GCPL's Q2 earnings fail to meet predicted figures
Godrej Consumer Products Limited (GCPL) reported a flat profit of Rs 452 crore for Q1FY26, a 4.7% dip year-over-year, despite a 9.9% increase in consolidated revenue to Rs 3,662 crore. The company's performance was affected by intense competitive pricing and macroeconomic headwinds in its Indonesian business, which resulted in flat underlying volume growth and a 4% sales decline in constant currency and INR terms for that market.
The challenging environment in Indonesia, combined with higher raw material costs, particularly elevated palm oil prices, weighed heavily on the company’s profitability for the quarter. Specifically, Indonesia’s volume growth was flat, and sales contracted by 4% due to fierce competitive intensity and macro headwinds in that market. GCPL incurred an exceptional litigation settlement expense of Rs 19.54 crore related to Indonesia, impacting consolidated results.
Despite these challenges, the India business of GCPL delivered robust growth. Revenue grew by 8%, and volume grew by 5%. The company's India operations include household insecticides, soaps, hair colorants, air fresheners, and liquid detergents. Soaps volume growth was impacted by volume-price rebalancing due to volatile price movements in palm oil.
Aasif Malbari, global CFO and president for Middle East, Africa, and International Markets at GCPL, expects FMCG consumption to improve in FY26. He also anticipates rural growth to get stronger and urban demand to recover in FY26. Malbari believes that the second half performance will be better than H1, helped by stabilizing palm oil prices and price-volume rebalancing in segments like soaps.
Sitapati, the managing director and CEO of GCPL, shares this optimistic outlook. He expects the company's performance to improve sequentially in FY26. GCPL derives approximately 65-70% of its business from India. The company's Ebitda for Q1FY26 was Rs 695 crore, below street estimates of Rs 750 crore. Sitapati did not mention any changes in the EBITDA margin or any deviations from street estimates for EBITDA.
In light of these results, GCPL has declared an interim dividend at the rate of Rs 5 per share. The company remains committed to delivering value to its shareholders while navigating the challenges in its international markets.
[1] Source: Business Standard [2] Source: Economic Times [3] Source: Livemint [4] Source: Moneycontrol [5] Source: Financial Express
- The challenging market conditions in Indonesia, coupled with higher raw material costs and intense competition, have negatively impacted the profitability of Godrej Consumer Products Limited (GCPL) in the quarter.
- Despite the struggled performance in Indonesia, the India business of GCPL has shown robust growth, with a 8% increase in revenue and 5% increase in volume.
- Aasif Malbari, global CFO and president for Middle East, Africa, and International Markets at GCPL, expects FMCG consumption to improve in FY26, with stronger rural growth and recovery of urban demand.
- In an effort to deliver value to its shareholders, GCPL has declared an interim dividend at the rate of Rs 5 per share, despite facing challenges in its international markets.
