Marico Q2 ad spends increase by 25.82% YoY to Rs 268 crore

FMCG major Marico has upped its advertising spending by 25.82% YoY in the second quarter of the current fiscal year. It spent Rs 268 crore on advertisement and sales promotion in Q2FY24 as against Rs 213 crore it had spent in the corresponding quarter of the previous fiscal year.

On a half-yearly basis, the conglomerate increased its spending on advertising by 16.50% on a YoY basis as it allocated an ad budget of Rs 480 crore in H1FY24 as opposed to Rs 412 crore it spent during the first half of the previous fiscal year.

The total income of the FMCG major in the quarter ended September 30, 2023, declined marginally by 0.04% YoY as the company amassed Rs 2,514 crore this time juxtaposed to Q2FY23’s Rs 2,515 crore.

When drawing a line of comparison between H1FY24 and the corresponding period of the previous fiscal year, it was also found out that Marico’s total income stood at Rs 5,037 crore in the first half. In the previous fiscal, the brand had clocked in a total of Rs 5,090 crores in the same period.

Additionally, the total expenses of the conglomerate also dropped by 3.64% YoY.

In Q2FY24, Marico had spent Rs 2,038 crore on the cost of materials consumed, purchase of stock in trade, changes in inventories, employee benefits expense, finance costs, depreciation and amortisation expenses in addition to others including advertising.

However, in the corresponding quarter of the previous fiscal year, it had incurred a total expense of Rs 2,115 crore.

Similarly, on a half-yearly basis, the company’s total expenses went down 4.70% YoY to Rs 3994 crore in H1FY24 as compared to the previous year wherein the same stood at Rs 4191 crore.

The FMCG player’s Net Profit for the period on the other hand spurted by 17.26% YoY to Rs 360 crore in Q2FY24 as against Rs 307 crore in Q2FY23.

In comparison to H1FY23, the Net Profit of Marico increased 16.37% YoY to Rs 796 crore in H1FY24. Last time around, the same stood at Rs 684 crore.

During the quarter and half year ended September 30, 2023, the company, in its regulatory filing, also mentioned that it acquired a 32.84% stake (equivalent to 32.75% on a fully diluted basis) and signed definitive agreements to acquire further stake of Satiya Nutraceuticals to increase on a fully diluted basis for a consideration aggregating up to Rs 369 crores in tranches by May 2025.

The India business delivered a turnover of Rs 1832 crore in Q2FY24, down 3% on a YoY basis, lagging volume growth due to price corrections in key portfolios in the last 12 months.

Parachute Rigids registered 1% volume growth amidst subdued consumer sentiment, while the

franchise gained ~35 bps in market share on a MAT basis. With pricing cuts coming into the base, value growth should mirror volume growth from Q3.

Value-Added Hair Oils grew by 1% in value terms, reflective of a slower recovery in mass personal care categories. Value growth on a 4-year CAGR basis was at 4%.

Saffola Edible Oils posted low single-digit volume growth, holding onto a strong base, despite vegetable oil prices remaining volatile during the quarter. Volume growth on a 4-year CAGR basis was in the high single digits. Revenue decline was in the low twenties on a YoY basis due to pricing corrections over the last 12 months.

Foods continued its steady growth trajectory with 25% value growth YoY. The franchise is largely on- course to reach its FY24 revenue aspirations.

Saffola Oats maintained its category leadership, while Honey and Soya Chunks continued to scale up well. Peanut Butter, Mayo and Munchiez have also been gaining traction. True Elements and Plix act as differentiated growth drivers to Marico’s Foods play.

Premium Personal Care also delivered a steady performance in the quarter. The digital-first portfolio clocked an exit ARR of over Rs 350 crore in Q2. The share of Foods and Premium Personal Care was at ~20% of domestic revenues in Q2.

Commenting on the quarterly update, Saugata Gupta, MD and CEO, said, “The domestic and overseas businesses have delivered a fairly resilient performance amidst a challenging operating environment in the first half of the fiscal. We have made substantial progress towards achieving the diversification objective set for the year with Foods and Digital-First portfolios scaling up on expected lines.”

“We are also on course to deliver robust gross and operating margin expansion this year, even while ramping up brand-building investments to strengthen the equity of our franchises. We continue to hold the aspiration of exhibiting an improvement across key performance parameters on a full-year basis,” he added.

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