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New Delhi: Fast-moving consumer goods company Marico Ltd., on Monday said that the December quarter was characterized by “slowing consumption patterns" as inflation affected household incomes leading to flattish volumes for the maker of Parachute hair oils and Saffola edible oils.
Consolidated revenue growth in the quarter was in low teens, the company said in a quarterly update released on Monday.
Marico is yet to announce its December quarter earnings.
“The quarter was characterised by slowing consumption patterns which affected the sector as a whole. This was mainly due to continuing inflation impacting overall disposable incomes as well as rising mobility unleashing some degree of pent-up demand for discretionary goods, services and out-of-home consumption. In the India business, we witnessed similar trends across our categories. Rural demand was also sluggish, albeit optical to an extent, given the high base," it said in a filing to the exchanges.
As a result, revenue growth in the quarter was in double digits, while volumes were flat, owing to a weaker consumption sentiment and a strong base, it said.
However, on a two-year CAGR basis, volume growth was close to the company's medium-term aspiration.
Among its key brands, Parachute coconut oil had a muted quarter on a high base. Value-added hair oils posted softer growth in value terms in the quarter, but has delivered double-digit value growth on a two-year CAGR basis.
Meanwhile, the company’s Saffola franchise, including cooking oils and packaged foods, grew in high teens in value terms, led by over 20% growth in foods.
Saffola edible oils reported a drop in volumes—largely owing to higher in-home consumption in the base and weak trade sentiment due to fluctuating input prices. Premium personal care posted broad-based double-digit growth. Digital-first brands, Beardo and Just Herbs, also tracked in line with expectations, the company said.
It, however, reported volatility in commodity costs.
Copra prices, it said, were range-bound for most of the quarter before witnessing correction towards the end of the quarter. Edible oil prices have also started softening, while crude oil prices remained firm.
“We expect gross margin to improve sequentially, but remain lower on a year-on-year basis. Operating margin is expected to be near the levels of the preceding quarter," the company said in its update.
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