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Godrej Cons: One-time income boosts margins

Apr 30, 2012

Godrej Consumer Products Ltd. has announced its fourth quarter results of financial year 2011-2012. The company has reported a 20% YoY growth in sales and 43.5% YoY rise in net profit. Here is our analysis of the results

Performance Summary
  • Godrej Consumer Products (GCPL) clocked a 20% YoY rise in topline led by over 25% YoY jump in the revenues of both household insecticides and soap segments. The hair colour segment grew by a relatively subdued 13% during the quarter. For the full year FY12, the company's sales were up by 21% YoY.
  • Backed by cut in cost of goods sold and other expenditure (as a percentage of sales), GCPL has managed to overcome a steep rise in staff costs and higher ad spends and register a 130 basis points improvement in operating margin. For FY12, operating margin fell by 100 basis points due to a steep rise in cost of goods sold.
  • Earnings were up by a steep 43.5% YoY mainly on account of extraordinary income of Rs 247.6 m. The earnings for FY12 were up by 41% YoY. The amortisation of GoodKnight and Hit brands has been directly debited to the General reserves. Had the same been debited to the Profit & Loss account, the profit for 4QFY12 and FY12 would have been lower by Rs 131.2 m and Rs 527.5 m, respectively.

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