Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marico Ltd (BOM:531642, Financial) reported a sequential uptick in domestic volume growth, driven by steady trends across most portfolios.
- More than 90% of the business either gained or sustained market share and penetration on a MAT basis.
- The company launched Phase 1 of project SETU, which has shown promising initial results with direct coverage expansion in urban and rural markets.
- Foods segment registered a robust 37% growth, with the core oats portfolio growing at over 20%.
- Premium personal care sustained its healthy growth trajectory, led by digital-first brands, with Beardo expected to hit double-digit EBITDA margin this year.
Negative Points
- Pricing growth turned flattish on a YoY basis, impacting overall revenue growth.
- Value-added hair oils segment has been sluggish, with volume declining in low single digits due to competitive pressures and stock adjustments.
- The Bangladesh business faces challenges due to the current on-ground situation, which could impact future performance.
- There is a need for further price hikes in the Parachute brand if copra prices rise, which could affect consumer demand.
- The company is experiencing elevated cool inflation and spatial distribution of rainfall, which are key factors to be monitored for future performance.
Q & A Highlights
Highlights of Marico Ltd (BOM:531642) Q1 FY25 Earnings Call
Q: Can you elaborate on the strong growth in the foods business and the differentiation strategy for True Elements?
A: Saugata Gupta, CEO: The foods business saw high-teens organic growth, with oats growing at 20%. True Elements differentiates itself with a higher RPI and a focus on free-from products. The brand leverages Marico's procurement and supply chain advantages for cost efficiency.
Q: How is the current situation in Bangladesh affecting your business, and what are the EBITDA margins there compared to the consolidated margins?
A: Saugata Gupta, CEO: The strategy to reduce dependence on Bangladesh started four years ago. Despite challenges, the business fundamentals remain strong. EBITDA margins in Bangladesh are robust, and the company has weathered various black swan events in the past.
Q: What is the outlook for the value-added hair oils (VAHO) segment, given the current competitive landscape?
A: Saugata Gupta, CEO: The VAHO segment has faced challenges, particularly at the bottom of the pyramid due to competitive pricing. However, Marico is focusing on mid and premium segments, which are more profitable. The company aims to drive value share and growth in these segments.
Q: Can you provide an update on the performance and future plans for the Saffola brand, particularly in the context of pricing and volume growth?
A: Saugata Gupta, CEO: Saffola edible oil saw mid-single digit volume growth. The pricing base will stabilize from Q2, aligning revenue growth with volume growth. The brand is expected to maintain its growth trajectory without the need for further pricing actions.
Q: How will the recent initiatives like Project SETU impact your distribution and sales channels?
A: Saugata Gupta, CEO: Project SETU aims to expand direct distribution, enhancing market share and assortment levels in urban and rural stores. This initiative will take a couple of quarters to fully reflect in primary sales, but it is expected to drive long-term growth and profitability.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
