On a consolidated basis, Marico's net profit fell 50.62% to Rs 199 crore on 7.02% decline in net sales to Rs 1,496 crore in Q4 March 2020 (Q4 FY20) over Q4 March 2019 (Q4 FY19).
During the quarter, the India business recorded a volume decline of 3%, vastly affected by disruptions in the last fortnight of March, due to lockdowns initially enforced in some states and eventually all over the country, to contain the outbreak of COVID-19 in India. But for this disruption, the business would have delivered low to mid single digit volume growth during the quarter.
During the period, while stress emerged in personal care categories, foods and allied categories gained disproportionately with households stocking up these items in the days leading to the lockdown. While overall category growth rates stayed muted, Marico's core brands continued to gain market shares on a MAT (moving annual total) basis.
The overseas geographies were also impacted in varying degrees. The International business declined by 6% in constant currency terms with MENA (Middle East and North Africa) and South Africa businesses posting sharp drops, while Bangladesh and Vietnam still ended in the green, given relatively limited restrictions imposed in these regions in the month of March.
Marico's India business delivered a turnover of Rs 1,146 crore, declining 8% on a year-on-year (YoY) basis in Q4 FY20. The company's international business earnings contracted by 5% on a YoY basis to Rs 350 crore during the same period.
While EBITDA fell 4% to Rs 282 crore, EBITDA margin improved by 58 basis points as it stood at 18.9% in Q4 FY20 as compared to Q4 FY19, due to the unfavorable portfolio mix in the India business.
On the input costs and pricing front, Marico said that in the current scenario, with a prolonged slowdown in demand looking imminent, raw material costs are expected to be benign except edible oils, which may continue to be firm given higher in-home consumption. The company will choose to pass on the benefit to consumers and protect & grow volume growth across franchises.
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The company derives comfort and confidence from the pricing power that its brands enjoy. The company would continue to exercise a bias for franchise expansion as long as margins remain within a band and do not fall below a threshold at the overall business level.
In order to cope up with the twin challenges of manpower and logistics availability posed by the unprecedented crisis of COVID-19, the company joined forces with Zomato and Swiggy to use their platforms for direct delivery to customers. The company also introduced a direct to home delivery portal for consumers in select metro cities. This has been critical in ensuring business continuity during the crisis.
The company's consolidated net profit (excluding one-offs) rose 13% to Rs 1043 crore even as its revenue from operations remained flat at Rs 7315 crore in the full year ended on 31 March 2020 (FY20) compared with the year ended March 2019 (FY19).
Offering comments for its India and International businesses, Marico said, "While the company holds its medium term aspiration of delivering 8-10% volume growth and 13-15% revenue growth, the near term is currently unpredictable. We will continue to invest behind brand building to support market growth initiatives in core categories and expansion into adjacent categories. In FY21, the company will strive to maintain the operating margin at FY20 levels. However, company would be comfortable maintaining operating margin at 19% plus over the medium term."
Marico manufactures consumer products and services in the beauty and wellness space. The company is known for its presence in the following categories: coconut oil, hair oils, anti-lice treatment, premium refined edible oils and fabric care. It is present in the skin care services segment through Kaya Skin Clinics.
Shares of the FMCG maker fell 0.87% to Rs 284.40 on Monday.
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