GCPL Q2 Earnings: Flattish Growth Amid Rising Costs

New Delhi, Oct 8 (PTI) FMCG firm Godrej Consumer Products Ltd (GCPL) has said it expects a "flattish" earnings growth in the domestic market during July-September quarter as higher palm oil prices added to input costs.

However, in terms of top-line the company expects its standalone business (domestic) "to perform well with high single-digit underlying volume and value growth", said Godrej Industries Group's FMCG arm in its latest quarterly updates.

"Palm input costs have been rising since March and have risen in the high teens as of date. Management has decided not to pass on the entire cost hike to consumers in one step and decided to continue investments on the long-term growth initiatives like rural van programme, new category development etc," it said.

"As a result, the standalone EBITDA (earnings before interest, taxes, depreciation, and amortization) growth will be flattish," said GCPL which owns brands such as Good Knight, Cinthol and HIT.

It is "largely on track to achieve" its Underlying Volume Growth (UVG) target of high-single-digit growth in Indonesia, which is the second biggest market of the company after India.

Indonesia business is expected to deliver continued performance "with high-single digit volume growth and double-digit sales growth" in constant currency.

"However, our consolidated EBITDA growth will be lower due to operating conditions in India being tough on cost and margin driven by inflation in palm and other competitive pressures," it added.

Over its international businesses, GCPL said it continues to do well on its relevant strategic objectives.

"In line with our earlier guidance, the GAUM (Godrej Africa, USA, and Middle East) organic business is expected to see a single-digit volume decline due to a reduction in trade stocks and portfolio simplification. However, offtakes continue to be strong," it said in a regulatory filing on Monday.

Nigeria, where currency unification has been implemented, continues to negatively impact its sales performance in INR terms.

"At a consolidated (organic) level, we expect mid-single digit INR sales growth, low-teens constant currency sales growth and mid-single digit EBITDA (reported) growth," said GCPL.

According to GCPL, this update provides an overall summary of the operating performance and demand trends during the quarter ended September 2024.

"This will be followed by a detailed performance update, post the approval of the Q2 FY25 financial results by the Board of Directors," it said.