Marico says rural market stayed weak in Q3; urban, premium categories maintained steady growth

Rural demand for the FMCG industry in the December quarter was not as discernible as retail inflation stayed at elevated levels, even as the urban and premium categories maintained a "steady pace of growth", Marico said.

Overall, the sector witnessed some improvement in demand, which was more visible in specific categories buoyed by the festive fervour and oncoming winter season, the FMCG firm said in its latest quarterly update.

Marico's domestic business showed a slight improvement over the preceding quarter to post a "mid-single-digit volume growth".

The company has witnessed some semblance of stability in key input prices and consumer pricing across key franchises, and expects its operating margins to improve both on a sequential and year-on-year basis.

"In view of the lower revenue growth, we expect a modest growth in operating profit," Marico said in its updates for the December quarter.

Talking about the domestic market, Marico said its brand Parachute Coconut Oil posted low single-digit volume growth after a visible recovery in December as consumer pricing stabilised, with copra prices firming up in the off-season.

"Going forward, we expect the brand to deliver growth in line with medium-term aspiration," it noted.

Saffola Oils posted a "low teen volume growth" and foods continued a "strong run" towards the stated revenue aspiration.

"Value Added Hair Oils had a subdued quarter, which was mainly a reflection of tepid sentiment in rural and mass personal care categories. Premium Personal Care, on the other hand, witnessed double-digit growth in line with sectoral trends," it said.

During the quarter, the international business of Marico continued its "healthy growth momentum with high single-digit constant currency growth", even while contending with implications of currency depreciation and high inflation in key markets.

Bangladesh held steady despite challenging macro conditions, while the other markets performed well.

"Consolidated revenue in the quarter grew in low single digits on a year-on-year basis," it said.

On the outlook, Marico said it maintains its aspiration of delivering "sustainable and profitable volume-led growth over the medium term", enabled by the strengthening brand equity of its core franchises and scaling up new engines of growth.

Marico, under its quarterly update, provided an overall summary of the operating performance and demand trends witnessed during the quarter that ended December 31, 2022.

"A detailed Information Update will follow this once the Board approves the financial results for Q3 FY23," it added.