Marico misses estimates; Q4 net falls 3% to Rs 69.70 cr

FMCG player Marico missed street estimates on Thursday as Jan-March net profit fell 3% year-on-year to Rs 69.70 crore, due to exceptional gains in the year ago quarter.

Marico's fourth quarter EBITDA rose 44% from a year ago to Rs 114 crore.

Net sales in Jan-March quarter were Rs 917.71 crore, up 23% from a year ago. Volumes rose 17% in the three-month period.

Analysts on average had expected Marico to report a net profit of Rs 80 crore on revenue of Rs 938 crore, according to a CNBC-TV18 poll.

Marico shares slipped near 5% post the disappointing results. At 14:30 hrs, the stock was down 1.8% at Rs 177.10 on NSE.

In the year ago quarter, Marico had exceptional gains of Rs 75.5 crore from profit on sale of Sweekar cooking oil brand and reversal of provision of excise duty.

In the last quarter, Marico had exceptional loss of Rs 1.75 crore towards provision for impairment relating to Kaya Skin Clinics.

Its gross margins in Jan-March were at 27% compared with 23% in the year ago quarter. Full year EBITDA margin was around 11%.

Marico's raw material costs in the fourth quarter declined 1% to Rs 516.90 crore. However, advertising and promotional spends rose 77% to Rs 118.60 crore.

OUTLOOK

Marico expects a volume growth of 6-8% in coconut oils in the medium-term, driven by increased sales of its low-unit sized packs.

In hair oils, the company said, it will focus on market share gains through introduction of differentiated and innovative products and effective communication.

"A successful execution of this strategy is expected to result in annual volume growth of 15-17% over the next 2-3 years," it said.

Marico said it will build a "sizeable business" in the healthy foods space by leveraging the equity of Saffola premium refined edible oil.

Marico markets Saffola as healthier edible oil and has in past few years extended the brand to other healthier products like Arise, rice with low glycemic index and oats.

It aims to get 25% revenue of Saffola from healthy foods over three years.

Marico had raised prices across its Saffola oils portfolio and some Parachute Oil packs last fiscal, to offset input cost pressures. Copra prices were 20% higher in FY12 over FY11. Similarly, safflower oil and rice bran oil prices were up 28% and 34% respectively.

Although average copra prices have declined in last few weeks, in the short run, the company expects there may not be much easing of cost pressures and so margins may remain under pressure.

Last quarter, Marico had acquired personal care products business of Paras Pharmaceuticals from Reckitt Benckiser. This acquisition gives Marico an opportunity in the rapidly growing deodorant and male grooming categories in India and it expects the portfolio to grow faster than its existing products.

Marico's international business is expected to grow in "healthy" double digits and the company said it will continue to explore expansion opportunities in countries in Asia and Africa in the long-term. The company already has a strong presence in the Middle East, North Africa, South Africa, and Asian countries like Bangladesh and Vietnam. 

KAYA SKIN CLINICS

Same-store sales at Marico arm Kaya Skin Clinics grew 19% in the fourth quarter. It had revenue of Rs 279 crore in fiscal 2012 and made loss of Rs 29.1 crore at PBIT level.

Marico said there will be continued losses over the next few quarters, but it "feels reasonably confident" that Kaya will record "sustainable" profit in fiscal 2014.

Source: www.moneycontrol.com

Thanks,

Gaurav Agarwal 

Head Dealer

DENIP COnsultants Pvt Ltd