Dec-qtr revenue growth in low teens amid continuing inflation: Marico

FMCG major Marico on Monday said its consolidated revenue grew in "low teens" during October-December, hit by slowing consumption across the sector due to continuing inflation.

The company expects its gross margin to improve sequentially but remain lower on a year-on-year basis, while its operating margins are expected to be near the levels of the preceding quarter, Marico said in its Quarterly Update for Q3 FY22.

"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," it said.

The company has witnessed "similar trends" across its categories in its India business.

"Rural demand was also sluggish, albeit optical to an extent, given the high base," said Marico.

It further said "revenue growth in the quarter was in double digits, while volumes were flat, owing to the weaker consumption sentiment and a strong base."

"However, on a 2-year CAGR basis, volume growth was close to our medium-term aspiration. 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 2 year CAGR basis," it said.

Marico's international business delivered high teen constant currency growth on a healthy base.

"Therefore, consolidated revenue growth in the quarter was in low teens," it said.

Regarding prices of key material inputs, Marico said copra prices were range-bound for most of the quarter before witnessing correction towards the end of the period.

"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," it said.

On the outlook, Marico said it aspires to deliver a volume-led growth over the medium term.

"The Company maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and new engines of growth reaching critical mass," said Marico.

In Q3/FY21, Marico's revenue from operations stood at Rs 2,122 crore.