FMCG Giants Face Margin Squeeze Amid Rising Input Costs

Leading FMCG companies like Godrej Consumer Products Ltd, Dabur, and Marico anticipate pressure on their profit margins due to rising input costs, particularly palm and vegetable oil prices, in the September quarter. Despite this, companies invest in marketing and long-term growth strategies to maintain competitiveness.

Leading FMCG companies are bracing for squeezed profit margins this September quarter as rising palm oil prices and increased operational costs take their toll. Key players, including Godrej Consumer Products Ltd (GCPL), Dabur, and Marico, foresee flat margin growth year-on-year due to escalating costs.

GCPL anticipates a flat earnings growth in the domestic market following hikes in palm oil prices, impacting input costs. The company has chosen to absorb a portion of these increases, investing in long-term growth projects like rural distribution initiatives and new category development instead of passing on hikes to consumers.

Meanwhile, Marico reports unexpected copra price rises, and Dabur is adjusting distributor inventory, leading to a mid-single-digit decline in consolidated revenue. Increased advertising and strategic corrections in distributor inventory aim to boost efficiency and growth across the sector.

(With inputs from agencies.)