 "Marico, Godrej Consumer slip up to 6% post December quarter biz update")
Shares of fast moving consumer goods (FMCG) companies, Marico and Godrej Consumer Products (GCPL) slipped up to 6 per cent on the BSE in Monday’s intra-day trade after the companies announced their provisional operating performance and demand trends during the quarter ended December 31, 2023 (Q3FY24). In comparison, the S&P BSE Sensex was down 0.39 per cent at 71,745 at 11:31 AM.
Among individual stocks, GCPL was down 6 per cent at Rs 1,149 as the company expects mid-single digit volume growth on a consolidated basis in Q3. In the domestic business, its organic business delivered steady underlying volume growth of mid-single digits and its inorganic business as Park Avenue and KamaSutra reported a double-digit volume growth.
In an exchange filing GCPL said at a consolidated level (organic), the company expects to deliver mid-single digit volume growth, double-digit constant currency sales growth but low-single digit sales decline in INR terms due to GAUM (Godrej Africa, USA, and Middle East) and LATAM currency and hyperinflation accounting impact. Reported volume growth is likely at high-single digit and reported sales growth to be flattish in INR terms.
However, the company said it continues to drive year-on-year (YoY) expansion in EBITDA (earnings before interest, taxes, depreciation, and amortization) (incl. Forex) margin despite significantly higher category development investments.
Shares of Marico slipped 5 per cent to Rs 520 after the company said domestic volumes grew in low-single digits YoY, with a slight sequential improvement in the core portfolio.
Towards the end of the quarter, the company said it took significant steps to improve the ROI of its GT channel partners and reignite growth in the channel structurally. This includes stock correction for the channel partners. Consolidated revenue declined YoY by low-single digit due to pricing corrections in key domestic portfolios and significant currency depreciation in some overseas market, it added.
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Marico further said the consumer sector’s demand trends are similar to the last quarter, with urban markets remaining steady and rural showing signs of improvement.
The constraints on liquidity and profitability in the general trade (GT) channel remained an overhang, while alternate channels continued to do well. The management is optimistic on the recovery in CY24 led by continued government spending and price cuts across categories.
Marico & GCPL said this update provides an overall summary of the operating performance and demand trends during the quarter ended December 31, 2023. This will be followed by a detailed performance update, post the approval of the Q3FY24 financial results by the board of directors.