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In its standalone business, soaps, which contributes roughly a third of its revenue, has faced headwinds from a 20-30% year-on-year increase in palm oil and derivative prices. “The surge in palm oil and derivatives prices to the extent of a (year-on-year) increase of 20-30% has impacted the soaps category, which represents ~1/3rd of our standalone business revenue,” Godrej Consumer Products said in a regulatory filing.
The company increased prices, shaved off a few grams from each bar of soap and scaled its trade schemes to mitigate cost pressures. This has affected inventories in its wholesale and household channels. However, the company expects the volume growth to return to normal once prices stabilise in the coming months.
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“To partly offset the cost increases we have taken price increases, reduced grammage of key packs and reduced various trade schemes. Such pricing actions typically have minimal impact on category consumption but do result in reduced inventory across wholesale and household pantry,” it said.
The home insecticides segment, another key contributor to standalone revenues, has been hit by delayed winters in North India and a cyclone in the South, further denting quarterly growth. Despite these challenges, the remainder of GCPL’s portfolio is performing robustly and is expected to deliver double-digit underlying volume growth (UVG). Overall, the standalone business is projected to record a flattish UVG and mid-single-digit sales growth in Q3 FY25.
The company highlighted pressures on EBITDA margins due to inflationary trends and normalisation from last year’s exceptional 29.7% Q3 margins, bolstered by favourable commodity prices. This quarter, margins are expected to temporarily dip below the normative range of 24-27%. GCPL, however, remains committed to strategic investments, including media spending and rural distribution, to drive long-term growth.
Also Read: Godrej Consumer Products sets sights on double-digit volume growth in long-term
Internationally, GCPL’s Indonesia business is projected to sustain strong performance, with mid-single-digit volume growth and high-single-digit sales growth. Meanwhile, its Godrej Africa, USA, and Middle East (GAUM) operations are undergoing portfolio simplification and stock reductions, leading to expected volume declines this quarter. Despite these transitions, GAUM is on track to deliver its fourth consecutive quarter of healthy EBITDA margins.
“These are exceptional situations in standalone business that the management believes are transitionary and not structural. Hence the management remains focused on navigating these near-term challenges while
maintaining strategic investments for long-term growth as these negative trends are likely to persist for a few months,” Godrej Consumer Products added.
Shares of Godrej Consumer Products Ltd ended at ₹1,235.95, down by ₹4.30, or 0.35% on the BSE.
