FMCG profit margins, electronics manufacturers may increase

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Given the recent decline in prices of major commodities like copper, steel, aluminum, palm and crude oil over the past three to four weeks, consumer packaged goods and consumer electronics may see improved profit margins in the September quarter for the first time in two years.

However, they said they were actively monitoring macroeconomic and geopolitical concerns and that it was still important to support the downward adjustment in these commodities. Company executives and experts said they expect margin pressures to ease.

Because major suppliers like Malaysia and Indonesia are now competitive in the export market, prices for palm oil, which is used in soap, cookies and noodles, have fallen by 10%. Since the resumption of Indonesian exports, crude palm oil prices have fallen by more than 35% in recent weeks.

Following supply disruptions caused by the Russian-Ukrainian war and the export embargo imposed by Indonesia, which led to lackluster demand as rising inflation put pressure on consumers’ wallets , companies have borne the brunt of the commodity price spike.

Godrej Consumer said in an investor update on Wednesday that he expects consumption and gross margins to recover in the coming quarters due to reduced inflationary pressures and a major correction in crude oil and derivatives. palm oil, two of our main raw materials.

Prices for key raw materials for home appliances and electronics makers, such as copper, steel and aluminum, have fallen 21-36% over the past three months.

Despite the devaluation of the currency putting pressure on costs by 5-7%, companies have postponed proposed price increases from July due to this continued decline in input costs.

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