Conglomeration for Consumer Goods Companies

BANGALORE: The fast moving consumer goods companies, financial performance for the quarter end June is likely to be diverse. The revenue growth is expected to be 12 to17 percent, with a volume growth varying from 4 to 11 percent and the Profit growth is expected to be 15 to 20 percent, reports Business standard.

The estimates are based on the past financial performance with context to the current quarter that results in beneficial of fast moving consumer goods companies. In most of the companies the profit growth for the June quarter will be aided by aggressive cost management, as cutting down of expenditure becomes inevitable when sales growth is not strong. Especially in areas such as advertising and sales promotions could see lower spending, which is expected to be 11 to 12 percent of net sales, according to analysts.

Earlier, in advertising and sales promotions, the percentage of sales was 12 to 13 percent for most of the companies. Colgate saw about 14 percent, as competitive pressures compelled them to keep spending more. However, in the past few quarters, advertising and sales promotions has smoothly moved for most companies as the pressure to maintain margins in an inflationary scenario has grown.

Dabur, Marico, and GlaxoSmithKline Consumer have all sounded a note of caution. "We are monitoring the situation closely," said Sunil Duggal, CEO, Dabur India. "If rainfall is indeed sub-optimal as indicated by the Met department, then what we are likely to see an agri-commodity inflation, which will put pressure on margins. A drought-like situation, on the other hand, could exacerbate matters. We are in wait and watch mode at the moment."

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