FMCG Firms Continue to Do Well Despite Challenging Conditions
Despite challenging economic environment prevailing in the country, homegrown FMCG firms have come out all guns blazing, reporting robust growth in profitability during the first quarter. With less than average rains during the monsoon and despite margins coming under pressure, the FMCG firms have been able to tide the rough weather, to come out with positive numbers. Leading the pack, diversified firm ITC Ltd has posted 20.21 percent rise in net profit to Rs 1,602.14 crore for the first quarter ended June 30, 2012, on the back of robust sale across non-cigarette FMCG businesses. It had posted a net profit of Rs. 1,332.72 crore during the same period in 2011-12. Net sales of the company has risen to Rs 6,552.21 crore for the April-June quarter of 2012-13, as compared to Rs 5,767.47 crore during the same period of the last financial year. In the FMCG segment, including cigarettes vertical, the company posted net revenues of Rs 4,777.29 crore during the quarter, compared to Rs 4,071.32 crore in the same period of 2011-12. The non-cigarette FMCG business -- comprising branded packaged food, personal care, education and stationery -- posted net revenues of Rs 1,473.05 crore during the quarter, up 22.98 percent from the same period of previous fiscal. In the branded packaged foods category of the FMCG segment, the company said it enhanced market standing across categories and posted significant growth in revenues during the quarter. “Sales of value-added and premium products grew at a faster pace based on an enriched portfolio mix. Improvement in profitability was further aided by smart commodity sourcing and several strategic cost management initiatives,” ITC told PTI Economic Service. The Kolkata-based firm said several initiatives were launched during the quarter across the cigarette portfolio in terms of pack modernisation and introduction of variants and limited edition packs under the Classic, Flake, Gold Flake Premium Filter brands. “The business is also test marketing filter cigarettes of length not exceeding 65 mm. On the manufacturing front, investments continued to be made towards enhancement of quality, productivity and variety,” it added. The company posted revenues of Rs 3,304.24 crore in the cigarettes segment in the first quarter ended June 30, as compared to Rs 2,873.56 crore in the same period of 2011-12 fiscal. The company said hotel industry continued to be impacted by the weak global and domestic economic environment and significant additions to room supply in key Indian cities. The hotel vertical reported net revenues of Rs 232.35 crore for the first quarter, compared to Rs 230.46 crore during the same period of previous fiscal. The company said it had acquired land in Sri Lanka on a 99-year lease from the Government of Sri Lanka, for developing a 5-star luxury property. In the Paperboards and Packaging business, the company posted net revenues of Rs 1,036.12 crore for the first quarter, as against Rs 959.57 crore during Q1 last fiscal. The company said it was in the process of investing in a paperboard machine at Bhadrachalam (Andhra Pradesh) and a new carton line at Haridwar which were expected to become operational by end FY’13. During the quarter, the company’s agri business posted revenues of Rs 1,691.42 crore, as compared to Rs 1,707.14 crore in the same period of 2011-12 fiscal. Similarly, FMCG major Dabur India reported 16.96 percent increase in its consolidated net profit for the June quarter at Rs 149.40 crore on account of growth in health supplements, shampoos and foods. The company had posted a net profit of Rs 127.74 crore in the corresponding period last year. The consolidated net sales during the first quarter went up by 21.37 percent to Rs 1,461.97 crore from Rs 1,204.58 crore in the year-ago period. The company attributed the good performance in the last quarter to “strong growth in key categories like health supplements, shampoos and foods”, the statement said. Commenting on the numbers, Dabur India Chief Executive Officer Sunil Duggal said: “Despite signs of an economic downturn and increased competitive intensity in the market, Dabur India has accelerated volume
