Godrej Consumer Products Ltd (GCPL) witnessed a dip in profit and volume in the quarter ending June amidst inflationary pressures. The personal care business, including soaps and hair colour, grew by 25%, while the household insecticides segment, which includes Goodknight and Hit, declined by 4%.

The company posted a 16.57% dip in profit at ₹345.12 crore on an income of ₹3,152.49 crore, which was up 8.13%, in the June ended quarter. The profit of India business dropped by 1.79% to ₹319.53 crore, while the income has increased by 11.56% to ₹1,870.70 crore in this period. The volume declined by 6% in India.

Sudhir Sitapati, managing director and CEO, GCPL expects a recovery in consumption and gross margins alongside continued higher marketing investments, with a significant focus on reducing controllable costs. The company will focus on growing health and beauty segment in emerging markets. “We are on a journey to reduce inventory and wasted cost and are deploying this to drive profitable and sustainable volume growth across our portfolio through category development,” says Sitapati.

The growth in Q1 is primarily because of the double-digit sales growth of personal wash and hygiene. “We are strengthening our value-for-money and green proposition with the launch of the affordable and sustainable ready-to-mix Magic Bodywash priced at ₹45,” says the CEO. The hair colour business also witnessed strong growth driven by category uptick.

The company’s sales in Indonesia declined by 9% in rupee terms and 12% in constant currency terms due to inflationary pressures. The sales excluding hygiene (Saniter) saw a decline of 4% in constant currency terms. “We continued to reduce stocks with channel partners, resulting in nearly flattish growth on sell-outs. Our EBITDA margins, contracted by 810 bps year-on-year due to higher commodity inflation, upfront marketing investments, high hygiene comparator, and scale deleverage,” says Sitapati.

The Latin America and SAARC regions also recorded a dip in sales by 5% in rupee terms, but grew 15% in constant currency terms. Africa, the U.S. and Middle East sales grew by 12% in rupee terms and constant currency terms. The sales growth momentum continued in Southern Africa. The dry hair category grew in mid-single digit, while the FMCG category grew in double digits, says the company.

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