Personal care products maker Emami Ltd reported a 12% growth in fourth-quarter revenue, but profit levels were impacted to due to a sharp increase in material costs and the write-off of a tax credit.
The company posted revenue of Rs 617 cr for the quarter, but net profit fell to Rs 60 cr from Rs 83 cr last year.
Revenue increased by Rs 34 cr from last year, but operating profit fell by Rs 46 cr to Rs 175 cr.
This was owing to a Rs 43 cr increase in material costs.
Total cost of materials were at Rs 189 cr this time compared to Rs 146 cr last year.
Some of the increase in material costs, however, was offset by a build up in inventory levels. The company added Rs 27 cr worth of inventory during the quarter, while it had added only Rs 10 cr worth of inventory in the same quarter last year.
It also saw a Rs 23 cr increase in advertising and promotional expenditure during the quarter to Rs 99 cr due to new launches.
The company said some of its new launches like Emami Diamond Shine Crème Hair Colour and Fair and Handsome Laser 12 “have been received quite well in the market.”
As a result of all these, the total operating expenses rose to Rs 444 cr from Rs 398 cr last year, bringing down operating profit to Rs 175 cro from Rs 187 cr.
“EBIDTA declined by 3% due to aggressive spends on New Launches which increased by 3.2 times at ₹ 19.6 crore,” the company said.
As a result, pretax profit fell to Rs 88 cr from Rs 94 cr.
However, the tax impact this time was around Rs 27 cr compared to Rs 16 cr last year due to the absence of a MAT credit entitlement that was there last year.
Although global business environment remained volatile and challenging, the international business delivered a growth of 37% in Q4FY18, led by SAARC and MENAP regions, the company said.
“The year FY 17-18 has ended with a reasonably good Q4 registering a double digit growth of 12% on a Y-o-Y basis,” said Mohan Goenka, Director, Emami Limited.”Most of our brands have registered a good growth in this quarter.
“The consumption environment for the industry has overall been positive with rural business chartering the growth path. We have increased our direct reach to 8.5 lakh outlets, which will help us in reducing our dependency on wholesale channel.”
Director Harsha V Agarwal said he the four quarter saw “good growth” in brands such as Navratna hair oil and the pain management productions.
“We expect the momentum to continue in FY19,” he said.
“With GST stabilisation, normal monsoon expectation coupled with higher government spending, FMCG is poised for a good growth.”
“Strategic investment in upcoming growth segments through start-ups will help the company to grow further in years to come,” he added.