Godrej Consumer Products Limited Q1FY23 Result

Sudhir Prajapati of HUL

Mumbai, August 06,2022: Godrej Consumer Products Limited (GCPL), aleading emerging markets FMCG company, today announced its financial results for the quarter endingJune30, 2022

FINANCIAL OVERVIEW

1QFY 2023 FINANCIAL PERFORMANCE SUMMARY:

  • 1QFY 2023 consolidated sales grew by 8% year-on-year; 3-year CAGR 10%
  • India business salesgrew by 12% year-on-year, 3-year CAGR 12%
  • Indonesia sales declined by9%in INR and12% in constant currency terms,year-on-year; 3-year CAGR -2% in constant currency
  • Africa, USA and Middle East sales grewby 12% in INR and constant currency terms, year-on-year; 3-year CAGR 11% in constant currency
  • Latin America & SAARCsales declinedby5% in INR and grew 15% in constant currency terms,year-on-year; 3-year CAGR 28% in constant currency
  • 1QFY 2023consolidated EBITDA declined by 13%year-on-year (without one-offs)
  • 1QFY 2023 consolidated net profit declined by 16% year-on-year (without exceptional items and one-offs)

MANAGING DIRECTOR AND CEO’SCOMMENTS

Commenting on the business performance of 1Q FY 2023, Sudhir Sitapati, Managing Director and CEO, GCPL, said:

We delivered a steadyperformance in 1QFY2023. Overall sales grew by 8%with 3-year CAGR in doubledigits. However, this growth was driven by pricing. We continue to believe that with the relatively non-discretionary, mass pricing of our portfolio and very good performance on market shares, volume growth will return in the medium term. Our overall EBITDA declined by 13% (without one-offs) driven by unprecedented global commodity inflation, upfront marketing investments and a weak performance in our Indonesia and Latin America & SAARC businesses.PAT without exceptional items and one-offs declined by 16%.

From a geography perspective, India grew steady at 12%. Our Africa, USA and Middle East business continued its robust growth trajectory, growing at 12% in INR and in constant currency terms. Performance inour Indonesian business was weak, declining by 9% in INR and 12% in constant currency terms. From a category perspective, in India, we saw continued momentum in Personal Care, which grew by 25%. Home Care delivered a soft performance and declined by 4%.

With inflationary pressures abating, we expect recovery in consumption and gross margins alongside continued higher marketing investments with a significant focus on reducing controllable costs.

We continue to have a healthy balance sheet and our net debt to equity ratio continues to drop. We are on a journey to reduce inventory and wasted cost and are deploying this to drive profitable and sustainable volume growth across our portfolio through category development.  

Weremain committed to our purpose of bringing the goodness of health and beauty to consumers in emerging markets.

BUSINESS UPDATE – INDIA

Performance Highlights

  • 1QFY 2023India sales grew by 12%to INR 1,814crore; volume declined by 6%
  • 1QFY 2023 EBITDAdeclined by 4% to INR 408crore
  • 1QFY 2023Net Profit without exceptions and one-offdeclinedby 2% to INR 319 crore

Category Review

Home Care

Home Caredeclined by4% with a 2-year CAGR of 8%.

While we delivereda soft performance in Household Insecticides, on the back of a high base and relatively muted season, we continued todeepen penetration and gain market shareon MAT basis. We are seeding in category development initiatives to drive sustainable growth. We launched anew campaign for Goodknight liquid vaporiser #NeendoKoNazarNaLageandfor HIT.Our non-mosquito portfolio continues to deliver strong growth momentum.

Air Fresheners witnessed strong performance, led by an uptick in the category, and we continue to gain market share on MAT basis. Our category development initiative around driving relevance for Aer Power Pocket and premiumisation through Aer Matic (‘If bathrooms/rooms could talk’) is receiving encouraging consumer response.

Personal Care

Personal Care grew by 25% with a 2-year CAGR of 21%.

Personal Wash & Hygiene maintained its growth momentum,delivering double-digit sales growth and a2-year CAGR in doubledigits. We continue to gain market share on MAT basis and deepen penetration led by category development initiatives. We are strengthening our value-for-money and green proposition with the launch of the affordable and sustainable ready-to-mix Magic Bodywash priced at INR 45.

Hair Colourwitnessed strong growthdriven by category uptick with a 2-year CAGR in double digits. Godrej Expert Rich Crème continues to perform well and gain market share,backed by strong marketing campaigns.Furthermore, the initial response to Godrej Expert Rich Crème’s at INR 15 is encouraging.

BUSINESS UPDATE – INDONESIA

Our Indonesia business delivered a weak performancewith asales decline of 12% in constant currency terms. Sales excluding Hygiene (Saniter) saw a decline of 4% in constant currency terms.

We continued to reduce stocks with channel partners, resulting in nearly flattish growth on sell-outs.Our EBITDA margins, contractedby 810bps year-on-yeardue tohigher commodity inflation, upfront marketing investments, high hygiene comparator, and scale deleverage. We continue to put building blocks in place to drive category development and general trade distribution expansion.

BUSINESS UPDATE – AFRICA, USA AND MIDDLE EAST

Our Africa, USA and Middle East cluster delivered double-digit sales growth of 12% inconstant currency terms (3-year CAGR of 11%).Our strong sales growth momentum continues in Southern Africa. Our Dry Hair category grew in mid-single digit, while the FMCG category grew in double digits.While EBITDA marginsdecreasedby 160bps year-on-year, we continue to introduce marketing initiatives to drive sustainable growth and have increased investments across both Dry Hair and FMCG categories.

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