Emami profits up by 5% in Q3 FY20, revenue growth remains flat

Emami Ltd has posted resilient growth during the third quarter ended December 31, 2019 despite ongoing challenges such as overall weak consumption environment in the domestic business, weak rural demand, liquidity concerns and hike in food inflation. Nearly 65 per cent of the portfolio (excluding winter products) grew by 8 per cent. However, delayed onset of winters impacted the sales of winter portfolio leading to an overall flat revenue growth in Q3FY20 with consolidated revenues at â‚¹ 813 crore.

During the quarter, gross margins at 68.2 per cent grew by 120 bps. Ad spends at 17.0 per cent of sales increased by 110 bps due to investments in new launches. EBIDTA at â‚¹ 264 crore posted flat growth with margins at 32.5 per cent and Profit After Tax (PAT) at â‚¹ 144 crore grew by 5 per cent with PAT margins at 17.8 per cent growing by 80 bps.

In the Domestic Business, Pain Management range, Kesh King range, Navratna range, 7 Oils in One posted robust growth, while healthcare range performed satisfactorily. International business also grew by 18 per cent, led by robust performance in SAARC and MENAP regions. CSD channel and modern trade also grew by 7 per cent and 15 per cent, respectively.

During the quarter, the company launched Navratna Garam Tel in North and Central India. Under the healthcare umbrella, the company also launched Zandu Ayurvedic Cough Syrup (in a smart sachet priced at â‚¹ 5).

Commenting on the performance, Mohan Goenka, Director, Emami Ltd, said, “We are happy that our Q3 performance has been led by the robust performance by most of our power brands, growing by 8 per cent, excluding the winter portfolio. We are also delighted that our power brands, irrespective of the demand environment, continued to gain market shares during the quarter and strengthen their leadership positions in categories where they are present. Our international business and modern trade channel continues to perform well and we are hopeful that in the next 2-3 quarters, the overall consumption environment will improve to drive offtake.”

Harsha V Agarwal, Director, Emami Ltd, added here, “This quarter we launched innovative products like Navratna Garam Tel and Zandu Ayurvedic Cough Syrup to address market need gaps and lifestyle requirement of the consumers. While lower raw material costs helped the company to increase its gross margins, ongoing cost control measures are expected to aide profitability in the coming quarters. We will continue to invest in our brands and marketing initiatives to capitalise the positive market condition that we expect to emerge in the days to come.”