Marico misses quarterly profit forecast as rising raw material costs pressure margins 

INDIA – Indian consumer goods manufacturer Marico has reported second-quarter earnings that fell below market expectations as rising raw material costs weighed heavily on profitability during the period ending September 30.  

The company said net profit dipped by 0.7 percent to Rs 4.2 billion (US$47.4M), underscoring concerns among analysts about the impact of commodity inflation on the firm’s performance. 

The broader fast-moving consumer goods sector in India has been facing volatility in both demand and margins, and Marico, owner of brands such as Parachute and Saffola, experienced heightened cost pressures compared with previous quarters. 

Prices for key inputs, including copra and vegetable oils, rose sharply due to supply disruptions across major producing regions. 

Copra, the dried coconut kernel used in coconut oil production, has experienced significant price swings as drought conditions and pest infestations reduced yields in several Asian markets. These challenges pushed up production costs for coconut-based products, including Parachute, one of Marico’s leading brands.  

The company implemented retail price increases over the past year to counter the higher input costs, but the adjustments contributed to a 3 percent drop in Parachute’s sales volume during the quarter.  

Marico noted that demand in price-sensitive categories remained highly responsive to changes in retail pricing. 

Overall expenditure climbed nearly 36 percent year-on-year, contributing to an 810-basis-point decline in gross margin.  

Despite this pressure, Marico posted a 31 percent rise in total revenue, reaching Rs 34.82 billion (US$392.96M). The revenue growth was driven largely by pricing revisions, although some volume segments remained stable or showed moderate expansion. 

Sales of the company’s Saffola edible oil range held steady through the quarter, reflecting continued consumer prioritization of essential household products.  

Marico also reported that recent tax reforms in India had a positive effect on around 30 percent of its domestic operations. In response, the company reduced prices on select items, though specific details were not disclosed. 

Chief Executive Officer Saugata Gupta said the company anticipates a gradual improvement in profitability once margin pressures ease. He added that Marico expects continued growth in both revenue and sales volume over the coming quarters as operating conditions stabilize. 

Marico is also focused on expanding its presence in packaged foods and premium personal care, segments expected to play a larger role in driving future revenue.  

The company aims to increase the contribution of these divisions to 25 percent of its total revenue by fiscal year 2027, up from roughly 22 percent in the first half of the current financial year.  

Its strategy includes rolling out new food products, widening distribution networks, enhancing brand visibility, and strengthening digital engagement as online retail continues to expand. 

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