Homegrown fast moving consumers goods firm Marico Ltd on Thursday said its revenue in the third quarter ended December 31, 2019 has declined by 2% at ₹1,824 crore while its domestic volume growth fell by 1% hit by the continued slump in consumption demand as well as liquidity crunch.
The Mumbai-based firm, which makes Parachute hair oil and Saffola edible oil, posted an 11% increase in its net profit to ₹272 crore. Its EBIDTA (earnings before interest, taxes, depreciation and amortization) margin also expanded by 116 bps to 20.4% helped “benign input costs in the domestic and Bangladesh businesses,” the company said in a filing to the BSE.
“The Company witnessed a muted quarter in the India business as channel partners grappled with liquidity constraints and consumption trends failed to bring any cheer. However, relative offtake growth trends and market share gains in our key portfolios was reassuring,” said Saugata Gupta, managing director and chief executive officer, Marico Ltd.
While personal care segment was seen under stressed foods and allied categories showed resilience,the company said. It also pointed out that the consumption slowdown was most pronounced in the traditional channel. Besides, modern trade and E-Commerce were also seen slowing down considerably during the quarter.
“Persistent liquidity constraints in the traditional channel, especially wholesale and in rural, led to further correction in trade channel inventories, impacting secondary growths, which were in low single digits,” it said.
Despite a slowdown in its domestic business, its international continued to see robust growth. Led by a strong momentum in Bangladesh and healthy growth in exports other markets, its international business registered a 10% constant currency growth during the December quarter.
“Despite the macro overhang in the domestic business, the company remains steadfast in its aspiration to deliver sustained volume-driven growth and franchise expansion over the medium term through specific consumer-focused initiatives and driving excellence in execution,” Gupta said.
The company plans to focus on reviving growth in its franchises by redirecting monies from trade promotion towards consumer pricing, investing behind upgrading distribution infrastructure in urban general trade and expanding direct reach in rural markets.
“We expect that it will take a couple of quarters for a healthy growth trajectory to materialize through these initiatives on the back of some recovery in the overall demand sentiment,” the company said in the release.
Shares of Marico Ltd closed at ₹338.00 per share, down 1.87% while Sensex was at 40,913.82 points down, 0.69% from the previous close.