Companies & Sectors
Higher input costs affects FMCG margins in Q2 despite rising sales

While HUL and Marico witnessed increased profits, others show poor profit growth

Fast moving consumer goods (FMCG) companies seem to be struggling under increased input cost burden. Only two among the companies that have declared their results so far - Hindustan Unilever (HUL) and Marico—seem to have avoided the predicament of rising sales and poor profit growth.

During the September quarter, most FMCG companies have reported higher sales but their profit growth remained in single digits or even lower than same quarter last year. Godrej Consumer Products (GCPL) reported a jump in sales of 23% while Colgate Palmolive’s revenues rose 19%, but those high sales figures did not translate into profits. GCPL’s operating profit for the second quarter stood at Rs138.13 crore, a mere 4% increase from the corresponding period last year. Colgate Palmolive was worse; with a mere 1% increase to Rs130.79 crore from Rs129.66 crore a year ago. For the same period, Dabur’s operating profit grew at 6% to Rs174.10 crore from Rs164.26 crore, though its sales grew 10% to Rs880.82 crore from Rs800.25 crore in September 2010.

Gillette has been the worst performer in this category, though the sudden collapse in profits may be attributed to a one-time issue. Despite a sales growth of 13% from September 2010 to September 2011, the company’s operating profit plunged 58%, to Rs25.58 crore from Rs60.47 crore. During the second quarter, Emami’s operating profits went down 9% to Rs54.72 crore from Rs59.84 crore a year ago.

Of the two excellent performers, Marico reported an operating profit of Rs96.40 crore up from Rs66.94 crore last September, a remarkable rise of 44%. HUL’s profits grew 28% to Rs 823.82 crore from Rs 641.47 crore in September last year. Sales growth of HUL in the September quarter was 18% while and Marico’s sales, for the same period, jumped 34% from Rs537.11 crores to Rs 718.34 crore.

HUL’s success has been attributed to strong volume growth. As for Marico, though the price of copra, the required raw material for its flagship brand Parachute coconut oil has gone up, Marico doesn’t plan any major hikes. Experts believe that next quarter, it may suffer a slowdown.

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EMC wins Rs776 crore contract from Power Grid

EMC will supply, erect, test & commission 765 kV double circuit transmission line worth Rs718 crore

Power system solutions provider EMC Ltd has bagged a contract of transmission line & substations together, worth Rs776 crore from Power Grid Corporation of India Ltd (PGCIL), the nation’s largest Power Transmission company.  

EMC will supply, erect, test & commission 765 kV double circuit transmission line worth Rs718 crore to be completed in 30 months, and supply, erect, test & commission 400kV substation worth Rs58 crore to be completed in a time frame of 24 months under Transmission System associated with LTOA Project in Tuticorin Area.

The 765 kV D/C Transmission Line of 410 km will be built between Tuticorin Pooling Station to Salem Pooling Station & the substation for construction at Salem, Madhugiri and at Tuticorin with 400 kV Substation as a whole.

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Lupin Q2 net profit zooms 23.7% to Rs266 crore

According to Lupin, steady product approvals, launches and growth across the US, Europe, Japan and India have helped the company deliver 25 quarters of consistent growth

Pharmaceutical company Lupin said that its consolidated net profit for the second quarter ended 30 September 2011 stood at Rs266 crore, a growth of 23.7% compared to Rs215 crore in the corresponding quarter of last fiscal.
During the same period, the company’s consolidated revenues rose 21.41% to Rs1,741 crore from Rs1,434 crore.

Dr Kamal Sharma, managing director, Lupin, said that “Steady product approvals, launches and growth across the US, Europe, Japan and India have helped us deliver 25 quarters of consistent growth.”

On Wednesday, Lupin ended at Rs475 per share on the Bombay Stock Exchange, 1.22% down from the previous close.

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