CHENNAI/BENGALURU (Reuters) – India’s Marico, which owns the Saffola and Parachute brands of packaged oils, reported a smaller-than-expected quarterly profit on Monday as neither price cuts nor new product ranges could sway customer demand.
The consumer goods major said its consolidated net profit rose 5.3% to 3.18 billion rupees ($38.1 million) for the fourth quarter ended March 31, from 3.02 billion rupees a year earlier. Analysts, on average, had expected a profit of 3.23 billion rupees, as per LSEG data.
Marico, which also owns the Set Wet and Livon brands of haircare products, has been doubling down on new launches in the last few quarters, including hair creams and shower gels, to boost its availability in rural markets.
The company also slashed prices in crucial domestic portfolios such as Parachute hair oil and aftershower gels.
However, none of this induced Marico’s inflation-hit customers to buy its products, with major segments such as hair oil declining on a high base.
This, coupled with higher prices of raw materials such as copra, squeezed its bottomline as demand for its packaged oil bounced back later in the quarter. Copra, the dried coconut from which coconut oil is extracted, is key for the production of its Parachute coconut oil.
Revenue from operations rose 2% to 22.78 billion rupees, snapping a three-quarter run of falling revenue, but missed analysts’ average estimates of 22.87 billion rupees by a small margin.
Marico’s shares turned volatile at the close of trade as results came in 15 minutes before the closing bell, before ending 2.6% higher. They are down 2.8% so far this year.
Among peers, Hindustan Unilever missed quarterly earnings estimates but said a recovery in demand in rural areas is underway, while Nestle India reported a bigger-than-expected rise owing to higher product prices.
($1 = 83.4530 Indian rupees)
(Reporting by Praveen Paramasivam in Chennai and Ashna Teresa Britto in Bengaluru; Editing by Janane Venkatraman)
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