FMCG firms turn in weak Q4 numbers
The trend is evident across all FMCG companies that have released their fourth quarter results over the past few days.
Mumbai: Companies in the fast-moving consumer goods (FMCG) sector, which is a gauge to consumer demand and sentiment, have reported a relatively weak performance in the fourth quarter of financial year 2019, signifying a slowdown in the economy.
Companies like Hindustan Unilever, Godrej Consumer Products, Dabur India Ltd and Britannia Industries Ltd saw a soft fourth quarter where their volume growth was disappointing, mainly due to the slowdown in rural consumption.
In fact, the FMCG industry was slated to grow at least two percentage points slower than in the last quarter of 2018, according to consumer insights firm Nielsen, which has projected growth of 11-12 per cent for 2019 for the sector, revising downwardly from its previous forecast of 13-14 per cent.
The trend is evident across all FMCG companies that have released their fourth quarter results over the past few days.
On Friday, HUL, India’s largest listed consumer firm by sales, reported a slowdown in volume growth, in line with analysts’ estimates.
The FMCG major reported 13 per cent growth in net profit while volume growth dropped to 7 per cent. Biscuit maker Britannia Industries Ltd, which reported its numbers earlier this week, also witnessed a soft fourth quarter with 7 per cent volume growth year-on-year.
“We have delivered a strong performance for the quarter despite some moderation in rural market growth," said Sanjiv Mehta, Chairman and Managing Director of HUL.
In the preceding quarter volumes grew at a robust 11 per cent, given the low base in the year-ago quarter, which was impacted due to demonetisation and saw consumption contracting.
Godrej Consumer Products Ltd (GCPL) on Friday reported a 51.53 per cent increase in consolidated net profit to Rs 935.24 crore in the fourth quarter against Rs 617.19 crore in the year-ago quarter. However, its total revenue from operations during the quarter fell 3.06 per cent to Rs 2,481.72 crore from Rs 2,560.14 crore.
GCPL Executive Chairperson Nisaba Godrej said, "We delivered a relatively weak performance in the fourth quarter of fiscal year 2019. Our India business remained soft on account of a general slowdown in staples consumption and the adverse impact of the delayed summer on our portfolio."
The firm's total expense stood at Rs 1,974.73 crore, against Rs 2,016.65 crore, a drop of 2.07 per cent.
During the quarter, GCPL's India sales were marginally down 0.9 per cent to Rs 1,356.09 crore, while its international business sales grew 10 per cent on a constant currency basis.
On the outlook, Nisaba Godrej said, "For fiscal year 2020, we are planning for robust sales growth in India on the back of a continued focus on innovations and enhancements to our go-to-market model."
Another FMCG firm Dabur India Ltd on Thursday reported a fall of 6.46 per cent in consolidated net profit to Rs 371.49 crore for the fourth quarter from Rs 397.18 crore a year ago. Its total income stood at Rs 2,194.25 crore, a rise of 4.18 per cent. Revenue from the firm's consumer care business rose 6.62 per cent to Rs 1,788.56 crore, but its food business stood fell 4.88 per cent to Rs 279.07 crore.
"Dabur's domestic FMCG business recorded a growth of 13 per cent in 2018-19. The performance of our international business was, however, relatively muted due to a challenging macroeconomic environment," said Dabur India Chief Executive Officer Mohit Malhotra.
On the outlook, he said, "Going forward, we will continue to invest behind our brands to successfully tap the significant growth opportunities and deliver profitable volume-led growth." Stocks of these firms have taken a beating after the results.
(With Inputs from agencies)