India`s Marico misses profit estimates on higher raw material costs
Indian fast-moving consumer goods firm Marico reported a quarterly profit that fell short of estimates on Friday, hurt by a surge in expenses, including for raw materials such as copra and vegetable oil.
The Mumbai-based company posted a 0.7% drop in profit to 4.2 billion rupees ($47.78 million) for the second quarter ended September 30. Analysts expected a profit of 4.28 billion rupees, according to data from LSEG.
Droughts and pest infestations have slashed coconut output across Asia, driving up costs for brands, including Marico's Parachute oil brand, which contributes about 36% of the company's India revenue.
The firm had to raise Parachute's price multiple times to cushion the blow over the last year.
Parachute's sales volume suffered as a result, dropping 3%.
Marico's total expenses rose nearly 36%, while its gross margin shrank by 810 basis points.
Overall revenue, however, rose 31% to 34.82 billion rupees, beating analysts estimate of 34.16 billion rupees, mainly led by price increases even as sales volumes of its Saffola oils were largely flat.
India's sweeping tax cuts, implemented during the tail end of the quarter, have helped about 30% of Marico's domestic business, the firm reiterated. It said it had lowered prices without providing specifics.
Marico expects consumer sentiment to improve in part due to easing inflation.
"We expect to maintain healthy volume and revenue growth momentum in the quarters ahead, with profit growth gaining traction as margin pressures gradually abate", CEO Saugata Gupta said in a business update.
Like peer AWL Agri Business, Marico is also doubling down on packaged foods. It aims to increase the contribution of its foods and premium personal care business to a quarter of its revenue by fiscal year 2027, from roughly 22% in the ongoing fiscal's first half.
($1 = 87.8950 Indian rupees)
