Marico sees 6.5% YoY spurt in Q1FY24 ad spends

FMCG major Marico has reported a 6.53% increase in its spending on advertising and sales promotion on a YoY basis in the April-June quarter of the current fiscal year.

As opposed to Rs 199 crore spent on advertising in Q1 of FY23, the parent company of Nihar Naturals, Parachute Advanced and Saffola amongst others had allocated ad budgets worth Rs 212 crore in Q1FY24.

While the company’s A&P was up by 8.6% in FY2023, it is estimated to rise by 9% this fiscal year, as mentioned in the company statement.

Marico’s Net profits for the quarter ended June 31, 2023, also stood at Rs 436 crore, which is a 15.65% spike (YoY) when compared to Q1FY23’s Rs 377 crore.

However, the Harsh Mariwala-led company witnessed a 2.02% decline in its total income, on a YoY basis, during the first quarter of FY24 as it mustered Rs 2,523 crore this year. The corresponding quarter of the previous fiscal year saw the company amass Rs 2,575 crore.

That being said, the total expenses of the company also stood at Rs 1,956 crore in Q1FY24 which is 5.78% down from Rs 2,076 crore it spent during Q1 of FY23.

In its filing, the FMCG major also highlighted that the downtrend in retail inflation has continued and stood at 4.8% in the quarter ended June 31, 2023. While the FMCG volume growth has stayed in positive territory and pricing growth tapered sequentially, it is likely that the volume-led growth will continue further.

“Pricing drops in key domestic portfolios and currency headwinds in international markets subdue revenue growth,” said Marico in its earnings presentation.

It further added that while growth remained urban-led, rural consolidated on a lower base and that from a category standpoint, packaged foods continued its good run, while beauty and personal care largely mirrored the trajectory of rural growth.

“The progressive moderation in commodity and retail inflation continues to infuse optimism for a gradual recovery in volume growth, led by the rural sector. However, it will be critical to monitor the spatial distribution of rainfall and impact of recent erratic weather patterns on the agricultural cycle and consequently, rural incomes,” it said.

The company's revenue from the domestic market was down 4.89% at Rs 1,827 crore in Q1 of FY24. It was Rs 1,921 crore a year ago.

“Domestic revenue was down 5% on a year-on-year basis, owing to pricing interventions in key domestic portfolios last year and further pricing drops in Saffola Oils during the quarter under review," it said.

Marico's revenue from the international business increased by 2% to Rs 650 crore against Rs 637 crore a year ago.

“The International business continued its strong momentum and delivered constant currency growth of 9%, amidst macroeconomic and currency devaluation headwinds in some of the geographies,” it said.

Over the outlook, Marico said though business in Q1 was marred by one-offs, it expects to resume an “improving trajectory in volume growth” in the near term, given the sustained healthy trends in offtakes, market share and penetration across our key franchises.

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