Inflation shock: FMCG companies’ revenue may remain less than 10 percent
New Delhi| With rising inflation and costs, everyday goods manufacturing companies i.e. FMCG may face lower sales during the third quarter (October-December). This could leave them with less than 10 per cent of their revenue. There is also a possibility of impact on the operating profit of companies.
FMCG companies believe that their revenue is being affected due to reduced urban demand. One reason for this could be that due to rising costs of commodities like copra, vegetable oil and palm oil, many companies have increased the prices of products in the December quarter. The price hike came at a time when their sales in the urban market declined due to reduced consumption due to high food inflation.
The rural market, which contributes a little more than one-third of the FMCG market, is performing better. Its operating profit could remain flat, Dabur says, as it has faced inflation constraints in some areas. Rural consumption for FMCG in the December quarter was good compared to cities.
