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Marico Q2 profit rises 18%, domestic volume growth disappoints

Chillicious Bureau

FMCG company Marico ‘s second quarter consolidated profit jumped 18.1 percent year-on-year to Rs 180.6 crore on operational efficiencies while revenue fell 0.7 percent to Rs 1,443 crore.

Domestic volume growth during the quarter stood at 3.4 percent against 5.5 percent in year-ago period, which was lower than analysts’ estimates of 6-8 percent while Parachute volume growth was negative 6 percent against expectations of 5-7 percent growth.

“The value growth was lower owing to price reductions in the Parachute Rigids portfolio on year-on-year basis in India and Bangladesh consequent to deflation in input costs,” the company said in its filing.

EBITDA (earnings before interest, tax, depreciation and amortisation) grew by 10.5 percent to Rs 253 crore and margin expanded by 180 basis points to 17.5 percent on gross margin expansion of 749 basis points due to fall in copra prices.

The company reported a mixed set of earnings as profit and operational performance met analysts’ estimates while revenue and domestic volume growth disappointed. According to analysts polled by CNBC-TV18, profit was estimated at Rs 177.2 crore on revenue of Rs 1,519 crore and EBITDA was expected at Rs 257 crore with margin at 16.9 percent for the quarter.

Volume growth in Saffola edibles oils was at 8 percent (against analysts’ expectations of double digit growth) and Value Added Hair Oils at 11 percent, which was lower than company’s guidance of 12-15 percent growth.

Marico said international business grew by 4 percent (contributed 22 percent to revenue) in constant currency terms during the quarter. While Vietnam, Middle East, Egypt and South Africa grew in Q2, Bangladesh business declined, it added.

The company expects headwinds in Middle East in the near term but growth outlook for other geographies remained positive.

The company further says the volume recovery is expected to commence in near term with a 6-8 percent volume growth in H2FY17 and in Parachute Rigids, it aims to grow volumes in a range of 5-6 percent in medium term while Saffola in medium term is expected to continue growing at a double digit volume growth.