Marico expects June quarter revenue drop on sluggish rural demand

BENGALURU/CHENNAI (Reuters) – India’s Marico said on Wednesday its consolidated revenue for the June quarter fell to a low single-digit percentage range, hit by sluggish sales in rural markets and its move to cut Savola edible oil prices.

“Signs of improvement on a sequential basis were not readily apparent… the expected recovery in rural demand remains elusive,” Mariko said in a statement.

Marico saw sales increase by 1.3% in the same quarter last year. According to Refinitiv data, the quarterly decline for the three months ending June 30 would be the company’s first in three years.

Rural consumers typically account for about two-thirds of FMCG makers’ sales, according to Bizum Bengaluru, Karnataka, which tracks retail industry trends.

Investors and analysts often view FMCG sales in remote areas — where buyers have been hit the hardest by rising prices for daily necessities — as a barometer of the country’s economic recovery.

Marico said its Parachute coconut oil sales volumes fell, even as Saffola reported double-digit growth helped by price cuts that made cooking oil about 30% cheaper than a year earlier.

However, Marico still says its gross margin will expand “physically” and net profit will grow in the double-digit percentage range on the back of lower costs for various raw materials, resulting in a “clear rebound from next quarter.”

The shares closed up 2.3% on Wednesday.

Earlier Wednesday, Godrej Consumer Products estimated its sales increased in the double-digit percentage range in the June quarter, driven by strong demand for home care and personal care products.

(Reporting by Elif Jahan in Bengaluru and Praveen Paramasivam in Chennai; Editing by Savio D’Souza and Nivedita Bhattacharjee)