FMCG giant Godrej Consumer Products expects easing input material prices to aid a significant recovery in its margin to levels last seen in the years that ended in March 2020 and March 2021. "With palm oil prices cooling down, with crude oil (prices) also coming down, we do expect a meaningful recovery in gross margins. In fact, we expect them to go back to the normative levels," Godrej Consumer Products CFO Sameer Shah told CNBC-TV18.
The management's optimistic remarks come a day after the company, whose brands include Cinthol, Good Knight and Ezee, reported a quarterly net profit that declined by one fourth compared with the year-ago period, marred by high inflation that continued to eat into its margin — or the degree to which a business makes money.
FMCG companies have been reeling under margin pressure due to high costs of raw material even as consumer prices have somewhat eased from their worst levels of the year.
The company's quarterly revenue came in at Rs 3,364.5 crore, up seven percent on a year-on-year basis. Revenue from home care grew two percent and that from personal care increased 18 percent.
The company reported an EBITDA margin — a key measure of profitability — of 17.1 percent for the three-month period, down by 450 bps compared with the corresponding period a year ago.
Shah said the company's Indian and African operations will lead growth in the six months ending March 2023.
“Indonesia will see a gradual recovery, but the performance will be better than what it has been in the last two quarters. We expect growth to be directionally broad-based,” he said.
He also asserted that the India business will grow in double digits in value terms in the October-March period. “Africa has been consistently growing in mid-teens range over the last 5-6 quarters. We expect that trend to continue going ahead,” he said.
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