GCPL reports dip in December quarter profit amid weak urban demand, price surge | Company Business News

Mumbai-based Godrej Consumer Products Ltd (GCPL) on Friday reported a 28% dip in standalone December quarter profit due to what the company called “temporary headwinds” citing weak urban demand as well as surge in palm oil prices during the quarter.
Profit for the period stood at ₹341.54 crore down from ₹472.58 crore reported in the year ago period. December quarter revenue from operations grew 4% year-on-year to ₹2,237 crore. The maker of Cinthol soap reported flat volumes during the quarter citing weak demand in urban markets.
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“Demand conditions in India have witnessed temporary headwinds over the past few months, led by a slowdown in urban consumption. Surge in palm oil prices by more than 40% along with weak seasonality in household insecticides has led to a flat underlying volume growth and mid-single digit underlying sales growth for our standalone business,” Sudhir Sitapati, managing director and chief executive officer, GCPL, said in a statement Friday.
The company’s commentary mirrors that of Hindustan Unilever Ltd (HUL), which also reported flat volumes in the December quarter earlier this week. HUL attributed the weak demand to sluggish urban consumption.
The surge in palm oil costs negatively impacted GCPL’s Ebitda margin. The company’s reported standalone Ebitda margin at 22.6% was lower than the normative margin. Ebitda stands for earnings before interest, taxes, depreciation, and amortization.
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In Indonesia, the company reported 6% volume growth and Ebitda margin expansion. In organic terms, Africa, US and the Middle East sales grew by 1% in constant currency terms and declined by 8% in rupee terms.
The company’s home care category grew 4% year-on-year. Household insecticides were impacted by a relatively poor season. Premium formats have been impacted by the urban consumption slowdown; however, we have started to gain share amongst premium formats, which suggests that the RNF molecule is working amongst consumers, Sitapati said.
Last year, the company introduced a new Renofluthrin formulation (RNF) in its new GoodKnight Flash liquid vaporizer; the patented molecule makes GoodKnight Flash the most efficacious liquid vapouriser formulation for mosquito control.
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Meanwhile, its fabric care business delivered strong double-digit volume growth. Godrej Fab, the company’s new ₹99 liquid detergent has been scaled up nationally and continues to gain market share.
GCPL sells brands such as Cinthol soap, GoodKnight mosquito repellants and Expert Rich Crème hair colours.
In personal wash or soaps, the company reported a mid-to-high single digit decline in volumes during the quarter. The company hiked prices across its soaps portfolio to counter higher raw material prices.
“The company continues to witness significant cost pressures due to inflation in palm derivatives; significant price hikes taken across the portfolio. As communicated earlier, this will result in reduced underlying volume growth and increased underlying price growth; margin pressure to remain for the next few months,” the company said in its earnings presentation. Hair colour volumes grew in mid-single digits.
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