in the company's raw material costs, over the last year. Copra, which forms a key input in coconut oils, has seen its prices soar over 45 percent over the last year. The company expects copra prices to keep increasing for the next two quarters.

Profit margin was higher as the company spent less on advertising and promotions, its media release said.

In India, Marico witnessed a volume growth of 10 percent over the last year. Its Parachute coconut oil has seen volumes grow 15 percent in the quarter, while Saffola, its refined edible oil, had a volume growth of 8 percent.

Its international business declined mainly due to challenges such as currency fluctuations and economic slowdown in Middle East and North Africa.

The company is now targeting an 8-10 percent volume growth, expecting a short disruption from the Goods and Services Tax regime and inflation in commodity prices.

Marico has seen its stock rise over 29 percent since demonetisation was announced in November. It is the third best performer on the consumer goods benchmark Nifty FMCG Index, which has seen a return of almost 14 percent in the same period.