May 3, 2001|
FMCG: March quarter synopsis
This March quarter has not been good for the FMCG companies. As per the table below, though the consolidated net profit of the top 8 FMCG companies (who have declared results) has shown an encouraging 28% growth YoY, the turnover growth has been sluggish at 5%.
|*MQ00 = march quarter 2000, MQ01 = march quarter 2001
The above statistics clearly indicate that the FMCG sector is facing difficult times on the whole. Except Nestle and Gillette, no other company has been able to clock double digit turnover growth. But Gillette's massive turnover growth is a result of its amalgamation with Duracell and Wilkinson. In Nestle's case too a significant part of its turnover growth has come due to increase in its exports. Its export sales grew by 47% YoY during the quarter.
The slowdown in the FMCG sector is further corroborated by the fact that the turnover growth in March 2000 (as compared to March 1999 quarter) was around 8.4% for the same sample of companies. Their net profit growth during the period was 23%.
However, the bottomline growth has been encouragingly consistent for almost all companies. In Gillette's case its amalgamation with Duracell and Wilkinson was the major culprit for the depressed bottomline growth. Most companies managed to improve their profits by pruning the interest costs and improving their operating efficiencies.
The coming months continue to look difficult for the FMCG sector in terms of turnover growth. Since growth for this sector is dependent on a good monsoon scenario, all eyes are on the MET deparment which is slated to give its report by May end. If the outlook on turnover doesn't improve soon, even bottomline growth will become sluggish, as there is a limit to improving efficiencies.
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