October 21, 2008 / 10:28 AM / 11 years ago

Marico Q2 net up 12 pct on strong sales, price hikes

MUMBAI, Oct 21 (Reuters) - Consumer products maker Marico Ltd (MRCO.BO) posted a 11.6 percent rise on net profit, backed by sales growth of almost a third during the quarter to September, the company said on Tuesday.

“Despite the inflationary pressures, consumption was not adversely impacted during the period,” the maker of Parachute coconut oil said in a statement.

It posted a net profit of 471.2 million rupees on net sales of 6 billion rupees during the quarter. Sales grew 30 percent. A Reuters poll of brokerages saw net profit at 489 million rupees on net sales of 5.8 billion rupees.

Marico faced volatility in the environment including input costs, foreign exchange rates and increased interest rates, said the company that owns skin clinic service, Kaya Skin Care.

The company, which also operates in Bangladesh, Egypt, the Middle East and South Africa, accounted for a foreign exchange mark-to-market loss of 70 million rupees due to rupee depreciation during the quarter.

Of the 30 percent revenue growth, organic volume growth accounted for 11 percent and acquisition-led growth contributed 3 percent, while price hikes accounted for 16 percent.

Parachute, Marico’s flagship brand, brought in a third of FY08 consolidated revenue, but the company has been diversifying its offerings to bring its down its dependance on the product.

The company, said Parachute recorded a 12 percent volume growth during the quarter over a year ago and the hair oil has seen a price increase of 13 percent since July 2007.

Prices of raw material copra were 30 percent more on year, but Parachute’s price hikes are “adequate to cover for a substantial part of the raw material cost inflation and keep gross margin per unit volume within a tight band,” it said.

Meanwhile, the company slashed sunflower oil prices, which did not see any price relief in the second quarter unlike other edible oils.

The reduction of about 10 percent effected from the third quarter was for two of its Saffola sunflower oil products, Saffola Tasty and Saffola Active.

The company’s material costs as a percentage of revenue was 54.3, while personnel costs accounted for 6.4 percent, it said.

Shares in Marico closed up 7.32 percent at 55 rupees in a firm Mumbai market. (Reporting by Jasudha Kirpalani, Editing by Prem Udayabhanu)

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