Godrej Consumer Q3FY22 Update: Expects margin dilution; it will deliver close to high single-digit sales growth in India

Godrej Consumer Q3FY22 Update: Expects margin dilution; it will deliver close to high single-digit sales growth in India
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Godrej Consumer Q3FY22 Update: Expects margin dilution; it will deliver close to high single-digit sales growth in India

Highlights

Godrej Consumer Products Ltd (GCPL) said it expects to deliver close to high single-digit sales growth in India in the quarter ended December 2021, largely driven by prices.

Godrej Consumer Products Ltd (GCPL) said it expects to deliver close to high single-digit sales growth in India in the quarter ended December 2021, largely driven by prices. It has witnessed broad-based sales growth in both, our Home Care and Personal Care categories.

Some of the short-term challenges that our MD & CEO, Sudhir Sitapati highlighted in the recent Analyst Meet have played out during the quarter and it is

(i) Unprecedented cost inflation

(ii) Indonesia business performance.

This has resulted in

(a) Low volume growth and high price growth

(b) High gross margin dilution and EBITDA margin dilution.

In Indonesia, GCPL expects a marginal decline in constant currency sales growth. It will continue to put building blocks in place to drive category development and general trade distribution expansion, to ensure gradual recovery in the short term.

In Godrej Africa, USA and the Middle East, growth momentum continued across most of our key countries of operations. So, it expects to deliver constant currency sales growth in the teens.

GCPL says that it will continue to focus on driving sustainable, profitable sales growth.

At a consolidated level, the company will continue to leverage its category and geographic portfolio and expect to deliver close to high single-digit sales growth. It will continue to remain on track with its objective of driving double-digit sales growth as seen in the first nine months of the financial year.

On the profitability front, GCPL expect that its quality of profits will improve with sequentially expanding gross margins, however, lower on a year-over-year basis due to unprecedented cost inflation. In line with our strategy of driving category development, the company had sequentially higher marketing spending. The net result would be a dilution in operating margins during the quarter, on a year-over-year basis.

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