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GCPL's Sitapati defends ad spend, says no plans to cut despite margin pressure
The FMCG major reported a 14.2 percent decline in consolidated net profit for Q3 FY 25 at Rs 498.31 crore versus Rs 581.06 crore in the same quarter last fiscal
Sudhir Sitapati, Managing Director and Chief Executive, pointed to the company’s strategic push into what he termed "categories of the future".
Godrej Consumer Products Ltd CEO Sudhir Sitapati has reaffirmed his commitment to advertisement and marketing, undeterred by the company's poor performance in the third quarter of fiscal year 2025. During the earning call, Sitapati said that despite the pressure on margins, "we have held our advertising spend at about 10% and delivered a consolidated EBITDA margin of about 20 percent."
The FMCG major reported a 14.2% decline in consolidated net profit for Q3 FY 25 at Rs 498.31 crore versus Rs 581.06 crore in the same quarter last fiscal.
GCPL experienced a 4% growth in sales in India but volume remained flat. Overall, GCPL's EBITDA saw a 21% year-on-year decline due to a slowdown in macros, high palm oil prices, and urban consumption.
"Our bottom-line performance has been poor due to an unprecedented inflation in palm oil and due to a particularly high base in Q3 FY '24. Since these issues are mainly transitory, we have chosen not to cut our advertising spends and other investments to increase reach like the rural van program," Sitapati said during the earning call held this week.
Despite seeing setbacks in domestic business, Sitapati highlighted some of the green shoots. He said Godrej is rapidly gaining market share in incense sticks.
"Goodknight Agarbatti has seen strong outperformance and has gained significant market share in the Incense Sticks category, soon to be the clear market leader in this category," Godrej Consumer said in a stock filing.
The company's Home Care grew by 4% while the personal care segment witnessed only a 2 percent gain. Hair Colour recorded strong double-digit volume growth led by Shampoo Hair Colour.
"Our Laundry, Air Fresheners, and Sexual Wellness businesses continue to grow double-digit volumes. Even in Soaps where we had a difficult quarter, our revenue growth of near flat is market beating and our EBITDA margins are at a healthy approximate 20 percent," he added.
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