Marico misses profit estimates as costs overshadow price-led growth

Indian consumer goods maker Marico reported a smaller-than-expected quarterly profit on Friday, as higher raw material costs and marketing spends overshadowed price increases-led growth.

Rising prices of raw materials including copra and vegetable oil weighed on the Parachute coconut oil maker’s profits, while the company also faces intense competition and continues to spend heavily on marketing and advertising.

Marico’s expenses rose 17.7% to 23.18 billion rupees ($267.54 million) during the third quarter ended Dec. 31.

Consolidated net profit stood at 3.99 billion rupees ($46.05 million), compared to 3.83 billion rupees a year earlier. Analysts, on average, were expecting a profit of 4.02 billion rupees, according to data compiled by LSEG.

Revenue, however, came in at 27.94 billion rupees, up 15.4% from a year earlier, supported by improving demand in rural areas and product price increases.

Marico said it would raise prices of its products further to make up for an expected “firmness” in commodity prices, noting copra prices, up 38% this financial year, were ahead of its forecasts.

It also said its revenue would increase in the double-digit percentage range in the medium term by increasing its market share across its portfolio of brands.

Meanwhile, Dove soap maker and industry bellwether Hindustan Unilever reported below-expectation results last week and forecast margin pressures ahead.