Marico, one of India’s leading consumer products companies in the beauty and wellness space, recently released its Q3 FY24 business update. Marico reported that its domestic volumes in Q3FY24 grew in low single digits on a year-on-year basis. However, the company noted that rural markets offered little to cheer, exhibiting similar demand trends on a sequential basis. This indicates that while urban markets remained steady, rural markets continued to face challenges.
Marico highlighted that constraints on liquidity and profitability in the general trade channel remained an overhang for the sector. Additionally, the company mentioned that Saffola Oils witnessed an optically weak quarter, and value-added hair oils posted low single-digit value growth amidst sluggishness in bottom-of-the-pyramid segments. These factors contributed to the overall performance of domestic volumes.
Despite the challenges in the domestic market, Marico’s international business delivered mid-single-digit constant currency growth. The company reported transient macro headwinds in the Bangladesh market but noted that the rest of the geographies held strong. Marico’s consolidated revenue declined in low single digits on a year-on-year basis in Q3FY24. This decline was attributed to pricing corrections in the key domestic portfolio and significant currency depreciation in select overseas geographies. However, the company expects robust gross margin expansion due to a drop in key input prices. Marico anticipates low double-digit operating profit growth on the back of a healthy expansion in operating margin.
The company remains optimistic about a gradual uptick in consumption trends in 2024, driven by improving macroeconomic indicators, continued government spending, and conducive consumer pricing across categories. The company maintains its aspiration of delivering sustainable and profitable volume-led growth over the medium term, leveraging the strength of its core franchises and new engines of growth.
RTM Watch’s Take
Marico’s Q3 business update reflects the challenges faced by the FMCG industry, particularly in the rural market. Weak rural demand, liquidity constraints, and pricing corrections have impacted the company’s domestic volume growth. However, Marico’s international business has shown resilience, delivering mid-single-digit constant currency growth. The company’s focus on gross margin expansion and operating profit growth positions it well to navigate the current market conditions and achieve its full-year margin guidance. Looking ahead, Marico remains optimistic about the gradual recovery of consumption trends, driven by improving macroeconomic indicators and government initiatives.
