Marico Q1 PAT down 6% YoY to Rs 365 cr on steep rise in input costs

Net sales up 31.2% on a low base to Rs 2,525 cr, volumes grow 21%

Mumbai-based personal care major Marico reported 6 per cent year-on-year (Y0Y) decline in its profit after tax (PAT) for the April-June quarter. The firm’s net profit stood at Rs 365 crore, down from Rs 388 crore in the corresponding quarter last year.

Its net sales surged 31.2 per cent on a low base to Rs 2,525 crore, from Rs 1,925 crore in last June. Marico, which got 79 per cent of its sales from the domestic market, said its volumes grew by 21 per cent over last year in the local market. Over 90 per cent of its portfolio gained market share on a moving annual total basis, while its sales through general trade grew by 17 per cent in both urban and rural markets.

While the contribution of its e-commerce channels grew by 61 per cent YoY to nine per cent of its domestic sales during April-June.

However, a steep rise in its input costs adversely impacted its margins. In June, cost of materials consumed jumped 66.4 per cent YoY to Rs 1,389 crore from Rs 835 crore in the same quarter last year. And advertising and promotional expenses grew by 27 per cent YoY as the company “actively invested in its core franchises and recent innovations in its foods business. As a result, its operating profit margin fell to 18.1 per cent from 23.2 per cent and 19.7 per cent on YoY and QoQ basis, respectively.

According to Marico, gross margin was down 759 bps YoY due to “the stark contrast in the cost of inputs consumed in the two quarters, as pricing interventions in the core portfolios could only partially alleviate the inflationary pressure.” However, operating leverage benefits reduced the drop in EBITDA margin to 522 bps YoY.

“The core portfolios continued to deliver good growth in the Indian business, while the new launches in Foods are rapidly gaining scale. Each of the international businesses also recovered well on a year-on-year basis,” said Saugata Gupta, managing director and CEO, Marico. “We will continue to prioritise volume driven growth and franchise expansion in the medium term, by focusing on growing and premiumising the core, aggressively scaling up foods, building a portfolio of strong digital-first brands and investing in distribution expansion”, he added.

Marico declared its numbers during the market hours. Its stock went up by 3.53 per cent to close at Rs 546.35 per share at the Bombay Stock Exchange.