Marico's revenue to be marginally lower in Q2 due to price corrections

Domestic volume growth in low single-digits

Marico reported a slight decline in consolidated revenue for the July-September quarter compared to the previous year, attributing it to price corrections in its core domestic range over the past year, according to its pre-quarterly update. The company stated that the effects of these corrections will be gradually incorporated into future calculations.

Additionally, currency depreciation in certain overseas markets negatively impacted the reported INR growth of the international business.

The firm, known for products like Parachute coconut oil, experienced low single-digit year-on-year growth in domestic volumes. Specifically, there was modest volume growth in Parachute Coconut Oil and Saffola Edible Oils, complemented by a similar value growth in Value Added Hair Oils during this period.

Marico highlighted continued strong trends in market share, off-takes, and penetration across principal franchises. Furthermore, emerging portfolios like Foods and Premium Personal Care (inclusive of Digital-First) are on track to meet annual targets.

The demand trends during this quarter mirrored those of the previous one. Factors such as increasing food prices and inconsistent rainfall patterns in certain regions appear to have postponed expected rural demand rejuvenation. However, Marico remains optimistic about rural consumption patterns improving in the latter half of the year. This optimism is rooted in factors like controlled retail inflation, a rise in MSPs, a productive sowing season, reduced liquidity constraints, and government expenditure.

Marico's international segment showcased a double-digit constant currency growth. The company anticipates a gross margin expansion for the quarter since primary input costs, including copra and edible oil prices, remained favourable. However, crude derivatives showcased a rising trend.

Despite ramping up Advertising & Promotion (A&P) expenditures for strategic brand-building across both established and emerging categories, Marico expects a positive operating profit margin expansion, resulting in low double-digit operating profit growth.

For H2, Marico anticipates an upward trend in key performance indicators. This will be supported by a steady rise in volume and revenue in the domestic sector and strong momentum in international operations, while full-year margin projections remain unchanged.

Marico concluded by reiterating its medium-term goal of achieving sustainable and profitable volume-driven growth, facilitated by the bolstered brand equity of its core offerings and the development of new growth avenues.