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Jyothy Labs Q3 ad spend up 25%, promo spends triple; PAT up 63%

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BENGALURU: FMCG company Jyothy Laboratories Limited (Jyothy Labs) has reported a 63.1 per cent rise in its net profit in the quarter ended 31 December, 2013 to Rs 27.38 crore from Rs 16.79 crore a year ago.

The company spent Rs.15.04 crore on advertising in the third quarter, up 25.2 per cent from a year ago. Its expenditure on promotions in the third quarter tripled to Rs 12.04 crore from Rs 4 crore a year ago. Jyothy Labs? combined advertising and promotional expenses in the third quarter rose 71.6 per cent to Rs 27.48 crore from Rs 16.01 crore a year ago.

Jyothy Labs? product portfolio includes household brands led by its flagship fabric whitening brand Ujala, Henko, Mr. White, Chek, Exo, Pril, Margo, Fa, Neem and Maxo.

Jyothy Labs? net profit in the third quarter was 31.2 per cent more than Rs 20.87 crore a quarter ago. In the nine months ended 31 December, 2013, the company?s net profit more than doubled to Rs 76.95 crore from Rs 32.22 crore a year ago.

The company?s advertising spend in the third quarter was 24.6 per cent lower than Rs 19.96 crore a quarter ago, while in the first nine months of 2013-14 it rose 49.2 per cent  Rs 64.54 crore from Rs 42.35 crore a year ago.

The company reported a 27.8 per cent increase in operating revenue to Rs 296.99 crore in the third quarter from Rs 234.21 crore a year ago, but was 3.75 per cent lower than Rs 308.55 crore a quarter ago.

Total expense during Q3-2014 26.8 per cent up to Rs.270.60 crores from Rs.213.47 crores in Q3-2013, but was down (3.9) per cent from Rs.281.51 crores in the previous quarter. Over the nine month period of the current year, Total expense during the nine month period of this year grew 19.6 per cent to Rs.839.29 crores from Rs.701.91 crores in the corresponding period of the previous year. For FY 2013, Jyothy Labs reported Total expense at Rs.956.64 crores.

Let us look at Jyothy Labs reported Ad and Promo spends during Q3-2014 as percentages of Operating Income and Total expense:

Ad spend for Q3-2014 of Rs.15.04 crores mentioned above was 5.06 per cent of Operating Income and 5.56 of Total expense for the period. Rs.12.01 crores for Q3-2013 mentioned above was 5.13 of Operating Income and 5.63 of Total expense for the period.  Q2-2014 ad spend of Rs.19.96 crores was 6.46 per cent of Operating Income and 7.09 per cent of Total expense for the period.

The company?s YTD AD spend for the current period of Rs.64.54 crores was 6.98 per cent of Operating income and 7.69 per cent of Total sales as compared to the Rs. 43.25 crores (5.80 per cent of Operating Income and 6.16per cent of Total sales for the period) during the corresponding period of last year.

Jyothy Lab?s Q3-2014 promo spend of Rs.12.44 crores was 4.19 per cent of Operating Income and  4.6 per cent of Total expense. Its Q3-2013 Promo spend of Rs.4 crores was 1.71 per cent of 9Operating Income and 1.87 per cent of Total expense for the period. The company?s Q2-2014 Promo spend of Rs.9.64 crores was 3.12 per cent of Operating Income and 3.42 per cent of Total expense.

The YTD Promo spend of Rs. 31.22 crores for the current period 3.37 per cent of Operating Income and 3.72 per cent of Total expense for the period as compared to the Rs.18.33 cores (2.46 per cent of Operating Income and 2.61 per cent of Total expense) during the corresponding nine month period of last year.

Combined Ad & Promo spend for Q3-2014 of Rs.27.48 crores was 9.25 per cent of Operating Income and 10.16 per cent of Total expense. For Q3-2013, the Rs.16.01 crores was 6.84 per cent of Operating Income and 7.5 per cent of Total expense. For Q2-2014, the combined figure at Rs.29.6 crores was 9.59 per cent of Total Income and 10.51 per cent of Total expense. The YTD figure of Rs.95.76 crores was 10.35 per cent of Operating Income for the period ended December 31, 2013 as compared to the Rs.61.58 crores (8.26 per cent of Operating Revenue and 8.77 per cent of Total expense) during the corresponding nine month period of last fiscal.

Segmental Performance (Q3FY14 v/s Q3FY13) as reported by the company:

Revenues from soaps and detergent business, which includes brands like Ujala, Henko, Exo, Pril, Margo, Mr. White, stood at Rs. 240.4 crore during the quarter compared to Rs. 187.2 crore in December 31st, 2012; up by 28.4 per cent. Ujala fabric whitener continues to be the market leader with a market share of 72.5 per cent by value claims the company.

Home Care, which includes mosquito repellant Maxo and Exo scrubber, saw revenues for the quarter ended December 31, 2013 at Rs. 56.4 crore up 25.9 per cent as against Rs. 44.8 crore during the same period last year.

Others businesses, which include brands like Fa and Neem, saw revenue increase of 78.1 per cent at Rs. 3.9 crore against Rs. 2.2 crore on December 31st, 2013.

Commenting on the company?s results, Jyothy Labs Chairman and Managing Director  M P Ramachandran said, ?We have continued to witness a steady growth in sales in spite of the weak consumer sentiment in the last several quarters. Increase in geographic footprint of our seven power brands has helped us grow at a fast pace. We have strategically concentrated on investing in our brands through advertising campaigns and brand extensions which are paying off well .?

?Jyothy is also concentrating on increasing its product portfolio. The funds raised via preferential allotment was utilized to repay debt and the balance will further be utilized for organic and inorganic growth of the company. We expect the growth momentum to continue translating to healthy volumes and profitability growth for the financial year ,? he further added.

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