Godrej Consumer Products Ltd. missed analysts' estimates in the April-June quarter due to de-stocking ahead of Goods and Services Tax launch and higher investments.
Net profit fell 8.9 percent to Rs 225 crore compared to the corresponding quarter last year, according to the company's exchange filing. The consensus estimate of analysts tracked by Bloomberg stood at Rs 284 crore.
Revenue increased 3.5 percent to Rs 2,271 crore, falling short of the Rs 2,322 crore consensus of analysts. Sales growth was impacted by GST-led cautiousness in trade in June, the company said in its press release.
Earnings before interest, tax, depreciation and amortisation fell 8.8 percent to Rs 349.4 crore, while margins contracted 200 basis points to 16 percent.
Growth in operating profits trailed sales growth due to investments to strengthen brands and support new launches, Nisaba Godrej, the executive chairperson said in the press release.
Overall, ouradvertising spends increased by 13 percent in the quarter. We believe that these upfrontinvestments will set us up for stronger growth as the macroeconomic environmentimproves.Nisaba Godrej, Chairperson, Godrej Consumer Products
The GST-related disruption will normalise in the July to September quarter as traders adapt to the new tax system, added Godrej. The company expects to report stronger growth in the second half of the year, she added.
Segment-Wise Performance
Primary sales grew six percent, while secondary sales increased nine percent in India, according to Godrej. Here's the break-up of the sales growth of different categories:
- Household insecticides: 4 percent
- Soaps: 7 percent
- Hair Colour: 5 percent
- Other brands: 20 percent
- Unbranded and exports: 7 percent
Geography-Wise Peformance
International business grew seven percent on a constant currency basis driven by the operations in Africa and Europe.
- Africa: 26 percent
- Europe: 24 percent
- Latin America: 4 percent
- Indonesia: 11 percent decline
Shares of Godrej Consumer Products fell as much as 2.8 percent to Rs 1,023.7 after the announcement of the results.
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