Marico posts revenue of Rs 1,754 cr in Q1 FY17; value growth remains flat

During the first quarter ended June 30, 2016, Marico posted revenue of Rs 1,754 crore. India business (turnover of Rs 1,387 crore) volumes grew by 8 per cent, while the international business (turnover of Rs 367 crore) grew by 4 per cent in constant currency terms (volume growth of 8 per cent). The company posted an overall volume growth of 8 per cent for Q1 FY17. The value growth was flat in comparison to Q1 FY16, owing to price reductions in the Parachute Rigids portfolio in India aggregating 18 per cent consequent to commodity price deflation that commenced in H2 FY16 and continued in Q1 FY17.

Market share gains continue in more than 55 per cent of the portfolio on 12 months MAT basis, while holding the market share in Coconut Oil segment in India.

EBITDA at Rs 374 crore grew by 18 per cent, while EBITDA margins expanded sharply due to softer input costs at 21.3 per cent. The company has judiciously utilised the benefits of lower commodity prices in improving pricing competitiveness, advertising inputs behind core categories and new products, while also improving EBITDA margins. Over the medium term, operating margin of about 18-19 per cent is sustainable. Profit after Tax (PAT) for the quarter at Rs 268 crore grew by 17 per cent.

The India business achieved a turnover of Rs 1,387 crore during the quarter, a value decline of 1 per cent over the same period last year. The healthy volume growth of 8 per cent was backed by continued growth momentum in categories of Parachute Rigid coconut oil, Saffola edible oils and VAHO, while youth business came back on growth trajectory.

The operating margin during Q1FY17 was 25.4 per cent before corporate allocation as against 21.2 per cent for the same period last year. Higher operating margins can be attributed mainly to gross margin expansion led by softer inputs costs. In the near term, the EBITDA margins are likely to remain in higher band (> 20 per cent) on the back of lower commodity costs and deflation in sales value.

Parachute’s rigid portfolio recorded a volume growth of 7 per cent for Q1 FY17 over Q1 FY16 amidst an aggressive deflationary environment. The company expects to deliver a volume growth of 5-7 per cent in the near term.

The Saffola refined edible oils franchise grew by 11 per cent in volume terms for the quarter. The company continued focus on the key task of driving relevance amongst the proactively health conscious consumers through key marketing inputs in Saffola Active and Saffola Tasty. The brand strengthened its leadership position in the super premium refined edible oils segment to 63 per cent during the 12 months ended June 2016.

Saffola Oats franchise continues to grow with a strong No. 2 position with a MAT value market share of 27 per cent. Focus on value added offerings in the oats segment led to a dominant 71 per cent value share in the flavoured oats market on a MAT basis. The franchise crossed Rs 100 crore of top line in FY16 and is well poised to cross Rs 200-crore landmark in the next 2-3 years, according to Marico.

Marico’s hair oil brands grew by 9 per cent in volume terms during the quarter. The company further strengthened its market leadership by 147 bps to 32 per cent volume share (for 12 months ended June 2016) and with value share gain of 85 bps to 25 per cent for the same period. Nihar Shanti Amla continues to gain market share and achieved a volume market share of about 37 per cent for the 12 months ended June 2016 in the Amla hair oil category (MAT June 2015: 34 per cent).

The Youth brands portfolio grew by 15 per cent in value terms. Set Wet Gels, re-launched in Q4 FY15, continued to grow in double digits during the quarter, leading to increase in market shares by 1039 bps in last 12 months in the Gels segment.

The Refreshed Set Wet Deodorants portfolio with Ranveer Singh as its brand ambassador has begun to gain back volume and market share. The Q1 FY17 market share was 4 per cent, reflecting a continued strong trajectory of growth since re-launch (MAT share as on June-16 of 3 per cent).

The Livon Hair Gain franchise with a better product formulation and packaging grew in double digits. The brand communication showcasing real life consumer experiences and the anti-counterfeit measures adopted by the brand are starting to show results. The company has also refreshed Livon Serum with better formulation, refreshed packaging, celebrity brand ambassador, new communication campaign and low unit packs at Rs 5.

Marico’s rural sales declined by 4 per cent due to higher exposure to the coconut oil portfolio. Urban sales remained flat in Q1 FY17. Sales in Modern Trade (9 per cent of the India turnover) continued the good run with growth of 14 per cent in Q1 FY17. CSD and Institutional sales (8 per cent of the India turnover) grew at 3 per cent in Q1FY17. The technology transformation in sales is on track and has started delivering results. A new initiative, Project Marval EDGE has been launched with the objective of improving the efficiency and effectiveness of trade and marketing spends. The company expects significant gains from this initiative.


News in the domain of Advertising, Marketing, Media and Business of Entertainment

More in Marketing