Marico reported 6% rise in consolidated net profit to Rs 328 crore on a 3% increase in revenue from operations to Rs 2,470 crore in Q3 FY23 over Q3 FY22.
The company said revenue growth was supported by an underlying volume growth of 4% in the domestic business and constant currency growth of 8% in the international business.
EBITDA improved by 6% to Rs 456 crore in Q3 FY23 from Rs 431 crore in Q3 FY22. EBITDA margin was 18.5% in Q3 FY23 as against 17.9% in Q3 FY22.
Profit before tax in Q3 FY23 stood at Rs 443 crore, up by 9% from Rs 407 crore in Q3 FY22.
Marico said that during the quarter, the FMCG sector in India showed some signs of a gradual improvement in overall demand trends, in addition to the festive spirit and oncoming winter season providing some fillip to specific categories.
With retail inflation easing month on month, the sector recorded its lowest volume decline in the last five quarters. Within the sector, Foods categories stayed on the growth path, while HPC categories were still under pressure. Rural remained a drag although its trajectory improved sequentially, while urban and premium categories continued to fare batter.
The India business also witnessed a pickup in the performance over the preceding quarter on the back of steadying trends in the core franchises of Coconut Oil and Saffola Edible Oils coupled with continued momentum in Foods and Premium Personal Care portfolios.
Domestic revenues was at Rs 1,851 crore, up 2% YoY, lagging volume growth due to varying pricing interventions across portfolios during the year. Sustained focus on execution and brand building investments translated into key franchises consolidating market shares during the quarter. Among the sales channels, General Trade declined in mid-single digits, with rural still behind urban. MT and E-commerce grew in high double digits.
The international business sustained its healthy growth momentum with constant currency growth of 8%. Each of the markets exhibited strength amidst macroeconomic uncertainty and currency devaluation headwinds.
Gross margin expanded 123 bps YoY and 131 bps sequentially, owing to the prevalence of stability in consumer and raw material pricing and improved portfolio mix in the India business, while the business also contended with the impact of currency devaluation in key overseas markets. A&P spends at 8.9% of sales, was up 3% sequentially.
Copra prices were up 1% sequentially and down 18% YoY. With seasonal supplies slowing down, prices should remain range-bound in the near term. Rice Bran oil was down 4% sequentially and 2% YoY. Rice Bran Oil prices are likely to be range bound in the near term. However, multiple global factors remain a watch-out for the international vegetable oil complex in the coming quarters. Crude derivatives such as Liquid Paraffin (LLP) and HDPE were up 31% and 4% YoY. Both inputs should trend in line with crude oil prices.
Within the International business, Bangladesh clocked 9% constant currency growth. Both the core and newer portfolios remained steady. Vietnam grew by 13% in constant currency terms as the HPC and Foods franchises performed well. Myanmar business dropped due to forex-led challenges. Both MENA and South Africa grew by 13% in constant currency terms. NCD and Exports business grew 18% in constant currency terms.
In its outlook, Marico stated that gross margin should remain steady with an upward bias going ahead unless sharp volatility in key input costs resumes. Taking into account the quarterly gyrations of all cost line items, EBITDA margin will be in the 18-19% band in FY23.
Over the medium term, the company holds its aspiration to deliver 13-15% revenue growth on the back of 8-10% domestic volume growth in the domestic business and double-digit constant currency growth in the international business. It will aim to maintain consolidated operating margin above the threshold of 19% over the medium term.
Saugata Gupta, MD & CEO, commented, The quarter was characterized by improving trends in topline and earnings growth as the domestic business witnessed emerging signs of a gradual demand revival, while the international business stood its ground amidst macro headwinds in some markets.
It was reassuring to see continued market share and penetration gains in most of our key portfolios and sustained growth momentum in new franchises. As the operating environment is expected to evolve favorably, we will aim to maintain an upward trajectory across growth parameters in the quarters ahead through consistent investment in our brands and focus on execution.
Marico is one of India's leading consumer products companies in the global beauty and wellness space. Its portfolio includes brands such as Parachute, Saffola, Saffola FITTIFY Gourmet, Saffola ImmuniVeda, Saffola Mealmaker, Hair & Care, Parachute Advansed, Nihar Naturals, Mediker, Coco Soul, Revive, Set Wet, Livon and Beardo.
The scrip fell 1.22% to end at Rs 493.50 on the BSE today.
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