During the quarter, the overall FMCG volume trends in India continued to show gradual improvement on a 2-year CAGR basis. The trajectory in rural areas showed more promise, while urban areas remained stable. Both HPC (Home and Personal Care) and Food segments witnessed an uptick, with the former experiencing a more pronounced pickup over the last six months. Premium segments outpaced mass segments, and alternate channels gained significance compared to General Trade (GT).

The volume growth was supplemented by price hikes in the Coconut Oil portfolio, which more than offset the residual base impact of pricing cuts in the Saffola Oil portfolio. Key portfolios saw healthy off-takes, with more than 90% of the business either gaining or sustaining market share and penetration on a MAT basis.

The execution of Phase 1 of Project SETU in six states, representing a mix of stronghold and opportunity markets, has yielded promising initial results. This phase has led to direct coverage expansion in both urban and rural markets. In FY25, the company plans to scale up Phase 1 markets and expand into more states.

The international business sustained its double-digit constant currency growth momentum, with each key market delivering broad-based growth.

Gross margin expanded by 230 basis points year-on-year. Advertising and promotion spending increased by 13% YoY. The EBITDA margin stood at 23.7%, up 50 basis points YoY, with EBITDA grew by 9%. Profit after tax (excluding one-offs) increased by 12% due to a lower effective tax rate (ETR) during the quarter. This excludes the one-off gain on the sale of fixed assets, classified under ‘Other Income,’ in the base quarter. Reported PAT growth was 9%. The ETR is expected to be 22.5% in FY25

Category Growth

Parachute Rigids registered a 2% volume growth. Volume off-takes grew 8% during the quarter. The brand asserted its stronghold in the category with ~100 bps gain in market share during the quarter. The volume market share of the composite Coconut oil portfolio reached higher levels at ~64% on a MAT basis.

Value-Added Hair Oils declined 5% in value terms amidst persistent sluggishness and competitive headwinds in the bottom of the pyramid segment. Mid and premium segments of franchises continued to fare relatively better. The value market share of the franchise was up ~60 bps during the quarter and consolidated at 27% on a MAT basis.

Saffola Edible Oils delivered mid-single-digit volume growth as input and consumer pricing remained stable.

Foods posted robust 37% value growth YoY. Saffola Oats delivered 20%+ growth, while the relatively newer franchises also scaled up on expected lines. True Elements and Plix maintained their accelerated growth momentum.

Premium Personal Care sustained its strong growth trajectory during the quarter, led by the Digital-first portfolio. Beardo continued to scale well and is on course to deliver improved profitability in line with expectations. Just Herbs and Personal Care portfolio of Plix continued to gain traction.

Earlier this month, the Company announced that it will collaborate with renowned dermatological solutions provider, Kaya Limited, to advance in the personal care segment. Under this arrangement, the Company will have exclusive rights to scale up Kaya’s range of efficacy-based personal care products outside of its clinics. This strategic initiative presents a Rs 100 crore revenue opportunity over the next 4-5 years and will add another growth lever to Marico’s Premium Personal Care led Digital Business.

In international business, Bangladesh achieved 10% constant currency growth, maintaining resilience and momentum. South-East Asia was flat in constant currency terms, as the recovery in HPC demand in Vietnam was offset by a weaker quarter in Myanmar. MENA delivered 20% constant currency growth, with both the Gulf region and Egypt performing well. South Africa saw a 28% constant currency growth, driven by the ethnic hair care segment. NCD and Exports reported 14% growth.

Saugata Gupta, MD & CEO, said, “The new fiscal has started on a promising note for both the domestic and international businesses with revenue growth visibly turning a corner. We expect to sustain the improving trajectory in the core domestic business on the back of consistent market share and penetration gains coupled with the ongoing initiatives to revive growth in traditional trade and expand direct reach under Project SETU. We will also maintain a steadfast focus on the profitable scale-up of the Foods and Digital-first brands. The international business has been veritably consistent over the last few years and is expected to maintain its double-digit constant currency growth momentum. We will aim to deliver on each of the key performance parameters and drive healthy revenue-led earnings growth in the near and medium term.’’

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In the March quarter, LT Foods posted revenue of Rs 2,092, crore, which is 14% higher than what it recorded in the corresponding period last year. Gross Profit stood at Rs 689 crore, up 13% YoY. Profit after tax at Rs 150 crore showed a 14% YoY growth.

