Marico Reports Sequential Uptick, Modest Profit Growth in Q3

New Delhi, Jan 3 (PTI) FMCG maker Marico on Friday reported a "sequential uptick" in domestic volume growth for the December quarter, but said its operating profit growth will be 'modest' due to higher input costs.

Marico expects a "higher-than-anticipated gross margin contraction" as key inputs faced 'higher-than-expected' inflation, said the homegrown firm which is the maker of Saffola, Parachute, Hair & Care, Nihar and Livon etc.

Among key inputs, copra prices remained firm at higher-than-expected levels and vegetable oil prices moved up during the quarter, while crude oil derivatives remained range-bound, it said.

"The rising trend in input costs is expected to result in a higher-than-anticipated gross margin contraction on a year-on-year basis, as the company continues to favour consumer franchise expansion in the current environment," Marico said.

While its international business delivered broad-based mid-teen constant currency growth.

Its operation in crisis-hit "Bangladesh continued to demonstrate visible strength and resilience with high double-digit constant currency growth".

While Vietnam had a soft quarter in a sluggish consumption environment MENA (Middle East and North Africa) and South Africa maintained their robust double-digit growth momentum.

"The consolidated business delivered mid-teen revenue growth on a year-on-year basis, thereby staying on course to meet the double-digit growth aspiration on a full-year basis," it said.

In the domestic market, its Parachute Coconut Oil in the October-December period was "slightly moderating" in volume terms on a sequential basis amidst the rising input cost and pricing environment.

"The brand recorded low-teen revenue growth, aided by pricing interventions during the current year. The brand has taken another round of price increase towards the end of this quarter as copra prices remained firm," it said.

Saffola brand was firm in volume terms despite "steep pricing interventions" in response to the rise in vegetable oil prices.

"The brand posted high-teen revenue growth," the company said.

However, the value-added hair oils business, which includes Hair & Care, Nihar, and Parachute Advanced "declined marginally owing to competitive headwinds in the bottom of the pyramid segment..."

While Marico's foods and digital-first brands sustained their strong growth momentum and continued to deliver well ahead of aspirations.

During the quarter, Marico sustained investments in brand building in line with its strategic intent and accelerated diversification.

"Consequently, we expect modest operating profit growth on a year-on-year basis. The company will focus on its stated volume-driven revenue growth aspiration while remaining watchful on the margin front in the near term," it said.

Marico has maintained its aspiration of delivering sustainable and profitable volume-led growth over the medium term. This quarterly update provides an overall summary of the operating performance and demand trends and a detailed information update will follow once its board approves the financial results for Q3/FY25.

Shares of Marico Ltd settled 1.16 per cent higher at Rs 660.95 apiece on the BSE.