FMCG majors’ growth tempered in Q2 FY24

Bengaluru: Fast moving consumer goods majors - Britannia Industries and Godrej Consumer Products - on Wednesday posted year-on-year revenue growth of 1.2 per cent and 6.2 per cent, respectively, for the quarter ended September 2023. While the former missed the analysts’ projections, the latter managed to meet them.

The two consumer product players however beat expectations on profits. Britannia’s net profit rose 19.6 per cent to Rs 586.5 crore on the back of softening input prices. Godrej posted a 20.6 per cent year-on-year growth in consolidated net profit at Rs 432.8 crore, bolstered by volume growth.

“We continue to remain focused on driving volume-led growth along with healthy investments in our brands and improvement in profitability,” Godrej Consumer Products Managing Director and Chief Executive Sudhir Sitapati said.

This comes as recovery in rural demand amid inflationary pressures continues to pose a cause for concern.

“While there is a strong narrative in favour of rural demand, improvement is not picking up at a rapid pace,” said Nirav Karkera, who heads research at financial services provider Fisdom. Overall, rural demand and the operational environment continue to be challenging, he stressed.

Preeyam Tolia, who is a senior research analyst (FMCG & retail) at Axis Securities seconded Karkera. “Rural demand is still a concern,” he said, adding that he sees better prospects for the sector, in the back half of the year.

Overall, Britannia reported Rs 4,432.88 crore in total revenue from operations during the July-September period, versus Rs 4,379.61 crore in the corresponding quarter a year ago. Godrej, on the other hand, reported consolidated revenue from operations at Rs 3,601.95 crore, as opposed to Rs 3,391.92 crore during the same period last year.

The two companies also announced interim dividends of Rs 29 and Rs 5 apiece, respectively.

“We delivered a good performance in a challenging environment on the back of 2 years of high inflation,” Britannia Vice Chairman and Managing Director Varun Berry said, adding that the company took strategic pricing corrections in some of its key brands, to remain competitive.

While intense competition and rural demand continue to pose significant headwinds, easing raw material prices is a tailwind for the sector at large, Tolia said. 

Berry said that amid the ongoing strife in the Middle East and Russia, Britannia remains watchful of the situation and its impact on the company’s business.