The company’s three key segments – Basmati & Other Speciality Rice, Organic Food & Ingredients, and Ready-to-Eat (RTE) & Ready-to-Cook (RTC) –  collectively delivered an impressive 12% year-on-year growth. “Specifically, Basmati & Other Speciality Rice segments have continued to outperform, showing a remarkable 17% YoY growth. Our RTE & RTC offerings, tailored for modern consumers, gained considerable traction, and the segment contributed to our overall revenue with a 23% YoY growth. This consistent performance underscores our strategic focus on continuous investment on brands across geographies and innovation, which has significantly bolstered our domestic and international market position,” said Ashwani Arora, Managing Director & CEO, LT Foods.

He added that the market share of flagship brand, Daawat in India stands at 30% (MAT March’24; AC Nielsen Retail Survey Audit). At the same time, the number of households consuming LT Foods products grew by 10.2% (vs. branded package rice growth of 2.8%) to reach 50.22 Lakh households (Kantar Households Panel Branded Basmati Rice MAT March‘24).

Commenting on the company’s performance in its major overseas markets, Arora said that flagship brand Royal continues to command more than 50% market share in the United States. In the Middle East, the brand reported a growth of 42% whereas in Europe it is growing at 11%. “Globally, our premium segment grew by 9.7% during FY’24. This growth is a testament to our strong brand equity, well-entrenched distribution network, innovative product portfolio, and targeted marketing strategies,” said Arora.

Looking ahead, LT Foods aims at solidifying its position further in the core Basmati and Specialty Rice segment while continuing to strengthen its presence in the Organic Food and ingredients and the RTE & RTC segment as well.

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In his statement, Suresh Narayanan, Chairman and Managing Director, Nestle India, said, “I am pleased to share that we have delivered double-digit growth, despite challenges posed by rising food inflation and volatile commodity prices. We have witnessed a strong growth momentum across our product portfolio led by a combination of pricing and mix.”

Nestle reported an increase in its Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) of 21.8% to Rs. 1,337.7 crore from Rs. 1,098,7 crore. It also indicated that the EBITDA margin improved by 270 basis points (bps) to 25.4% from 22.7%, YoY.

In its statement, the company has highlighted some concerns too that it will have to deal with. “Commodity prices are seeing unprecedented headwinds in Coffee and Cocoa with all time high prices and an ongoing price rally. Cereals and grains are going through a structural cost increase backed by MSP. Milk prices are expected to rise on account of expected harsh summer.”

The Q4 results have been declared in the backdrop of a major controversy that the company finds itself in regarding the levels of sugar content in baby food. The row started after a global report published by Swiss NGO Public Eye was released that claimed Nestle’s product had high sugar content. Indian food safety regulator FSSAI has launched a drive to collect samples of Nestle’s Cerelac baby cereals from across the country.

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Despite these figures falling slightly short of analysts’ expectations, the company maintained a steady dividend payout strategy. Hindustan Unilever declared a final dividend of Rs 24 per share for FY24, adding to the interim dividend of Rs. 18 per share paid on November 16, 2023. Consequently, the total dividend for FY24 stands at Rs 42 per equity share of face value of Rs. 1 each.

The company’s homecare segment, its biggest one, which houses brands like Surf Excel and Comfort, posted mid-single-digit percentage volume growth led by outperformance in Vim liquid.

Rohit Jawa, CEO and Managing Director, expressed optimism about the company’s performance, highlighting a resilient 3% USG and surpassing the Rs 10,000 crore Net Profit milestone in FY24. He emphasized the strategic focus on operational excellence, gross margin improvement, and increased investment in brands and long-term capabilities.

Jawa outlined the company’s forward-looking approach, anticipating a gradual improvement in consumer demand driven by favorable factors such as a normal monsoon and positive macro-economic indicators. He underscored confidence in the medium to long-term potential of the Indian FMCG sector, citing rising affluence, under-indexed FMCG consumption, and robust digital infrastructure as key drivers.

In alignment with their strategic vision, Hindustan Unilever is committed to a transformative journey labeled ‘Transform to Outperform.’ This initiative is characterized by core objectives including enhancing brand superiority, market expansion, premiumization, portfolio optimization, and leadership in future channels.

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