Godrej Consumer Products Ltd.'s second quarter profit rose but missed analysts' estimates, even as revenue grew due to steady demand for its homecare products.
Consolidated net profit for the maker of Goodknight mosquito repellent and Cinthol soaps rose 20.6% over the year earlier to Rs 432.8 crore in the quarter ended September, according to an exchange filing on Wednesday. That compares with the Rs 472.5-crore consensus forecast of analysts tracked by Bloomberg.
The profit was partly impacted because of a one-time additional cost to the tune of Rs 10.5 crore as part of restructuring.
Godrej Consumer Q2 FY24 Highlights (Consolidated, YoY)
Revenue rose 6.2% as against Rs 3,602 crore in line with Bloomberg estimate of Rs 3,617.5 crore.
Operating profit jumped 30% to Rs 704 crore (Bloomberg estimate: Rs 703.5 crore).
Margin expanded to 19.5% from 15.9% due to easing of input inflation (Bloomberg estimate: 19.4%).
India business sales grew by 9% to Rs 2,129 crore, led by volume growth of 11%. Organic volume growth was 4%.
The pace of revenue growth moderated sequentially as GCPL slashed prices of soaps to pass on the benefit of lower input costs to consumers. Underlying volume grew 10% during the quarter.
"We delivered a steady performance in Q2 FY24, despite the tough operating environment," Chief Executive Officer Sudhir Sitapati said.
Category-Wise Performance
Homecare sales grew 5% to Rs 913 crore.
Within homecare, the growth of household insecticides was flat due to poor monsoon, while non-mosquito portfolio continued to perform well. Air fresheners delivered double-digit volume and value growth.
Personal care sales dipped 1% to Rs 1,003 crore with low single-digit volume growth.
Within personal care, the hair colour segment reported low single-digit volume growth, impacted by an additional month of 'Shravan' during the quarter.
Unbranded and exports sales rose 6% to Rs 71 crore.
As for the international business, GCPL's performance in Indonesia market, which has been a laggard for several past quarters, continued to improve.
Indonesia sales grew by 16% in rupee terms and 14% in constant currency terms to Rs 473 crore, aided by media spends. Ebitda margin was at 17.9%, up 80 basis points over the previous year, led by gross margin expansion. The business continues to scale up its general trade distribution, drive innovation in the portfolio and seed access packs.
Africa, the U.S. and the Middle East sales declined by 5% in rupee terms and grew by 17% in constant currency terms to Rs 816 crore. The performance in INR terms was impacted due to the Naira devaluation.
Latin America and SAARC sales grew by 5% in INR terms and 99% in constant currency terms to Rs 181 crore.
The recently-acquired brands—Park Avenue and KamaSutra—reported sharp improvement in sequential sales run rate, clocking sales of Rs 142 crore. While the integration of these businesses is largely completed, GCPL expects cost synergies to flow from the second half of fiscal 2024.
"We continue to remain focused on driving volume-led growth along with healthy investments in our brands and improvement in profitability," Sitapati said.
The company also announced an interim dividend of Rs 5 per share, which is equivalent to 500% on shares with a face value of Re 1 each, for FY24. This would result in a payout of Rs 511 crore.
The board also approved incorporation of a new wholly owned subsidiary. The proposed unit shall engage in the manufacture, sale and export of personal and household care products.
Shares of GPCL closed 1.81% lower at Rs 974.60 apiece on the BSE before the results were declared, as compared with a 0.44% decline in the benchmark Sensex.
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