Companies

As demand returns, FMCG majors post strong Q3

Nandana James | | Updated on: Dec 06, 2021

Improving consumer confidence and receding impact of the pandemic boosted demand | Photo Credit: yalcinsonat1

HUL profits up 18.82%, Marico’s 13.4%; Emami net jumps 44.6%

FMCG companies are seeing demand rising on the back of falling Covid-19 cases, increased mobility, resumption of economic activities led by a strong rural demand, and a pick-up in urban demand. Hindustan Unilever, Marico and Emami on Wednesday reported double-digit growth in their profits for the third quarter.

HUL posted a consolidated net profit of ₹1,938 crore in the quarter ended December 31, an increase of 18.82 per cent compared to the year-ago period’s ₹1,631 crore.

Marico clocked a consolidated net profit of ₹312 crore, 13.04 per cent higher than that in the third quarter of FY20. Emami reported a consolidated net profit of ₹208.96 crore, a 44.6 per cent jump over the corresponding previous period. HUL’s domestic consumer volumes (excluding the impact of the merger of GSK CH and acquisition of VWash) grew 7 per cent during the quarter, while Marico posted a jump of 15 per cent, and Emami 13 per cent.

‘Worst is over’

Sanjiv Mehta, Chairman and Managing Director, HUL, said the worst is over now for the FMCG sector and the company. Rural demand has proven to be resilient owing to the government’s interventions, he said, adding that while urban demand — in the negative territory earlier — has turned positive in Q3, and is picking up. HUL said that 86 per cent of its business gained penetration during Q3, with its health, hygiene and nutrition segment — which forms around 80 per cent of its portfolio — continuing to grow in double-digits.

Amidst steadily improving consumer confidence and the receding impact of the pandemic, Marico saw robust demand across 95 per cent of its portfolio, the company said in a statement. Its foods portfolio posted a value growth of 74 per cent. Emami saw all-round growth across major brands, with its healthcare range growing by 38 per cent in Q3.

All three companies also said that the e-commerce channel is showing growth. HUL’s e-commerce channel now contributes 5-6 per cent to its turnover compared to three per cent earlier.

Price rise

“Inflationary pressures are building up in select commodities,” said HUL’s Mehta. Both HUL and Marico have raised prices of certain products due to this.

“Now that the supply side constraints are getting over, if we can put a stimulus on the demand, it is bound to get dividends. That’s what, perhaps, we can hope the government to do in the coming Budget,” said Mehta

Published on January 27, 2021
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