FMCG firms report poor Q2 results; expect better times ahead

FMCG firms report poor Q2 results; expect better times ahead

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Even as majors in India expected a revival in demand in the second half of the year, post a normal monsoon that bought a relief to drought-hit farmers almost after two years, the September quarter has been dismal in terms of volume growth.

Infact the volume sales of consumer products makers such as Hindustan Unilever () and hardly picked up in the quarter, making it one of the worst in more than a decade.

Hindustan Unilever, the largest FMCG company in the country, posted just 1.6 per cent year-on-year increase in its net sales for the second quarter while Dabur posted standalone revenue growth of just 2.3 per cent and ’s FMCG business grew 13 per cent, prompting everyone to concede that the overall market in the country remains “challenging”, but they said market conditions could improve in the next few months.

Coca-Cola India, too, reported 4 per cent decline in volumes for the July-September quarter, impacted by slowing discretionary spending, and consumers moving away to healthier drinks.

India’s biggest maker of household goods, HUL, reported a 1 per cent decline in sales volume growth, the first in 30 quarters, as price hikes, prompted by an increase in raw material costs, depressed demand further.

Net profit grew 11.54 per cent to Rs1,095.60 crore in the quarter ended 30 September from Rs 982.17 crore a year ago, the company said on Wednesday. Revenue rose 1.6 per cent to Rs 8,480.3 crore.

ITC, India’s biggest cigarette maker, said quarterly profit rose 10.5 per cent from a year earlier to Rs 2,500 crore, largely on account of an increase in operating profit from its cigarette business.

However, revenue growth was muted and slightly behind analyst expectations at 7.8 per cent. The company said it continued to battle “persistently sluggish demand environment”.

ITC posted Rs 13,491.37 crore in revenue from operations as against Rs 12,511.76 crore in the same period last year. Revenue from non-cigarette consumer goods segment grew 13.3 per cent over last year to Rs 2,671.66 crore.

While Dabur India’s September quarter profit rose 5 per cent to Rs 357.3 crore from Rs 340.2 crore a year earlier. Revenue grew at a poor 1 per cent to Rs 1,975.7 crore from Rs 1,955.3 crore in the year earlier.

Companies, however, are optimistic that the consumer demand would witness a revival on the back of good monsoons and the money from the seventh pay commission and OROP (one rank, one pension for army pensioners) coming in.