Marico Reports Lower-Than-Expected Quarterly Profit as Raw Material Costs Rise

Mumbai – Indian consumer goods manufacturer Marico posted quarterly earnings that fell short of market expectations, as the company faced sharp increases in raw material expenses.

The rise in costs, particularly for key inputs such as copra and vegetable oils, affected profitability during the second quarter ending September 30.

The company reported that net profit for the quarter declined by 0.7 percent to 4.2 billion rupees.
Market analysts had anticipated higher earnings, reflecting concerns about the impact of commodity inflation on the firm’s performance.

India’s broader fast-moving consumer goods sector has been experiencing fluctuations in demand and margins. Marico, known for brands such as Parachute and Saffola, faced tighter cost pressures compared with earlier quarters.

Copra, the dried kernel used to produce coconut oil, has seen substantial price volatility due to regional supply disruptions. A combination of drought and pest-related issues has reduced coconut yields across multiple Asian markets.

These conditions have pushed production costs higher for coconut-based products, including Parachute, one of Marico’s flagship offerings.
The company increased retail prices over the past year to offset rising input expenses.

However, the price adjustments led to a decline in Parachute’s sales volume, which dropped by 3 percent in the latest quarter. The company noted that demand remained sensitive to price changes in value-driven categories.

Overall expenditure for the quarter rose significantly, climbing nearly 36 percent compared to the previous year. The surge in spending contributed to an 810-basis-point reduction in Marico’s gross margin.

Despite these challenges, the company recorded a 31 percent increase in overall revenue, reaching 34.82 billion rupees. The growth was driven primarily by price revisions, even as volumes in certain segments remained stable or grew modestly.

Marico said sales of its Saffola edible oil line remained largely steady through the quarter. Consumers continued to prioritize essential cooking products, providing resilience to the company’s broader portfolio.

The company also highlighted that recent tax reforms in India have had a positive effect on roughly 30 percent of its domestic business.
Marico reduced select product prices in response, although it did not disclose specific figures.

Management expressed optimism that consumer sentiment may strengthen as inflationary pressures ease. They believe more stable commodity trends and lower retail prices could support a recovery in demand.

Chief Executive Officer Saugata Gupta stated that the company expects sustained growth in both revenue and sales volume in the coming quarters. He said improved profitability is anticipated once margin pressures gradually subside.

Marico is also expanding its presence in the packaged foods and premium personal care categories. These divisions are expected to contribute a larger share of revenue as the company continues to diversify its portfolio.

The firm aims to increase the contribution of its food and premium care businesses to 25 percent of total revenue by fiscal year 2027.
This represents an increase from approximately 22 percent during the first half of the current financial year.

The company’s strategy includes introducing new food products, expanding distribution channels, and enhancing brand visibility. It also plans to strengthen digital engagement as online retail becomes a growing part of its business model.

Market analysts say Marico’s long-term strategy remains intact despite short-term cost challenges. The company’s focus on innovation and category expansion is expected to support sustainable growth.

For now, Marico continues to navigate commodity fluctuations while adjusting pricing strategies to balance margins and demand. Management indicated that operational efficiency measures will remain a priority as the company moves into the next quarters.

The firm added that it continues to monitor global and regional supply trends closely. Efforts to maintain stability in sourcing and production are expected to support gradual margin improvements.

With easing inflation and improved availability of agricultural inputs, Marico anticipates a more favorable cost environment. The company believes these conditions will help it deliver stronger performance through the remainder of the fiscal year.