Marico (MARICO) Q4 97/98 earnings summary

Executive summary

• FY97-98 turnover grew 19.6% to Rs 4,900m; all product categories delivered double-digit volume growth of 10%–22% despite intense competition.

• Leadership positions strengthened across core brands; post-tax profit rose 50% to Rs 300.4m, partly reflecting a recovery from FY96-97 profit deceleration.

Financial highlights

• Sales and other income reached Rs 4,915.8m, up from Rs 4,118.2m; PBT rose 32% to Rs 364.9m and PAT increased to Rs 300.4m from Rs 200.8m.

• PBDIT was Rs 489m, up 27.4%; operating margin improved to 10% from 9.4%, while net margin rose to 6.1% from 4.9%.

• Raw-material cost fell to 56.2% of sales from 59.0%; advertising and sales promotion increased to 8.3% of sales from 5.9%, including spending on Parachute restaging and new products.

• Finance charges declined 22% to Rs 59m from Rs 76m; other expenses included a Rs 26m non-recurring item.

Outlook and guidance

• FY98-99 outlook described as promising, but FY98’s 50% profit growth was partly a correction of prior-year deceleration and may not be fully sustainable.

• Raw-material availability expected to be broadly satisfactory except safflower; supply and price fluctuations could affect quarterly revenue and profits.

• Growth plans emphasized consolidation, aggressive expansion of three businesses and greater focus on value-added brand extensions; surplus funds intended for judicious deployment, including growth opportunities and acquisitions.