Domestic volumes declined by 6% year-on-year, dragged by a double-digit decline in Saffola Oils. Gross margin expanded 401 bps year-on-year, attributable mainly to benign copra prices and favorable mix impact. A&P spends grew 14% on a year-on-year basis, as the company maintained investments towards strategic brand building of core and new franchises. EBITDA margin stood at 20.6%, up 159 bps year-on-year. EBITDA was up 10% year-on-year.
“In India, the FMCG sector witnessed volume decline in Q1FY23 for the third quarter in a row and value growth continued to be price-led. Domestic volumes declined by 6% year-on-year, dragged by a double-digit decline in Saffola Oils. Excluding Saffola Oils, domestic volume growth was 1%," the company said in a statement.
The company’s international business delivered a 18% constant currency growth during the quarter.
The domestic business had to contend with persistent inflation and resultant weak demand conditions during the quarter, said Saugata Gupta, MD and CEO, Marico.
“In India, despite the strong headwinds, we have continued to record market share and penetration gains, and deliver operating margin expansion. We expect volume trends to improve once inflation pressures ease," he said.
Marico’s India Business delivered a turnover of ₹1,921 crore, down 4%. The company’s Parachute Rigids portfolio was down 2% in volume terms owing to soft consumption trends and much slower conversion from loose to branded.
Value added hair oils posted value growth of 5% and flattish volumes year-on-year despite weak consumption sentiment, especially in rural markets.
The Saffola franchise, comprising refined edible oils and foods, declined by 13% in value terms during the quarter. Saffola edible oils declined “sharply" given high in-home consumption in the base quarter, visible downgrading from super premium to mass segments and a volume drop in the ROCP (refined oil consumer packs) category.
“The brand chose to maintain threshold margins over higher volumes in the face of unprecedented raw material inflation, muted trade sentiment, supply chain issues and the undesirable effect of price hikes on the absolute outlay for the consumer. In addition, stock limits imposed on retailers and lower CSD billing due to lag in effecting price changes played a part during this quarter,“ the company added.
Premium personal care and digital-first portfolios clocked high double-digit growths.
In the medium term the company holds its aspiration of delivering 13-15% revenue growth on the back of 8-10% domestic volume growth and double-digit constant currency growth in the International business. The company will aim to maintain operating margin above the threshold of 19% over the medium term, it added.
