Consumer goods companies see high single to double-digit growth


Consumer goods companies are expected to report high single to double-digit growth in revenues led by continuous price hikes undertaken in the March quarter, while margins will remain under pressure as geo-political crisis results in high commodity price inflation.

Godrej Consumer Products (GCPL), in its quarterly update sent to the stock exchanges, has said that it expects to deliver double-digit sales growth in the quarter ended March 2022, which will be led entirely by pricing.

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The company highlighted that the consumption and margins were impacted during the quarter owning to short term challenges such as unprecedented global commodity inflation and the performance of its Indonesia business. At a consolidated level, it expects to deliver a higher than mid-single-digit sales growth and a two-year CAGR around mid-teens. The investors reacted favourably to the growth forecast, as GCPL’s share price closed 3.83% up at 781.55 on BSE, on Thursday.

Marico said that its consolidated revenue growth in the quarter touched high single digits. Volumes were marginally positive on an exceptionally high base of 25%, leading to a double-digit volume growth on a two-year CAGR basis. Company’s international business delivered double-digit constant currency growth on a strong base, with all markets faring well. Due to spike in edible and crude oil prices Marico took calibrated price increases in the value added hair oils and Saffola edible oils portfolio during the quarter. Consequently, gross margin is expected to be at similar levels as the same quarter last year, the company said. Marico’s share price closed down 1.79% at Rs 511.80 on BSE, on Thursday.

Fast moving consumer goods (FMCG) companies have been under the pressure of high commodity price inflation over the last one year, which has been rising further after the Russia-Ukraine war broke out in February. Companies are taking calibrated hikes across categories, but are also absorbing a lot of it as passing it on entirely will impact demand. Impact of this will be visible in the March quarter’s margins. Rising prices will also show in terms of lower volumes as markets are witnessing downgrading by customers who are moving to cheaper alternatives or smaller packs in different categories to ease pressure on their pockets.

Meanwhile, Titan Company disclosed that it expects revenues to decline by 3% y-o-y during the March quarter on a standalone basis. The company said in its quarterly update that the consumer sentiments were affected adversely due to a sharp increase and volatility in gold prices and uncertainty due to a fragile geo-political situation. Titan’s stock price closed 3.24% down at Rs 2,458.95 on BSE, on Thursday.

“On the profitability front, we expect lower year-on-year Ebitda margins during the quarter. This is due to input inflation and our weak performance in Indonesia,” GCPL said. Giving the outlook for the ongoing financial year, it said that it hopes to deliver early double-digit sales growth.

The company said that the Indian FMCG industry has witnessed a consumption slowdown over the last few months and the sector continued to be hit hard by higher inflation levels, leading to successive price increases, and impacting volumes.

The company saw a mixed performance in its personal care and home care categories during the January-March 2022 period. While personal care sustained its double-digit growth trajectory, led by pricing in personal wash, home care witnessed a soft performance on a high base, impacted by a relatively muted season for home insecticides and the discretionary nature of air fresheners. However, the company said that it gained market share in 85% of its categories.

In terms of geographies, hygiene performance is waning in Indonesia after Covid-19 and the company expects a sales decline in the high teens, in constant currency terms. Godrej Africa, USA and Middle East, continued the growth momentum across most key categories of operations. “We expect to deliver a constant currency sales growth close to the mid-teens. We also continue to focus on driving sustainable, profitable sales growth,” it said.

In Latin America, GCPL expects to clock strong double-digit constant currency sales growth, while SAARC business performance would remain soft.


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