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Marico cuts ad spend by 18% in Q4FY20

The expenditure on advertising and promotions for the whole year were up 10% over the last year

Indian FMCG major Marico Limited reduced its advertising spend by 18% in the fourth quarter of the financial year 2020 compared to the corresponding quarter of the previous year. The company spent Rs 126 crore in Q4FY20, down 18% from Rs 153 crore in Q4FY19.

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The decline in ad spends for the quarter ending March 31 was 32% over the previous quarter. The company had spent Rs 185 crore in Q3FY20.

Advertising and Promotion spends in Q4FY20 at 8.4% of sales, were down 109 bps YoY (9.5% of sales in the corresponding quarter of the previous year), largely due to high spends on new products in the base quarter and rationalization of spends on discretionary segments of the portfolio. The company said it continued to invest in the core.

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For the whole year, Marico spent 10% more than the previous year. The total spent on advertising and promotions by the company was Rs 727 crore compared to Rs 659 crore in the previous year.

The company reported more than 50% decline in its net profit in the fourth quarter due to COVID-19 related disruptions over the corresponding period of the previous year. Its net profit stood at Rs 199 crore in Q4FY20 from Rs 403 crore in Q4FY19.

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Marico reported a net profit of Rs 1,043 crore in FY20, down 8% from Rs 1,131 crore.

Its net sales dropped 7.02 per cent to Rs 1,496 crore during the fourth quarter ending March 31, 2020 as compared with Rs 1,609 crore in the corresponding quarter of the previous year.

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"The company witnessed some encouraging signs in demand in its core portfolios until early March, which sharply diminished amidst COVID-19 outbreak as economic activity progressively slowed and adherence to social distancing norms became an imperative," Marico said in a post-earnings statement.

Saugata Gupta, MD & CEO, Marico Limited, commented, “The unfortunate outbreak of COVID-19 and consequent lockdown has brought about severe hardships to various sections of our society. Marico is committed to working with all stakeholders to make a difference to the lives of those affected. At this time, we are focusing on the movement of food and grocery items of daily use to our consumers, subject to all safety norms. While persistently soft consumption trends have led to muted volume growth in FY20, we have continued to gain market share in our core franchises on the back of our trusted leader brands.”

With the rising consciousness among consumers about personal health and hygiene, the Company introduced Mediker Hand Sanitizer in April’20 in three SKUs – 90 ml, 200 ml, 500 ml for INR 45, INR 100 and INR 250 respectively. Distribution of the range is being ramped up across all channels. The Company also launched Veggie Clean, a first-of-its-kind fruit and vegetable cleaner in April’20. The product will be available across Modern Trade.

Gupta said, “We will continue to invest behind our core portfolios, while also adapting to shifts in consumer behaviour that may be brought about by this unprecedented human crisis. We believe consumer consciousness towards health, hygiene and nutrition could be at an inflection point, which could be an opportunity for Marico, as it already has a portfolio of brands with a presence in some of these categories. We will continue to innovate with existing and new brands to meet these emerging consumer needs, while aggressively focusing on cost management and cash conservation in order to navigate through these challenging times.”

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