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Marico Q1FY22 adspend up 27% YoY

However, the adspend was marginally up from the previous quarter

Indian FMCG major Marico increased its advertising and sales promotion spends by 27% YoY during the first quarter of the fiscal year 2022 as the company actively invested in its core franchises and recent foods innovations while maintaining a low-key in discretionary categories.

The company spent Rs 175 crore in the quarter ending June 30, 2021, 27% up from Rs 138 crore in the corresponding quarter of the previous year.

The adspend in the previous quarter was Rs 173 crore.

In Q1FY22, Revenue from Operations grew by 31% YoY to Rs 2,525 crores (USD 346 million) with underlying volume growth of 21% in the domestic business and constant currency growth of 21% in the international business.

Gross margin was down 759 bps YoY given the stark contrast in the cost of inputs consumed in the two quarters, as pricing interventions in the core portfolios could only partially alleviate the inflationary pressure. However, operating leverage benefits reduced the drop in EBITDA margin to 522 bps YoY, which stood at 19.0% in Q1FY22. As a result, EBITDA was up 3% YoY and recurring PAT was up 8% YoY. Reported PAT was down 7%, due to exceptional gain in the base quarter.

The Company holds its medium term aspiration of delivering 13-15% revenue growth on the back of 8-10% domestic volume growth and double-digit constant currency growth in the International business. The Company will aim to maintain operating margin above the threshold of 19% over the medium term.

Saugata Gupta, MD & CEO, said, “We have started the year with a healthy quarterly performance especially under the challenging circumstances arising due to the severe second COVID wave in India. The core portfolios continued to deliver good growth in the India business, while the new launches in Foods are rapidly gaining scale. Each of international businesses also recovered well on a year-on-year basis, thereby reaffirming stable medium-term growth prospects. We will continue to prioritize volume-driven growth and franchise expansion in the medium term, by focusing on growing and premiumising the core, aggressively scaling up foods, building a portfolio of strong digital-first brands and investing in distribution expansion.”

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