FMCG major Marico Ltd. on Thursday said it will report a strong start to the financial year, with robust demand across its India and international businesses driving broad-based growth in the June quarter. However, the company cautioned that evolving inflationary conditions and the potential impact of El Niño on the monsoon remain key risks to monitor in the coming quarters.
In its quarterly business update, Marico said demand trends remained steady during the quarter, supported by resilient economic activity. While it remains optimistic about consumption, the company said it will closely watch inflation and weather-related developments that could influence rural demand.
The India business gathered further momentum during the quarter, delivering double-digit underlying volume growth, the highest in several quarters. Marico said its flagship Parachute Coconut Oil brand posted double-digit volume growth, reflecting strong brand equity, consumer trust and execution.
The Saffola edible oils business registered mid-single-digit revenue growth, driven by pricing, although volumes declined after the company rationalised supplies of select variants to maintain profitability.
The Value Added Hair Oils segment continued its strong performance, with revenue growing in the twenties, supported by increased focus on the mid and premium segments, wider direct distribution under Project SETU and new product launches.
Marico said its Foods and Premium Personal Care businesses, including digital-first brands, continued to scale up in line with its diversification strategy.
The company's international business maintained strong momentum, recording mid-teen constant currency growth. The performance was led by Vietnam and the Middle East and North Africa (MENA) region, while all other international markets also contributed positively.
Bangladesh witnessed a temporary moderation in growth due to the anniversary of price increases and softer consumer demand amid elevated inflation, the company said.
On a consolidated basis, Marico expects revenue to grow in the early twenties during the quarter, driven by healthy performance across its core portfolio, digital businesses and international operations.
On the cost front, the company said prices of crude-linked derivatives and vegetable oils increased sharply during the quarter. However, copra prices have corrected nearly 45% from their peak, although they continue to remain above historical averages.
As a result, Marico expects gross margins to improve sequentially. At the same time, advertising and sales promotion (ASP) spending increased significantly as the company stepped up investments in brand building and portfolio diversification.
Despite higher investments, Marico expects to deliver strong operating profit growth during the quarter, supported by robust business performance and lower copra costs.
The company also reiterated its medium-term aspiration of delivering sustainable, profitable, volume-led growth through stronger core brands and the scaling up of new growth engines across domestic and international markets.
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