Mumbai: In a recently organised board of directors meeting, Emami reported consolidated net sales of Rs 807 crore in Q2 FY23, which ended on 30 September 2022, which grew by four per cent and posted a three-year CAGR (compound annual growth rate) of eight per cent.
Due to continued inflation, rural slowdowns, and liquidity pressure, the domestic FMCG industry remained soft during the quarter, and demand sentiment remained muted.
Net sales increased by eight per cent during the quarter, excluding the pain management and healthcare ranges, which saw corrections due to lower consumption of covid contextual products and the new subsidiary, Helios Lifestyle.
Modern trade and e-commerce both performed exceptionally well, increasing by 28 per cent and 55 per cent , respectively. The contribution of modern trade and e-commerce channels to domestic revenues increased to 16.5 per cent in Q2FY23.
International business grew by 17 per cent in the third quarter, owing to strong performance in most markets. The MENA and CIS regions performed well in international markets.
Gross margins contracted by 230 basis points in Q2FY23 due to inflationary pressures combined with an unfavourable portfolio mix due to exceptionally high sales of pain management products last year.
PBT fell 18 per cent year on year to 186 crore due to the previous year’s pressure on gross margins, the inclusion of new subsidiary costs, upfront marketing investments, and strategic outlays on distribution expansion in rural, digital, and modern trade channels. On a three-year CAGR basis, it grew by 17 per cent.
PAT of Rs. 180 crore fell three per cent year on year but increased 23 per cent year on year. Nonetheless, when compared to peers, the company has one of the highest gross margins at 66.6 per cent, PBT margin of 23 per cent, and a PAT margin of 22 per cent.
Helios Lifestyle (The Man Company) became a subsidiary of Emami after increasing its stake from 49.53 per cent to 50.40 per cent. The board of directors declared an interim dividend of 400 per cent or four rupees per equity share.
Emami Limited vice chairman and managing director Harsha V. Agarwal said, “We are happy that despite the challenging business & industry environment, the first half delivered net sales growth of 10 per cent. With our strong focus on cost control, distribution expansion, aggressive marketing campaigns, and driving penetration, we expect to deliver double digit growth with healthy margins in the second half. Thus, on a full year basis, we aspire to deliver double digit growth with higher Ebitda (earnings before interest, taxes, depreciation, and amortisation) than the previous year for our core business.”
Emami vice chairman and whole-time director Mohan Goenka said, “Consumer demand remained muted across markets with high inflation affecting consumption, especially in the rural markets. As anticipated, we witnessed a correction in the Covid contextual portfolio of pain management and healthcare products, which grew significantly during the last two years. In the given context, the quarter delivered a low single-digit growth on a year-on-year basis, however, the 3-year CAGR has been impressive with a high single-digit growth of eight per cent if compared to pre-pandemic levels. Our international business also maintained its strong run, delivering a double-digit growth of 17 per cent, notwithstanding various global and geo-political uncertainties.”
