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Godrej Consumer Products lowers Q4-2014 ad spends by 36 per cent

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BENGALURU: FMCG player Godrej Consumer Products Limited (GPCL) spent (-35.93) per cent less towards Advertising and Publicity (Ad & Pub spends) in Q4-2014 at Rs 145.78 crore as compared to the Rs 227.53 crore in the immediate trailing Q3-2013 and (-14.75) per cent lower than the Rs 171 crore in the year ago quarter (Q4-2013).

However, the company spent 24.61 per cent more towards Ad & Pub in FY-2014 at Rs 832.97 crore as compared to the Rs 668.48 crore in the last fiscal (FY-2013). Overall, as per Fig 1 below, in terms of rupees spent, the company’s overall Ad & Pub spends trend (linear) upwards over the last eight quarters starting with Q1-2013 till Q4-2014. However, in terms of Ad and Pub spends in terms of percentage of Operating Revenue (Op Rev), the linear trend is downwards, the company is spending less as a percentage of its Op Rev towards Ad & Pub.

The company’s Op Rev in Q4-2014 has fallen by (-2.56) per cent to Rs 1931.52 crore from Rs 1982.27 crore in Q3-2014, but is 12.34 per cent higher than the Rs 1719.39 crore in Q4-2013. GCPL’s FY-2014 Op Rev is 18.49 per cent higher at Rs 7602.41 crore as compared to the Rs 6416.30 crore in FY-2013.

Overall, GCPL’s PAT for FY-2014 at Rs 759.73 crore is (-4.57) per cent lower than the Rs 796.10 crore in FY-2013. Q-o-Q, PAT at Rs 236.28 crore in Q4-2014 is 20.69 per cent higher than the Rs 195.77 crore in Q3-2014, but (-29.29) per cent lower than the Rs 334.14 crore y-o-y.

As per Fig 2 below, GCPL’s Op Rev, PAT and PAT as percentage of Op Rev, all show an upward trend.

In its India category review, the company has the following to say:

Household Insecticides

Sales growth returns back to normalcy at 17 per cent plus, well ahead of the category. GCPL continues to drive market share gains aided by success of Good Knight Fast card and HIT Anti Roach Gel. GCPL believes that the new launch Good Knight Xpress LV will bring further gains to GCPL franchise.

Soaps

Sales value grew at 1 per cent, well ahead of the category growth which is facing significant pressure in terms of consumer off take. Category de-grew both in value and volume terms in mid to high single digits respectively. GCPL has recently launched a new variant for Godrej No. 1 ‘Lavender and Milk Cream’and says that it has also started a 360 degree media campaign for Cinthol ‘Cool’ soap ahead of summers.

Hair Colours

Strong momentum in hair colours was maintained, delivering sales growth at 16 per cent plus despite anniversarisation of Expert Cr?me launch. Growth rates were significantly ahead of category growth rates. The company has also launched new packaging for Expert Advanced Gel based hair colours and a twin use pack for Expert Cr?me. GCPL has on going initiatives such as salon engagement programs, festival linked promotions, etc. to drive higher  consumption and penetration for the category continued to deliver healthy results.

Aer

GCPL says that Aer continues to do well aided by its consumer engagement initiatives. The product was launched in gel format for both click and twist format.

 GCPL chairman Adi Godrej’s quote

“We have delivered robust performance in our India and in our international businesses this quarter, in a challenging market environment. Our focus on sustaining and extending leadership in our core categories has enabled us to grow significantly ahead of the market. Our innovations have delivered well ahead of expectations. Overall, our operating performance has been strong, with profits growing ahead of sales.”

“Our India business delivered relatively healthy sales growth, amidst a slowdown in the household and personal care market. We have continued to gain market shares across categories, driven by new innovations and compelling marketing programs.”

“Our international businesses also had a good quarter with significant improvements in profitability. Our teams have demonstrated great agility and resilience to deliver this market-leading performance.”

“The overall macro outlook remains turbulent. While the pace of economic recovery remains uncertain, we are hopeful that consumer sentiment will become more positive and we will see better growth in the sector in the quarters ahead. We will continue investing judiciously for the longer term to improve our competitive position and emerge stronger than ever before. I am confident that with our clear strategic focus, our superior execution and our top notch team, we will continue to deliver industry leading results in the future."

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