Marico on Wednesday (8 April) issued an update on the operating performance and demand trends witnessed during the quarter ended March 31, 2020
In India, early signs of improvement across categories were witnessed in early March 2020 which helped offset the disruptions caused in the past 12 days, due to lockdowns in some states, culminating into a first-ever national lockdown to contain the outbreak of COVID-19. During the period, Marico registered sales largely in the edible oils and foods portfolio. The continued healthy growth in the Saffola portfolio was topped up by households stocking up on food and essential items in the early stages of the outbreak, the company said in a statement.
Overall, the India business posted a low single-digit volume decline in the quarter, with very skewed high growth in the Saffola portfolio, it added.
However, overall secondary growth in the quarter was in low single digits, as primary movement of goods was relatively more impacted during the lockdown period. Value growth for the business continued to trail volume growth. Traditional trade, which was already reeling under liquidity constraints, was further weakened. However, modern trade and e-commerce still managed to stay on the path of growth, the release stated.
In line with the directives from government authorities, production at units that manufacture essential food and grocery products continue at a much reduced scale, while deploying highest safety standards. Production was currently suspended at its other manufacturing units and shall commence as and when the government approvals are received. The distribution network has also been significantly impacted due to lack of manpower.
Marico said it is focusing on the movement of essential food and grocery items to the consumers subject to necessary approvals from local Government authorities and is taking all possible efforts to ensure uninterrupted supplies of essential products to its customers across channels (general trade, modern trade and e-commerce) within the existing constraints.
With COVID-19 assuming the nature of a pandemic, the international businesses were also affected. With many of the territories experiencing partial or complete lockdown in March 2020, the international business recorded a mid-single digit decline on a constant currency basis.
Revenue decline (both in India as well as in international business), coupled with an unfavourable mix in the India business, has translated into a decline in earnings before interest, tax, depreciation and ammortization (EBITDA) in this quarter as against the corresponding quarter last year.
However, the company assured that it will aim to serve its consumers. At the same time, it has started a cost management exercise to mitigate the impact of reduced sales. Marico also said that it will continue to drive sustained profitable volume-led growth over the medium term, through its focus on strengthening the franchise in the core categories and driving the new engines of growth towards gaining critical mass.
Marico is a leading Indian group in consumer products in the global beauty and wellness space.
Shares of Marico rose 2.15% to Rs 289.85 yesterday, 8 April 2020.
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