Marico, leading consumer products company in India, reported mixed June Quarter 2023 results. The manufacturer of Parachute and Saffola Oil has a diverse portfolio constituting Hair & Care, Parachute Advansed, Nihar Naturals, Mediker, Pure Sense, Coco Soul, Revive, Set Wet, Livon, Just Herbs, True Elements and Beardo. The company reported volume growth of 3% YoY in Q1FY24. Speaking on low volume growth, Saugata Gupta, Managing Director and CEO, Marico said, “ Volume growth for the FMCG sector was in the positive territory for the second consecutive quarter, led by steady growth in urban, however, evident green shoots in rural were not yet visible”. He further added that low volume growth was due to trade destocking in Saffola oil and one off channel adjustments in Parachute oil and value added hair oil category (VAHO) .
Core portfolios of Marico consists of Parachute oil category, Saffola oil and VAHO which contribute 34%, 24% and 25% respectively of total domestic revenues of Marico. Parachute Rigids reported volume decline of 2% YoY in Q1FY24. According to the management, offtakes remained healthy and the company expects an uptick from Q2FY24. Value-Added Hair Oils reported a flat quarter amidst slower recovery in mass personal care categories. Gupta said that high competitive intensity at the bottom of the pyramid impacted VAHO. The management expects growth to return in VAHO category by H2FY24.
Saffola Edible Oils registered a low double-digit volume growth, on a negative base, mainly due to trade reducing inventory levels as vegetable oil prices experienced a sharp downturn. The company has taken price reduction of 30% YoY in Saffola edible oils leading to revenue decline of low twenties on a yearly basis. Foods continued its healthy scale up with 24% value growth YoY, aided by steady growth in core and newer franchises. Food category includes Saffola Oats, honey, soya chunks, peanut butter, mayonnaise and Munchiez brand. Marico has recently invested in plant-based nutrition brand, ‘Plix’ which has a portfolio of non-GMO, vegan and gluten-free offerings. And lastly premium personal care which includes Set Wet, Livon and its digital first portfolio which is expected to exit FY24 with annual recurring revenue (ARR) of Rs 400 crore. The foods category is also expected to reach Rs 850 crore in FY24. The company aims foods and premium personal care categories to together contribute 20% of domestic revenue by the end of FY24. By scaling up foods and premium personal care categories, Marico is trying to reduce its dependence on Parachute and Saffola edible oil which together account for nearly 60% of domestic revenues.
Marico reported consolidated revenues of Rs 2,477 crore in Q1FY24 compared to Rs 2,558 crore in the same period previous year.
Operating margins came in at 23.17% in June Quarter 2023, a jump of 253 basis points (bps) YoY due to lower input costs. The management has guided for an operating margin of 20% in FY24. And aims to increase its advertising & promotion (A&P) expenditure to 9% in FY24 compared to 8.6% in FY23 as a long-term growth driver. With retail inflation inching up again investment in A&P is a must.