The report states that it would take two to three quarters to widen margins, but the company will not be pushing up the prices suddenly
Amid a rise in prices of palm oil, Godrej Consumer Products, a player in the fast-moving consumer goods (FMCG) segment will keep on increasing the prices of its soaps gradually. As per the report by Reuters, this is aimed at protecting the margins.
Due to floods in top producers like Indonesia and Malaysia, there has been a surge in the prices of palm oil in recent months which has forced the consumer goods makers to raise prices. Reuters cited Sudhir Sitapati, the Chief Executive Officer of the company who stated that the company is yet to recover the full extent of the costs yet.
The Reuters reports further quoted the CEO who stated that it would take two to three quarters to widen margins, but the company will not be pushing up the prices suddenly. The CEO is confident that the price hikes will not have an impact on sales as palm oil-based products tend not to be discretionary goods that consumers can forgo.
On account of an elevation in inflation and a slowdown in economic growth, the Reuters report stated that middle-class Indians have been cautious in spending on everything from cookies to fast food. As far as the performance of the rivals is concerned, the report added that the impact of palm oil prices on the margins of Hindustan Unilever is lower.
As the prices of palm oil rose, the company’s gross margin narrowed 175 basis points (bps) during the October to December period on a year-on-year basis, as per the stated report. (With Reuters inputs)
