Godrej Consumer ad spend rises Q-on-Q in Q3 after a fall in Q2

share this on
0 0
By indiantelevision.com Team Posted on : 24 Feb 2014 06:25 pm

BENGALURU: Godrej Consumer Products is one of the large advertisers in the FMCG segment in India. The company says that in Q3-2014, it continued to outperform the FMCG market with an 18 per cent y-o-y growth in net sales. Its India business grew 14 per cent (ex contract manufacturing), while its international business grew 25 per cent in the quarter, while its consolidated net profit after tax and minority interest increased by 16 per cent.

Advertisement and Sales Promotion (Ad & SP) spends as per the numbers reported by the company in Q3-2014 and earlier periods over six consecutive quarters (starting Q2-2013) show an upward trend in terms of percentage of operating revenue and total expense. However, it may be noted that the company’s Ad & SP spend in Q3-2014 was higher than in Q2-2014. Please refer to figure A below:

 

Figure A

In value terms also, Ad and SP spend by the company has trended upwards (Figure B)

 

Figure B

 

During the six quarters, Godrej CP’s PAT trend is also upwards, but at a much lower rate as is evident from Figure C below. Q1-2014 saw a 60 plus per cent dip in PAT as compared to the PAT in Q4-2013. PAT across the six quarters under consideration actually peaked in Q4-2013 at Rs.334.14 crores. Even the PAT in the latest quarter, Q3-2014 is just 58.6 per cent at Rs.195.77 crores of the Q4-2013 PAT.

 

Figure C

The company’s operating revenue and Total expense during period has moved upwards, there was no dip in Q1-2014, the growth in revenue was just 0.44 per cent as compared to the previous quarter Q4-2013. –Refer Figure D.

 

Figure D

 

Figure E represents the q-o-q movement of Operating Revenue, Total expense,  PAT and Ad and SP spend in percentage terms. Please note that the Q2-2013 percentage change below is in relation to Q1-2013.

 

Figure E

Figure F represents the overall Picture in terms of Rupees.

Figure F

Adi Godrej’s Comments:

Godrej Group Chairman Adi Godrej said,” “We have done fairly well in a challenging environment. We continue to deliver topline growth that is far ahead of the growth both for the overall FMCG sector and for the home and personal categories that we participate in. We have been consistently gaining share and strengthening our market positions. “

“However, over the last couple of quarters in particular, the FMCG industry has witnessed a significant slowdown. These trends are evident across India and other emerging markets. The lag effect of multiple quarters of deceleration in GDP growth and high food inflation has negatively impacted consumer sentiment in India.  Consequently, consumption has taken a hit as consumers have been reducing their frequency of purchase. 

We are confident that this is just a cyclical phenomenon. The fundamentals still remain positive, as there is still a lot of headroom for growth given the low  penetration and consumption rates for many FMCG categories in India. As the  economic environment improves, we are hopeful that consumer sentiment will turn positive and we will see better growth in the industry in the quarters ahead,” added Godrej.

Category Review as indicated by Godrej CP

 

Household Insecticides:

Sales growth at 8 plus per cent; well ahead of the category that witnessed an abnormal seasonal slowdown. Both our key brands HIT and Good knight continue to gain share and strengthen market leadership positions across all formats. Our latest innovation in the category, Good knight Fast Card - a paper based mosquito repellant at a price point of Re 1 is performing ahead of our expectations.

Soaps:

Sales value and volume growth at 6 plus per cent, well ahead of the category growth which de-grew on both value and volume terms. Category growth is witnessing pressure with slowdown at the mass premium end of the category. We have also taken calibrated price hikes to counter some of the impact of the recent increase in palm oil prices.

Hair Colours:

Strong momentum in hair colours was maintained, delivering sales growth at 37 plus per cent Growth rates were significantly ahead of category growth rates. We also launched new packaging for Nupur. Ongoing initiatives such as salon engagement programs, festival linked promotions, etc. to drive higher consumption and penetration for the

category continued to deliver healthy results.

Liquid Detergents:

Liquid detergents grew 36 per cent. We continue to do well aided by a new TV campaign for Ezee.

 

Click here for Press release

 

Click here for Q3-2014 results

 

Performance Update

 

 

Go Top