High Input Costs Hit FMCGs’ Bottom Line During Q3-FY25

New Delhi: Hit by inflation, higher input costs and pricing measures, fast-moving consumer goods companies are expected to see a contraction in their gross margin and a modest-to-flat operating profit in the October-December quarter.

Several FMCG makers are likely to log a low single-digit rise in their revenue, returning to the cycle of value-driven growth. One of the reasons could be that a number of companies have opted for a price hike in the December quarter due to rising costs of input items such as copra, vegetable oil, and palm oil. The price hikes came at a time when the urban market was dragged down by lowered consumption due to high food inflation. However, the rural market, which is slightly above one-third of the total FMCG market, stayed ahead of it. Some of the listed FMCG companies, such as Dabur and Marico, shared their updates for the third quarter of FY25, and analysts expect either flat or low single-digit volume growth.

Home-grown firm Dabur expects a “low single-digit growth” in the December quarter along with a “flattish operating profit” as it faced inflationary headwinds in some of the segments. “In Q3, inflationary pressures were witnessed in some segments which were partially mitigated through tactical price increases and cost-efficiency initiatives. We anticipate flattish operating profit growth in Q3,” said Dabur in an update for Q3/FY25. Besides, in the December quarter, rural consumption for FMCG was resilient and continued to grow faster than urban, said the company which owns brands such as Dabur Chyawanprash, Dabur Honey, Dabur PudinHara, Dabur Lal Tail, Dabur Amla, Dabur Red Paste, Real and Vatika.