Godrej Consumer Q4 Results: Profit Falls, Revenue Growth Slowest In Four Quarters

Godrej Consumer Products Ltd.’s quarterly profit fell, missing estimates, as a slowdown in consumption and high commodity inflation weighed.

Net profit of the maker of Good Knight mosquito repellent and Cinthol soaps fell 1% over the year earlier to Rs 363.24 crore in the quarter ended March, according to its exchange filing. That compares with the Rs 398.12-crore consensus forecast of analysts tracked by Bloomberg.

Consolidated revenue of the company increased 7% to Rs 2,915.82 crore, against the Rs 2,905.64-crore estimate. That’s slowest sales growth in four quarters.

Godrej Consumer Q4 FY22 Highlights (YoY)

• Operating profit slipped 15% to Rs 467.58 crore, against a projection of Rs 567.36 crore.

• Margin contracted to 16% from 20.1% due to input inflation and weak performance in Indonesia. Analysts had pegged the metric at 19.5%.

• India business sales grew 9%, volumes dipped 3%.

• Indonesia posted a 16% drop in revenue in constant currency, while Africa, the U.S. and the Middle East grew 14%.

• Latin America and SAARC registered 26% growth.

Sudhir Sitapati, managing director and chief executive officer, said the company delivered a “weak” performance in the fourth quarter, driven entirely by pricing.

While successive price hikes taken to offset pressure on margin impacted volumes during the quarter, Sitapati expects volume growth will return in the medium term. This would be driven by the relatively non-discretionary, mass pricing of its portfolio and continuous market share gains, he said.

During the quarter, the company had gained share in 85% of its categories.

Godrej Consumer said it saw the personal care segment grow 18%, while home care declined 7%.

Another short-term concern, according to the company, is the performance of Indonesia business. Revenue declined primarily with hygiene sales, which has a large comparator in base, waning after Covid-19. “While the short term may continue to remain challenging, we are putting building blocks in place to drive category development and general trade distribution to ensure gradual recovery in the medium term.”

In its quarterly update, Sitapati has said that it expects the company to deliver double-digit sales growth in FY23.

Shares of the Godrej Consumer closed 4.19% lower on Thursday before the results were announced against a 2.65% loss in the benchmark Nifty 50. The stock has fallen 16.9% year-to-date.