Tuesday, July 28, 2009

FMCG Margin Expansion

Certainly I got it all wrong in April on FMCG margins - margins have been the biggest surprise of this recession. Volume growth has been so strong that companies haven't had to cut prices. Commodity and media deflation has reduced costs. As a result margin expansion has been very strong, much beyond even the most bullish expectations. So profits have zoomed up 60%-70%.

1Q11 (June 10) would certainly be a very tough qtr for FMCG companies. 2Q10 (Sep 09) might continue the trends of 1Q10 (June 09). Volume growth is unlikely to suddenly break down barring a shock.

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