Marico Says Optimistic About Gradual Uptick In Consumer Trends

FMGC major Marico remains optimistic about a gradual uptick in consumption trends in 2024 on the back of improving macroeconomic indicators, conducive consumer pricing across segments and other factors, even as the rural market offered 'little to cheer' in the December quarter.

In its update providing an overall summary of the operating performance and demand trends witnessed during the three months ended December 2023, the company said constraints on liquidity and profitability in the general trade channel remained an overhang for the sector, while alternate channels continued to fare well.

"We remain optimistic of a gradual uptick in consumption trends over the course of the next calendar year on the back of improving macro-economic indicators, continued government spending and conducive consumer pricing across categories in response to a benign input cost environment," Marico said in the quarterly update on Friday.

In the given context, Marico said its domestic volumes grew in low single-digit on a year-on-year basis with a slight sequential improvement in its core portfolio.

During the December quarter, "the FMCG sector exhibited similar demand trends on a sequential basis, with urban markets staying steady and rural offering little to cheer," it added.

The company's brand Parachute Coconut Oil registered a low single-digit volume growth while Saffola Oils had an optically weak quarter owing to a high base and persistently cautious trade sentiment.

"Value Added Hair Oils posted low single-digit value growth amidst sluggishness in the bottom of the pyramid segments of the portfolio. We stayed on course in our diversification journey as Foods and Premium Personal Care scaled up well in line with aspirations," it said.

While the International business delivered mid-single digit constant currency growth amidst transient macro headwinds in the Bangladesh market, while the rest of the geographies held strong, it said.

"With a degree of pricing corrections in key domestic portfolios yet to anniversarise and significant currency depreciation in select overseas geographies, consolidated revenue declined in low single digit on a year-on-year basis," Marico said.

On commodity prices, Marico, which owns brands such as Saffola, Parachute, Hair & Care, Nihar and Livon, said that among key inputs, copra and edible oil prices remained at lower levels and crude derivatives also exhibited some downward bias.

This will help in "leading to robust gross margin expansion" on a year-on-year basis. While A&P (Advertising & Promotion) spends were ramped up in line with our strategic intent to continually strengthen the long-term equity of both the core and new franchises, as per the update.

"Consequently, we expect low double-digit operating profit growth on the back of a healthy expansion in operating margin, thereby staying on track to deliver on the margin guidance for the full year," it said.

Further, the company said it maintains the aspiration of delivering sustainable and profitable volume-led growth over the medium term, enabled by the strengthening brand equity of its core franchises and scale up of new engines of growth.