growth ahead of the market in its key categories.” The company had laid the foundation for strong and profitable growth in the future with a range of initiatives that included doubling its distribution footprint in rural India, he added. The company’s foods business, led by packaged fruit juice brands Real and Real Activ, grew 34.5 percent in the first quarter. Home care category closed the quarter with a 14.4 percent increase, while the skin care business went up by 13.3 percent during April-June period, it added. “Both domestic and International business reported strong growth during the first quarter, growing at 20 percent and 24 percent respectively,” Dabur India said. The growth in overseas markets was driven by Gulf Cooperation Council, Nigeria and Egypt. Mumbai-based Marico reported a rise of 45.39 percent in its consolidated net profit to Rs 125.78 crore for the first quarter ended June 30, on account of robust sales growth in domestic as well as international markets. The company had posted a net profit of Rs 86.51 crore during the same period of previous fiscal. Net sales of the company rose to Rs 1,267.20 crore in the April-June quarter compared to Rs 1,041.39 crore during the same period of 2011-12 fiscal, Marico Ltd said in a statement. “We are reaping the results of the strategic building blocks we have put in place-strengthening the core, creating the portfolio of the future, managing costs and investing in people and process capability,” Marico Consumer Products Business CEO Saugata Gupta said. The Mumbai-based firm said its consumer products business in India (CPB) achieved a turnover of Rs 934 crore during the first quarter ended June 30, a growth of about 23 percent over the same period of previous fiscal. Parachute grew by about 18 percent in volume during the first quarter ended June 30, 2012 compared to first quarter of 2011-12 fiscal, it added. During the April-June quarter, Marico’s international business posted a growth of 17 percent, while Kaya skin care solutions business grew by 29 percent over the same period of 2011-12 fiscal, the company said. Marico said the margins during the first quarter were higher than what the company intends to target. The company has decided to pass back some of the input cost benefit in Parachute to consumers and has initiated steps in select recruiter SKUs, it added. “We are acutely conscious of the challenges ahead, both macro and Marico-specific. We shall continue to focus our energies on our long term deliverable of building endurable consumer franchises in India and other emerging markets,” Marico Group CFO Milind Sarwate said. Marico’s brands include Parachute, Parachute Advanced, Saffola, Hair & Care, Nihar, Livon, Setwet, Zatak, Mediker, Revive and Manjal. Kolkata headquartered firm Emami posted a 12.31 percent rise in consolidated net profit at Rs 46.61 crore for the first quarter ended June 30, buoyed by robust sales of various brands, including Navratna Oil and Zandu Balm. The company had posted a net profit of Rs 41.50 crore during the same period of previous fiscal. Net sales of the company rose to Rs 338.83 crore for the reported quarter, as compared Rs 296.85 crore in the same period of 2011-12 fiscal. Emami has recorded substantial growth from its power brands like Navratna Oil, Zandu Balm, Fair and Handsome and Menthoplus Balm, the company said. On a standalone basis, the company posted a net profit of Rs 49.45 crore for the first quarter ended June 30, 2012 as compared to Rs. 39.84 crore during the same period of previous financial year. Brand extension Navratna Extra Thanda Oil also did extremely well, it added. During the quarter, the company said its healthcare division comprising over the counter (OTC) and generic products registered strong sales led by Zandu Pancharista, a digestive syrup. The Kolkata-headquartered firm said its revenue from international business grew over 27 percent at Rs 34 crore for the first quarter ended June 30, over the same period of previous financial year. “While development of new products and new markets continues, thrust is being put on increasing distribution and penetration in existing markets and to develop global brands,” the company said. Homegrown consumer goods player Godrej Consumer Products (GCPL) posted a net profit of Rs 130.5 crore for the June quarter, boosted by a 39 percent rise in sales. During the reporting quarter, the company acquired a 60 percent stake in Chilean firm Cosmetica Nacional for an undisclosed amount. However, the company’s consolidated sales rose 39.16 percent to Rs 1,388.64 crore, compared to Rs 997.84 crore in the June quarter of FY12. Its standalone net stood Rs 91.94 crore during the reported quarter as against Rs 219.84 crore in the yearago period, while sales stood at Rs 777.66 crore compared to Rs 625.55 crore in previous fiscal.