Marico's Q1 ad spends witness 7% YoY increase

FMCG major Marico, has recorded a turnover of Rs 97.6 billion (USD 1.2 billion) through its products sold in India and chosen markets in Asia and Africa, during FY 2022-23. The company has reported a consolidated net profit of Rs 427 crore for the quarter ended June 30, 2023.

As per the Q1 FY24 report, A&P spends were up 7% YoY, as the company maintained investments towards strategic brand building of core and new businesses. While the company’s A&P was up by 8.6% in FY2023, it is estimated to rise by 9% this fiscal year, as mentioned in the report.

A&P spends continued to trend upwards in line with the Company’s focus on strategic brand building of core and new categories.

Gross margin expanded ahead of internal expectations, by 494 bps YoY and 257 bps sequentially, owing to incrementally softer input costs.

EBITDA margin was at 23.2%, up 253 bps YoY. EBITDA grew 9% and recurring PAT was up 12% on YoY basis. Reported PAT was up 15% YoY, due to a one-time gain (amounting to ~INR 14 cr. pre-tax) from the sale of fixed assets, classified under ‘Other Income’.

During the quarter, the performance of the domestic business was affected by significant trade destocking in Saffola Edible Oils in reaction to sharply falling vegetable oil prices and channel inventory adjustments in core portfolios triggered by the last leg of trade scheme rationalisation for correction of the historical Q1 revenue skew.

In the given context, domestic volumes grew in low-single digits, with a minor volume drop in Parachute Coconut Oil, low double digit volume growth in Saffola Edible Oils and flattish quarter for Value Added Hair Oils. Among the newer portfolios, Foods continued its strong run, while Premium Personal Care (including Digital-First portfolio) remained steady.

The International business maintained its healthy growth momentum as it delivered high single-digit constant currency growth during the quarter.

Consolidated revenue in the quarter declined in low-single digits on a year-on-year basis, dragged by pricing interventions in key domestic portfolios last year and further pricing drops in Saffola Edible Oils (amounting to a pricing decline of ~30% YoY) during the quarter.

The business has exhibited a healthy margin upside, and as indicated above, the company remains confident of resuming an upward trajectory across key growth parameters from hereon.