BackJyothy Labs posts lowest ever volume growth of 6%
Net profit for April-June quarter rises 5% to Rs44.58 crore from Rs42.47 crore a year ago
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Fast moving consumer goods company Jyothy Laboratories Ltd on Thursday reported its lowest ever volume growth of 6% in the fiscal’s first quarter, affected by a prolonged summer and irregular monsoon.
Net profit for the April-June quarter rose 5% to ₹ 44.58 crore from ₹ 42.47 crore in the year-ago period. Profit was also impacted by provisions made for employee stock option and tax deferments.
Consolidated net sales rose 7.5% to ₹ 414 crore from ₹ 385.14 crore a year ago. Sales were driven by price increases of 1.5% and volume growth of 6%, said Ullas Kamath, joint managing director of Jyothy Laboratories.
A Bloomberg poll of eight analysts had estimated a net profit of ₹ 56.03 crore and sales of ₹ 432.8 crore for the quarter.
“We believe that this quarter is an aberration. We have increased our market share across categories. We will be back to double-digit volume growth in the next quarter," said Kamath, while sharing that this is the lowest ever volume growth rate for the company.
The low volumes came even as advertising and promotion spends were on the higher side at 12.2% of sales. During the quarter, the company also offered promotions, which translated into a 6-10% price cut in its soaps and detergent category.
Household insecticides, with brands such as Maxo, which contribute about 25% of overall volumes was hit by a prolonged summer in the east and also delayed monsoon. The sector itself shrunk by 2%.
“The overall volume growth was disappointing, as it got impacted by brands such as Maxo and Ujala not performing," said Abneesh Roy, associate director, institutional equities, Research, Edelweiss Securities Ltd. Roy believes the company will get back to the 9-10% volume growth in the coming quarters.
The rural and urban markets grew at about the same rates for the company, said Kamath.
Jyothy Laboratories Ltd lost 5.05% to close at ₹ 294.50 per share on Thursday on the BSE, while the benchmark index, Sensex gained 0.51% to close at 27,705.35 points and the BSE FMCG Index gained 2.74% to close at 7,991.09 points.
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