Marico (MARICO) Q4 00/01 earnings summary

Executive summary

• FY01 growth was driven by sustained volume gains in key brands, lower raw-material costs and cost management; PAT rose 28% to Rs 456.3 million and PBT rose 22% to Rs 499.3 million.

• Sales and services reached Rs 6,580 million, up 1.5% reported; at FY00 average prices and including Bangladesh turnover, comparable growth was 15%.

• Coconut oil franchise volumes grew 14% and refined edible oil franchise volumes grew 27% YoY.

Financial highlights

• Gross margin, measured as PBDIT before advertising and sales promotion, rose to 21.1% of sales from 17.1%; cash operating margin increased to 9.0% from 8.1%.

• Q4 FY01 sales and services were Rs 1,787 million vs Rs 1,700 million; PAT was Rs 107 million vs Rs 100 million. Annualized EPS for Q4 was Rs 29.5 vs Rs 27.7.

• Consolidated sales were Rs 6,707 million, up 3.2%; consolidated PAT reached Rs 458 million, up 28.3%, while PBT after exceptional items was Rs 502 million vs Rs 408 million.

• Advertising and sales promotion rose to 12.1% of sales from 9.1%, with nearly one-third of total spending directed to new products and markets.

Outlook and guidance

• FY02 volume momentum was expected to continue, with profits forecast to grow in line with volumes.

• Raw-material prices were expected to be firmer in FY02 after reaching lows in FY01; brand pricing power was expected to support margins through MRP increases as input costs rose.

• ERP and supply-chain management benefits, including lower costs and cycle times, were expected to accrue over several years starting FY02.