Movement in BSE FMCG vis-à-vis BSE 500 (Q4 FY09)
FMCG sector has managed to register double digit revenue growth of around 11% in Q4 FY09 (y-o-y), a little lesser than the expected growth of 12-15%. A strong upsurge witnessed in rural demand helped in keeping the sector’s growth momentum intact. However, high prices of key inputs restricted the sector’s OPM growth, though, companies tried to cut costs, like from packaging or selling & administrative, especially after witnessing a year of high volatility in commodity price movement.
FMCG in Q4 FY09
|Inter-Company Comparison for Q4 FY 2009|
Even as large FMCG companies like Hindustan Unilever struggle with revenue growth, mid-tier FMCG companies like Godrej C.P., Marico and Dabur have reported strong spurts in realization as they focus on inorganic growth and rural markets. Godrej C.P. witnessed maximum growth in revenue of 21.34% followed by beverage companies, viz. United Breweries and United Spirits, with the growth rate of more than 20%. On aggregate basis, sector wise, the growth rate is satisfactory at 10.34% but is lesser than the expectation of 12-15% as consumers switched to a smaller pack or a cheaper value product. Hindustan Unilever (HUL), Ruchi Soya and Nestle altogether comprised 77% of sectors’ revenue while remaining 5 companies had less than 10% of revenue’s chunk. Operating margin of the sector stood at 14.98% in Q4 FY09 lower form last year’s 16.69% in the same quarter mainly due to high cost raw material despite the expense on selling and administration remained flat. Raw material comprised more than 57% of the total expenses and there was 9% increase in the same to Rs 6,036.95 crore (y-o-y). Nestle and United Breweries were only ones who managed to register increase in the OPM broadly as revenue grew more than the expenditure. PAT of the sector augmented by 4% to Rs 837.16 crore while NPM stood at 9.40% marginally lesser than the last year’s 9.79%.
United Sprites (US)
United Breweries (UB)
Ruchi Soya Industries
FMCG on Bourses
FMCG index was fickle during Q4 FY09 but managed to post positive return of 2.49% while BSE 500 index delivered negative return of 2.04%. FMCG index was among the top 5 BSE sectoral indices that posted highest return in Q4 FY09 (Q-o-Q).
Return posted by BSE sectoral indices vis-à-vis BSE 500 in Q4 FY09 (Q-o-Q)
Indices’ Quarterly Return
FMCG index, in Q4 FY09, started at the level of 1,991.98 (January 1). During the month of February, the index touched highest value of 2,059.42 where as in the month of March, it touched lowest level of 1,802.57.
|Top Performers in Q4 FY09 (based on Share Price)|
Macy’s announced first-quarter results that showed that the department store chain had lost USD 88 million versus a loss of USD 59 million in the company’s year-ago quarter. Sales were down 9.5% year-over-year and gross margins also were pinched slightly. Liz Claiborne remained in the red for the first-quarter and Ann Taylor Stores is expected to be in the same predicament. Claiborne’s loss came in at USD 91 million versus USD 31 million in the first-quarter of 2008. Ann Taylor has warned that sales continue to be dragged down as the result of consumers tightening their belts and a shaky reception of product offerings at the company’s namesake division.
Value-oriented retailers such as Target and Wal-Mart have fared better than higher-end retailers, but have still experienced their own headwinds. Year-to-date, same-store sales are down 3.7% at Target and Wal-Mart with flat first-quarter earnings that were hampered by the company’s international business segment. One other retailer that investors should keep an eye on to get a sense of direction as to which way this sector is headed is Costco Wholesale which is set to report its quarterly results later this month. The discounter’s same-store sales for the month of April were down 2%.
Tuesday, June 2, 2009
Sector Analysis: FMCG
Posted by Morgan at 8:22 AM