FMCG major Marico Ltd on Monday (January 29) reported a 15.9% year-on-year (YoY) rise in net profit at ₹386 crore for the third quarter that ended December 31, 2023. In the corresponding quarter last year, Marico posted a net profit of ₹333 crore, the company said in a regulatory filing. CNBC-TV18 poll had predicted a profit of ₹366 crore for the quarter under review.
The company's revenue from operations declined 1.9% to ₹2,422 crore against ₹2,470 crore in the corresponding period of the preceding fiscal. CNBC-TV18 poll had predicted revenue of ₹2,420 crore for the quarter under review.
At the operating level, EBITDA increased 12.5% to ₹513 crore in the third quarter of this fiscal over ₹456 crore in the corresponding period in the previous fiscal. CNBC-TV18 poll had predicted an EBITDA of ₹506 crore for the quarter under review.
The EBITDA margin stood at 21.2% in the reporting quarter against 18.5% in the year-ago period. EBITDA is earnings before interest, tax, depreciation, and amortisation. CNBC-TV18 poll had predicted a margin of 21% for the quarter under review.
Amidst the given operating environment, the company’s India business posted volume growth of 2%, which dipped sequentially primarily due to a stock reduction undertaken across key portfolios as a part of the aforesaid initiatives to support its general trade channel partners.
Domestic revenue, at ₹1,793 crore, was down 3% on a year-on-year basis, lagging volume growth as some pricing corrections in key portfolios were yet to materialise. Offtakes remained healthier across key portfolios with 75%+ of the business either gaining or sustaining market share and penetration levels.
International business
In international business, Bangladesh registered a 6% decline in CCG (constant currency growth) terms as the region experienced transient macroeconomic headwinds. Newer portfolios of shampoo and baby care witnessed healthy growth. We expect business performance in Bangladesh to revert to a healthy trajectory in the coming quarter.
South-East Asia grew 4% in CCG terms, amidst slower home and personal care demand in Vietnam. MENA (Middle East and North Africa) continued its strong growth momentum and delivered a 26% CCG with both the Gulf region and Egypt growing in double-digits. South Africa registered 33% CCG driven by the ethnic hair care segment. NCD and exports posted 16% growth.
The gross margin expanded by 634 bps year-on-year, ahead of expectations, owing to softer input costs and favourable portfolio mix. Advertisement and promotional (A&P) spending was up 12% year-on-year, up 125 bps as a percentage of sales, as the company stayed focused on strategic brand building of core and new businesses. Consequently, EBITDA margin stood at 21.2%, up 272 bps year-on-year and EBITDA grew by 13%. PAT was up 17%, aided by lower ETR.
Outlook
The company expects improving trends ahead and aims to maintain the double-digit constant currency growth momentum on a full-year basis. Gross margin is expected to expand by 450-500 bps on a full-year basis, higher than earlier envisaged, owing to sustained input cost tailwinds and a favourable portfolio mix. The company expects its operating margin to expand by 250 bps in FY24.
The results came after the close of the market hours. Shares of Marico Ltd ended at ₹516.55, down by ₹8.60, or 1.64%, on the BSE.
