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Consumer goods companies are beginning to turn a corner, with the July-September quarter numbers showing signs of a revival. The results declared for the three months ended September show both sales and profit growth was better than the numbers declared in the previous quarter.
Data compiled by BS Research bureau shows sector sales and profit growth were nearly 12 per cent and 8.2 per cent, respectively, in July-September quarter. In the April-June, sales and profit growth were 11 per cent and six per cent, according to analysts tracking the industry.
More important, a wider spectrum of companies, from Hindustan Unilever (HUL) to Marico, Dabur, Asian Paints, Emami and Bajaj Corp, saw an uptick in volume growth in the quarter. On an average, volume growth hovered in the region of five to 11 per cent for these companies.
Saugata Gupta, managing director, Marico, said: "Our focus remains on maximising volume growth and market share for our brands. This was reflected in the second quarter results, with all-round growth seen in the domestic business. Saffola gave us 9.5 per cent volume growth, Parachute seven per cent, value-added hair oils 13 per cent, and youth brands (consisting of erstwhile Paras products) 21 per cent."
Naresh Bhansali, chief executive, finance, strategy and business development, Emami, said: "The 11 per cent volume growth we saw for the September quarter was led by growth in brands such as Navratna Oil, Fair and Handsome and Zandu Balm. New launches such as Fair and Handsome facewash and He deodorant also performed well, contributing about six per cent to the domestic turnover."
Sanjiv Mehta, managing director, HUL, said: "If you compare our performance with the (FMCG) sector, then we were ahead of the market in July-September. Volume growth (for the industry) contracted, while value growth was four per cent only."
Surprisingly, the sales growth seen in July-September was led by rural rather than urban growth.
Most companies did not specify how much this number was, barring Marico, which said it saw 48 per cent rural sales growth versus an urban sales growth of 30 per cent in the three months. Analysts say this is likely to be the last quarter before an urban recovery sets in.
"I see urban recovery setting in by the third quarter. The signs are visible with India topping the worldwide consumer confidence index for a second time in a row and improvement in sentiment reflected in the performance of the stock markets. Urban consumers are expected to react to these positive cues with a pick-up in spending likely in the October-December quarter. This is also the festive quarter," said Abneesh Roy, associate director, research, institutional equities, Edelweiss.
