Godrej Consumer posts slowest revenue growth in over 3 years amid soft demand

Godrej Consumer Products: Consumer goods major Godrej Consumer Products posted its slowest total revenue growth in 14 quarters on Wednesday. The company faced challenges stemming from weakened demand, particularly in the country's hinterlands.

For the three months ended December 31, the company's consolidated total revenue from operations witnessed a modest increase of 1.7 per cent, reaching Rs 3,660 crore. This slowdown in revenue growth reflects the broader trend of softening demand that has been affecting consumer goods companies, including industry leaders like Hindustan Unilever and Marico.

While urban demand remains relatively stable, consumer goods companies have been grappling with subdued rural demand. Factors such as an uneven monsoon and increased costs of essentials have led buyers in rural areas to cut back on spending.

Godrej Consumer managed to offset some challenges by controlling total expenses, which slipped by 1 per cent. This cost management strategy contributed to a 6.4 per cent rise in net profit, reaching Rs 581 crore, surpassing analysts' estimates.

To navigate the challenging market conditions, the company introduced new products in its 'home care' segment, aiming to broaden its offerings. This move is strategic, considering the current scenario where consumers are exploring local and more affordable alternatives due to financial constraints.

The domestic business, a crucial component representing 60 per cent of total revenue, exhibited more resilience with a growth of 9.7 per cent. This growth was supported by strong sales in Godrej Consumer's mosquito repellent, air freshener, and detergent brands.

Despite the positive aspects of the financial report, shares of the company ended 0.7 per cent lower, indicating the cautious sentiment in the market.

The slowest revenue growth in over three years underscores the challenges faced by consumer goods companies in adapting to evolving consumer behaviors and economic conditions. Godrej Consumer's strategic moves and focus on cost management will likely be pivotal in navigating these challenges and ensuring sustained growth in the future.

(With Reuters inputs.)