Consumer products and services company Marico Ltd reported strong profit growth in the first quarter, led by better operating margins boosted by the performance of its overseas FMCG business and Kaya coming out of the red.
The company’s net profit rose 27.4 per cent to Rs 157.7 crore for the quarter ending June 30, 2013, compared to the corresponding quarter last year. Excluding certain exceptional and non-comparable items during Q1 FY14, the growth in PAT is around 24 per cent, the company said in a media release.
During the quarter ended June 2013, Marico posted revenues of Rs 1,382 crore, up 9 per cent over the year-ago period. The growth was largely led by volumes, which were up about 10 per cent. Domestic FMCG business recorded a volume growth of 10 per cent while the international FMCG business recorded a volume growth of 9 per cent.
Kaya Skin Care Solutions business recorded a growth of 8 per cent over Q1 FY13 and sported segment profit of Rs 2.17 crore as against loss of Rs 10.93 crore in the year-ago period.
The gross margins in the FMCG business expanded 260 bps during Q1 FY14. Part of this was re-invested in the business, resulting in about 160 bps increase in the operating margins to 17.2 per cent.
Saugata Gupta, chief operating officer of Marico, said, “The market shares across the portfolio in the domestic business are strong. The international FMCG business also showed a robust performance after a gap of a few quarters. The immediate macro environment is challenging but we will continue to build on long-term consumer franchises. As we grow in the developing and emerging markets of Asia and Africa, we expect to derive advantages of scale across selected product platforms.”
Marico, which generated consolidated revenues of Rs 4,596 crore for the year ended March 31, 2013, has brands such as Parachute, Saffola, Hair & Care, Nihar, Mediker, Revive, Setwet, Zatak, Livon, Kaya and Derma Rx, among others. This straddles categories such as hair oil, deodorant, edible oil, fabric care and male grooming besides the Kaya skin care business.
While the firm was largely known for its Parachute hair oil brand in the 90s, it has diversified through a string of acquisitions and the flagship brand now contributes less than a third of total sales.
Marico is in the process of restructuring its businesses into two entities. One will be housing its fast-moving consumer goods (FMCG) unit while splicing out the beauty and wellness business housed under a separate listed firm, Marico Kaya Enterprises Ltd (MaKE), through a vertical demerger.
(Edited by Sanghamitra Mandal)