Godrej Consumer Products sees growth in Indonesia amid hyperinflation impacts in Latin America

08 Jan 2024 --- Indian multinational corporation Godrej Consumer Products (GCPL) releases an overall summary of its operating performance and demand trends during the quarter ended December, 2023. 

The Mumbai-based company’s Indonesia business delivered “compelling performance,” with close to double-digit volume growth and high-single-digit constant currency sales growth.

Meanwhile, its GAUM (Godrej Africa, US and Middle East) business had a “flattish to mild decline” in volume growth. This was driven by trade destocking in geographic areas in which the company plans to restructure in Q4.

“Although it sustained double-digit constant currency sales growth, the impact of the Naira devaluation will result in high-single-digit sales decline,” states GCPL.

The FMCG’s notable brands include Cinthol, Godrej Fair Glow, Godrej No. 1 and Godrej Shikakai in soaps. It also produces hair care and home care products such as Godrej Powder Hair Dye and Ezee liquid detergent.

GCPL’s Indonesia business delivered “compelling performance,” with close to double-digit volume growth and high-single-digit constant currency sales growth.Hyperinflation in Latin American region
GCPL’s LATAM business revenue has been severely impacted due to the sharp devaluation of the Argentinian Peso from 361 to 808. The hyperinflation in this region impacted nine months of revenue.

“This is likely to have a negative impact of mid-single digit on the consolidated sales. However, the impact on profit is minimal,” details the multinational.

Despite the challenging environment, the company’s LATAM business records “positive volume growth.”

“At a consolidated level (organic), we expect to deliver mid-single-digit volume growth, double-digit constant currency sales growth, but low-single-digit sales decline in INR terms due to GAUM and LATAM currency and hyperinflation accounting impact,” details the company.

“Reported volume growth is likely at high-single-digit and reported sales growth to be flattish in INR terms. We continue to drive year-on-year expansion in EBITDA (including Forex) margin despite significantly higher category development investments.”

A detailed performance update will follow this quarterly report after the Board of Directors approves the 3Q FY24 financial results.

Chemicals division expansion
Overseeing a reported 1.2 billion consumers globally across different businesses, GCPL ranks among the largest Air Care and Hair Care players in emerging markets of India, Indonesia and Africa. 

“We are at the forefront of serving the hair care needs of women of African descent, the number one player in Hair Colour in India and Sub-Saharan Africa, and among the leading players in Latin America,” details the company.

“We rank number two in Soaps in India and are the number one player in Air Fresheners and Wet Tissues in Indonesia. But for us, it is very important that besides our strong financial performance and innovative, much-loved products, we remain a good company.”

The chemicals division of GCPL’s parent company Godrej Industries is planning a major expansion of its facility in Valia, Gujarat, India, with an investment of Rs 600 crore (US$72.2 million) over the next four years. 

The company recently signed a non-binding memorandum of understanding (MoU) with the Gujarat state government to facilitate this expansion. 

“As part of the MoU, the company may plan to invest Rs 600 crore over the next four years on the significant expansion in Valia with employment of around 250 [personnel],” reads the MoU.

The Valia unit, which already produces various oleochemical products used in personal care, pharmaceuticals and food industries, will undergo significant modernization and expansion under this plan. 

Edited by Benjamin Ferrer