The surge in palm oil and derivatives prices to the extent of a y-o-y increase of 20-30% has impacted the soaps category, which represents around 1/3rd of the company’s standalone business revenue. To partly offset the cost increases the company have taken price increases, reduced grammage of key packs and reduced various trade schemes. Such pricing actions typically have minimal impact on category consumption but do result in reduced inventory across wholesale and household pantry.
The company said that the weather conditions have not been supportive (delayed winters in North and cyclone in South India) to the Home Insecticides (HI) segment, contributing approximately 1/3rd of its standalone business. This has impacted HI category growths in the current quarter.
The rest of the portfolio is demonstrating robust performance and expected to deliver double digit UVG. However, given the significant contribution of Soaps and HI to the overall business mix, the standalone business is expected to report around flattish UVG and around mid-single digit sales growth in this quarter.
The standalone business has historically had normative EBITDA margins in the range of 24-27%. The previous year's third quarter (Q3 FY24) had delivered exceptional margins of 29.7%, outside of the company’s normative range, driven in part by favorable commodity prices. Due to confluence factors, the company anticipates a temporary downward breach of the normative margins this quarter.
The FMCG company said that its international business continues to do well on their relevant strategic objectives. Indonesia business is expected to deliver continued superior performance with mid-single digit volume growth and high single digit sales growth. In line with its earlier guidance, the GAUM (Godrej Africa, USA, and Middle East) organic business is expected to see volume decline due to reduction in trade stocks and portfolio simplification. The effects of these actions would be largely completed in Q3 FY25 and it is likely to be fourth consecutive quarter of healthy EBITDA margins for GAUM.
Godrej Consumer Products is an Indian consumer goods company. The company's products include soap, hair colorants, toiletries and liquid detergents.
The company’s consolidated net profit increased 13.53% to Rs 491.31 crore on 2.3% rise in total income to Rs 3,752.32 crore in Q2 FY25 over Q2 FY24.