Marico ups ad spends in India by 14% in Q1FY19 on comparable basis

Indian FMCG major Marico Limited increased its advertising and sales promotions expenses by 14% in Q1FY19 on a comparable basis. The actual expenses for Q1FY19 were Rs 165.71 crore compared with Rs 163.92 crore in the same quarter of the previous year.

The company had spent Rs 118.88 crore on advertisement and sales promotion in the last quarter (Q4FY18).

The FMCG business in India achieved a turnover of Rs 1,628 crore, a growth of 23% over the same period last year.

Revenue from operations at Rs 2,027 crore grew by 20% (YoY). The India business volumes grew by 12.4% while the international business posted a constant currency growth of 7% (volume growth of 3%).

EBITDA was at Rs 355 crore, up 9% (YoY). EBITDA margin was at 17.5%, staying within the guided range for the medium term. PAT was at Rs 256 crore, up 10% (YoY).

Rural growth (28%) outpaced urban growth (16%) for the fourth straight quarter.

Modern trade (11% of the India turnover in FY18) grew by 39% in Q1FY19, fuelled by factors such as a comfortable and modern shopping experience, access to diverse categories as well as a wide variety of brands under a single roof and attractive prices. CSD (7% of the India turnover in FY18) grew 15%.

With the growing relevance of the digital marketplace, e-commerce (over 1% of India turnover in FY18) has become an integral pivot of growth. This business more than quadrupled during the quarter, albeit on a low base. E-commerce is expected to contribute more than 2% of the India business in FY19.

The healthy foods franchise grew by 23% in value terms. Saffola Masala Oats (SMO) maintained its momentum on the back of focused inputs and a renewed promotional campaign, continuing to dominate the flavoured oats category with a value market share of ~69%.

In Q1FY19, male grooming grew 44% in value of terms on a comparable basis. Investment in Zed Lifestyle (who owns Beardo) is likely to enhance the capability in e-commerce and salons over the medium term.

During the quarter, Marico’s International business grew by 7% in constant currency terms (volume growth of 3%). The operating margin (before corporate allocations) was at 20.0% in Q1FY19 against 20.9% in Q1FY18.

Commenting on the Q1FY19 performance, Saugata Gupta, MD & CEO, Marico Ltd., said, “We had a satisfactory start to the year delivering healthy topline growth coupled with a resilient margin performance. The domestic business recorded broad-based volume growth while the international business got off to a slower start. The prospects for the rest of the year look encouraging as off-take growth and market shares are trending favourably. We will continue to aggressively drive growth in core and new growth engines by investing behind brands and capability building.”

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