Marico's domestic business reports modest uptick on volume in Q1; margins improve

Marico domestic business reports modest uptick on volume in Q1 margins improve on sequential basis expects gross margin to expand YOY

Fast-moving consumer goods maker Marico on Friday said its domestic business posted a "modest uptick" in volume growth in the first quarter on a sequential basis and expects gross margin to expand year on year.

The overall demand trends in the first quarter continued to exhibit gradual improvement on the expected lines, said Marico, which owns brands such as Saffola, Parachute, Hair & Care, Nihar and Livon, among others.

The company recorded volume growth post adjustments in distributor stock levels and a certain degree of wholesale channel destocking to ensure smoother direct reach expansion, said Marico in its quarterly update for the first quarter.

Key brands such as "Parachute Coconut Oil posted low single-digit volume growth in this quarter, but is likely to pick up visibly through the rest of the year given the consistently healthy trends in offtake growth", said Marico.

While Saffola delivered mid-single-digit volume growth amidst marked stability in input and consumer pricing.

However, its "value-added hair oils had a soft start to the year due to competitive headwinds persisting in the bottom of the pyramid segment, while the mid and premium segments fared relatively better".

Its food and digital-first brands sustained their "robust momentum" and scaled up well ahead of stated aspirations.

Marico's international business delivered double-digit constant currency growth, driven by resilient and broad-based growth across markets, it added.

Marico's consolidated revenue in the April-June quarter grew in "high single digits" despite the residual impact of pricing cuts in the Saffola Oils portfolio and currency headwinds in overseas markets.

"We expect consolidated revenue growth to trend upwards during the year, on the back of an improving trajectory in domestic volume growth and higher realisations due to the favourable pricing cycle in key domestic portfolios," it said.

Over the key inputs, Marico said copra prices stayed firm in line with forecasts, while edible oil and crude oil derivatives remained range-bound.

"We expect gross margin to expand on a year-on-year basis owing to a favourable portfolio mix," said Marico, adding "Operating profit is expected to grow slightly ahead of revenue leading to a marginal inching up of operating margin on a year-on-year basis."

The Mariwala family-promoted firm maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term.