Marico: Q1FY15 Result Analysis

FMCG major Marico in its Q1FY15 financial performances have been able to beat the street estimates on the bottomline front. Consolidated net profit of the company grew by 17.5% on yearly basis to Rs 185.3 crore aided by higher revenue. Consolidated total income from operations jumped 17.4% to Rs 1,623 crore in the quarter ended June 2014 from Rs 1,382 crore in the year-ago period supported by the price increases taken across the portfolio during the quarter.

In the filing the  company has said that the topline was driven by an overall volume growth of 5% with a 6.5% volume growth in India. The domestic business recorded a growth of 28% while the International business posted a growth of 16%. 
Volume growth for its key brands like Parachute, Saffola and value added hair oils came in at 6%, 10% and 11% respectively.

On the operating front, EBITDA jumped 16% on YoY basis to stand at Rs 267 crore in first quarter of current fiscal. However, on the margins front, the comapany’s performance has been disappointing. Margins declined by 20 bps to 16.4% in the quarter gone by due to sustained uptick in copra prices and high base despite price hikes. 
The company believes that an operating margin for the domestic business in the band of 17 to 18% and is sustainable in the medium term.

Marico International operating profit margin slipped significantly to 18.2% during the quarter compared to 13.3% in corresponding quarter of last fiscal. Advertising spends increased 9.1% to Rs 192 crore during the quarter from Rs 176 crore in same quarter last fiscal and the same as a percentage of sales declined 90 basis points on yearly basis to 11.8% in the quarter gone by.