GCPL reports decline in December quarter on weak urban demand, lower profits on higher prices

Mumbai-based Godrej Consumer Products Ltd (GCPL) on Friday reported a 28% fall in standalone December quarter profit due to what it termed “temporary headwinds” due to weak demand for Urban and palm oil in the quarter. Oil prices rise.

Profit for the period ₹341.54 Crore ₹472.58 Crores reported. Operating December quarter revenue increased 4% year over year ₹22.37 Crore. The maker of Cinthol Soap reported weaker demand in urban markets during the quarter.

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“Demand conditions in India have witnessed temporary headwinds in the past few months due to slowdown in urban consumption. Palm oil prices have risen over 40% while household pest control Weaker seasonality in agents resulted in underlying volume growth and flat mid-single digit sales growth in our standalone business,” GCPL Managing Director and CEO Sudhir Sitapati, said in a statement on Friday.

The company’s comments mirror those of Hindustan Unilever Ltd (HUL), which also reported flat volumes in the December quarter earlier this week. HUL attributed this to weak urban consumer demand.

The surge in palm oil costs has negatively impacted GCPL’s EBITDA margin. The company reported a standalone EBITDA margin of 22.6%, below normative margins. EBITDA stands for earnings before interest, taxes, depreciation and amortization.

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In Indonesia, the company reported 6% volume growth and EBITDA margin expansion. From an organic perspective, sales in Africa, the United States and the Middle East increased by 1% on a constant currency basis and sales in the rupee declined by 8%.

The company’s home care category grew 4% year over year. Household insecticides are subject to relatively poor seasonal exposure. Premium formats have been affected by the slowdown in urban consumption; however, we have started to gain share in premium formats, which shows that the RNF molecule is working among consumers.

Last year, the company launched a new Renofluthrin Formula (RNF) in its new Goodknight Flash liquid vaporizer. This patented molecule makes Good Knight Flash the most effective liquid vaporizer formula for mosquito control.

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At the same time, its fabric care business can achieve strong double-digit volume growth. Godrej Fab, the company’s new ₹99 Liquid Detergent has expanded nationwide and continues to gain market share.

GCPL sells brands such as Cinthol soap, Good Knight Mosquito insect repellent and specialist Rich Crème hair colour.

In personal cleansing or soap, the company reported a mid-volume decline in unit volume during the quarter. The company has increased prices across its soap portfolio in response to higher raw material prices.

“The company continues to see significant cost pressures due to inflation in palm derivatives; significant price gains across the portfolio. As discussed previously, this will result in lower underlying volume growth and potentially higher price growth; Margin pressure remains high over the next several months,” the company said in its earnings presentation.