Marico Limited manufactures consumer products and services in the beauty and wellness space. The Company is known for its presence in the following categories: Coconut Oil, Hair Oils, Anti-lice Treatment, Premium Refined Edible Oils, and Fabric Care. Marico Limited is present in the Skin Care Services segment through Kaya Skin Clinics.
The share price of Marico Ltd fell by 1.39% to Rs 283 ahead of its results on 4th Mat 2020. the results were declared post market hours.
Marico's Q4FY20 Profit was in line with the street's expectation as volume growth declined by 3% amid the spread of Coronavirus which has resulted in a nationwide lockdown.
The Profit After Tax (PAT) for the company stood at Rs 199 crores which were down by 51% as compared to Rs 403 crores in the previous quarter ended in March 2019 because of tax adjustments in the previous years.
Key Highlights (YoY):
- Revenues declined by 7% to Rs 1,496 crores as compared to Rs 1,609 crores
- EBITDA declined by 6% to Rs 303 crores as compared to Rs 321 crores
- India volume growth declined by 3% while overall volume growth declined by 4%
- EBITDA margin and PAT margin stood at 20% and 13%
- Earnings per Share (EPS) stood at Rs 1.51 as compared to Rs 3.10
The India business was vastly affected by disruptions in the last fortnight of March, due to lockdowns initially enforced in some states and eventually all over the country, to contain the outbreak of COVID-19 in India. But for this disruption, the business would have delivered low to mid-single-digit volume growth during the quarter. In the last week of March, the Company was able to record sales largely in the Saffola Oils and Foods portfolio. However, the Indian business managed to post low single-digit volume growth in secondary sales in the quarter.
With COVID-19 turning into a pandemic, the overseas geographies were also impacted in varying degrees. The International business declined by 6% in constant currency terms with MENA and South Africa businesses posting sharp drops, while Bangladesh and Vietnam still ended in the green, given relatively limited restrictions imposed in these regions in March.
Segment-Wise Performance (YoY):
- Indian business declined by 8% to Rs 1,146 crores
- Parachute Coconut Oil (Rigid packs) was down by 8% in volume terms
- Value-Added Hair Oils were down by11% in volume terms
- Saffola (Refined Edible Oils) was up by 25% in volume terms
- International business declined by 5% to Rs 350 crores
Parachute Rigids had a flat FY20. Given the market construct and strengthening brand equity, the Company expects to grow volumes in the range of 5-7% over the medium term.
Value-Added Hair Oils has posted a 2% volume decline in FY20. The Company aims to revive volume growth in this franchise in the near term with focused pricing and marketing initiatives, innovation, driving premiumisation, scale-up of new launches, and active participation in the bottom of the pyramid segment.
Saffola Edible Oils volumes grew by 9% in FY20. The brand appears to have charted a sustainable growth path after a variety of channel/pricing/promotion measures taken over the last 18 months. The Company aims to sustain high single-digit volume growth over the medium term in this franchise.
Foods grew 31% in value terms in FY20. The Company will continue to innovate and broad-base its play in this category, thereby maintaining 20% plus CAGR over the medium term.
In FY20, the India business delivered volume growth of 1%, amidst a tough consumption environment, especially in rural, with acute liquidity stress crippling the traditional trade channel, fall in overall discretionary spending, delay in pricing interventions in the Parachute Coconut Oil, the underperformance of mid and premium segments of Value Added Hair Oils, and lastly, the unprecedented COVID-19 led disruption in the last fortnight of March.
With the first quarter of FY21 starting on a considerably bleak note due to the extended period of lockdown, the company says it is difficult to set an aspiration for FY21 until more clarity emerges in Q2. The estimated capital expenditure in FY21 is likely to be around Rs 125–150 crores.
Overall in FY21 Marico strives to maintain the operating margin at FY20 levels. However, the company would be comfortable maintaining an operating margin at 19% plus over the medium term.
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