FMCG firms report single-digit volume growth with better margin in Dec qtr
Some of the companies also reported a decline in their topline numbers, as they extended the benefits of softening commodity prices to the consumer by lowering the prices
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NEW DELHI: Fast-moving consumer goods (FMCG) companies have reported single-digit volume growth with improved margins in most segments during December quarter, helped by moderating commodity inflation, though operating environment remained challenging.
Some of the companies also reported a decline in their topline numbers, as they extended the benefits of softening commodity prices to the consumer by lowering the prices, which had a bearing on their gross sales numbers.
Companies such as HUL, ITC, Marico, Dabur, and Godrej Consumer Products said urban markets continued their moderate growth, while consumer demand from rural India remained subdued even as they expect an improvement in coming quarters. Also, late arrival of winter also impacted the pickup of relevant products such as lotions, oils and creams.
Hindustan Unilever (HUL) reported a muted growth in consolidated net profit at Rs 2,508 cr and its sales were marginally down to Rs 15,259 cr. “Overall, FMCG demand trends have largely remained stable and similar to what we saw last quarter. While market volumes grew at high single digits year-on-year, this came on a base period where volumes declined in mid-single digit,” said HUL CEO-MD Rohit Jawa in his latest earnings call.
Like past quarters, modern trade channels are doing well and continue to outpace general trade. Similarly, the volume growth of premium products is significantly ahead of mass products in the market. Echoing the view, Marico said, “General trade continued to drag as it grappled with liquidity and profitability constraints, while alternate channels grew healthily.” Marico’s India business posted a volume growth of 2 per cent in the Q3 year on year though its turnover was down 3 per cent to Rs 1,793 cr.
“During the quarter, demand trends were stable with no visible improvement from the preceding quarter. Rural demand remained soft, while urban demand steadied its moderate growth trajectory,” said the earnings statement from Marico. Within the sector, mass home and personal care categories aligned closely with the rural demand trajectory, while packaged foods led the sector owing to higher urban salience and penetration-led growth, it said. ITC, which owns brands such as Aashirvaad, Sunfeast, said it had a resilient performance in FMCG segment amidst subdued demand conditions.
