GCPL Q1 net profit more than doubles to INR 245 crore

Sounak Mitra, Mint, 30 July 2016

Household and personal care company GCPL on Friday reported a 109.2% jump in consolidated net profit (after adjustment of exceptional items) at Rs.244.89 crore during the quarter ended 30 June, driven by strong operational metrics, despite slow sales growth. Net profit during the year-ago quarter was Rs.117.20 crore.

Stand-alone net profit for the quarter rose 11.9% to Rs.151.59 crore in April-June 2016, as against Rs.135.39 crore in the year-ago period.

The maker of Cinthol soaps and Hit insecticide reported a 6.7% increase in revenue at INR 2,122.77 crore (consolidated) in the first quarter of the current fiscal year, as compared with INR 1,987.94 crore in the year-ago quarter. Stand-alone revenue rose just 0.05% to INR 1,063.97 crore in the April-June quarter as against INR 1,063.39 crore in the year-ago period.

"India business sales was flat, impacted by a stretched summer and the late onset of monsoon, resulting in a weak performance in household Insecticides," the company said in a statement to the BSE. Revenue from international business grew by 18% on a constant currency basis. Operating profit or Ebitda (earnings before interest, tax, depreciation and amortization) during the quarter increased by 20%, driven by 14% growth in the India business and 29% growth in the international business, the company said.

"We delivered this performance despite the sluggish business environment across many geographies that we are present in. Additionally, sales was also impacted by the unfavourable weather conditions in some of our key geographies. We delivered healthy profits driven by judicious cost control and commodity tail winds. Our India business performance was impacted by a stretched summer and the late onset of monsoon, which resulted in a weak performance in household insecticides," Adi Godrej, chairman, Godrej Group, said.

According to the company, household insecticides business was "temporarily impacted by a stretched summer and the delayed onset of monsoon", resulting in an 11% dip in sales. Godrej, however, is hopeful of better sales in the segment next quarter backed by better monsoon.

The maker of Cinthol and Godrej No 1 soaps, reported just 1% growth in revenue from soaps due to deflationary pressure, while volume growth was in low double digits. Hair colours' sales increased by 4%, led by high double-digit volume growth in Godrej Expert Rich Crème.

"We are hopeful that the good monsoons in India should lead to a pickup in rural demand later this year. We should also see a boost to consumption in India, following the implementation of the Seventh Pay Commission and the passing of the Goods and Services Tax (GST). We are relentlessly focusing on our strategy and investing strategically in creating new growth vectors for the future," Godrej said.