Marico beats Q2 profit estimates on price hike

Indian consumer goods maker Marico on Tuesday reported second-quarter profit well above market estimates, driven by a price hike to offset higher raw material prices.

The company reported a nearly 20% rise in consolidated net profit to ₹4.23 billion ($50.3 million) for the three months ended September 30.

Analysts had expected a profit of Rs 3.86 billion, according to data compiled by LSEG.

To compensate for the 25% year-on-year increase in prices of copra, the main raw material used to produce coconut oil, Marico raised product prices in India.

The price increase includes a 15% increase in its edible oil segment.

“Pricing growth for the segment remained positive on a year-on-year basis as brands effected price increases in response to rising commodity prices,” Marico said in a statement.

It said its gross margin increased by 30 basis points from a year ago as healthy margin improvement offset the increase in input costs.

Sales volumes of “parachute” coconut oil – its largest segment by domestic revenue – rose 4%, while revenue rose 10%.

Meanwhile, sales volumes of Marico’s “Saffola” brand of edible oils remained stable year-on-year, while revenue increased by 2% due to higher prices.
Marico’s revenue from operations rose 7.6% to Rs 26.64 billion.

The company projected domestic revenue growth in the second half of the fiscal year to be in the double-digit percentage range, and said it expected international trade to maintain double-digit percentage constant currency growth.

Marico and rival Adani Wilmar have posted solid results largely due to demand for cooking oil.

This is in contrast to Nestle India, Hindustan Unilever and ITC, which reported weak earnings due to lack of demand.