Marico's Q1 net profit rises 19% on high revenues from FMCG business

FMCG major Marico’s consolidated net profit grew by 19.4 percent on a yearly basis to Rs 185 crore aided by higher revenue from its FMCG business.

Consolidated total income from operations jumped 25.32 percent to Rs 1,623 crore in the quarter ended June 2014 from Rs 1,295 crore in the year-ago period supported by the price increases taken across the portfolio during the quarter.

“The topline was driven by an overall volume growth of 5 percent with a 6.5 percent volume growth in India. The domestic business recorded a growth of 28 percent while the International business posted a growth of 16 percent,” said the company in its filing.

[caption id=“attachment_92784” align=“alignleft” width=“380”]  Screengrab from Marico website[/caption]

Volume growth for its key brands like Parachute, Saffola and value added hair oils were 6 percent (versus expectations of 8 percent), 10 percent (versus estimates of 10 percent) and 11 percent (versus forecast of 8 percent), respectively.

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Operating profit (EBITDA) jumped 20 percent year-on-year to Rs 267 crore in first quarter of current financial year 2014-15 but margins declined 20 basis points to 16.4 percent in the quarter gone by due to sustained uptick in copra prices and high base despite price hikes.

The company believes that an operating margin for the domestic business in the band of 17 percent to 18 percent is sustainable in the medium term.

“However, in the immediate term, operating margin will face compression due to the unprecedented rise in input costs,” it added. Copra prices, the key raw material for Parachute brand, increased by 135 percent year-on-year and 28 percent Q-o-Q.

Marico International’s operating profit margin slipped significantly to 18.2 percent during the quarter compared to 13.3 percent in corresponding quarter of last fiscal.

Advertising spends increased 9.1 percent to Rs 192 crore during the quarter from Rs 176 crore in same quarter last fiscal and the same as a percentage of sales declined 90 basis points on yearly basis to 11.8 percent in the quarter gone by.