Consumer sector profits plummet to decade-low

- Earnings of companies from all sectors have doubled in the first six months of the current financial year to Rs 3.06 lakh crore

Consumer goods companies' profits have been hit by sharp rise in prices and lower-than-expected recovery in demand. This can be gauged from the fact that in the first six months of FY205, the share of companies in the combined profits of auto, FMCG, consumer goods, apparel and Kivak service restaurants fell to 7.5 per cent. This is the lowest level in a decade. The figure was at a high of 12.5 per cent in the second six months of FY17 before the Covid 18 epidemic.

Consumer goods companies' net profit rose to Rs 318 crore in the first six months of FY208 from Rs 31,000 crore in the first six months of FY 2021. However, during this period, the earnings of companies in all sectors more than doubled in the first six months of the current financial year to Rs 3.08 lakh crore. Their combined earnings in the first six months of FY 2021 were Rs 5 lakh crore. In comparison, the combined earnings of all listed companies in the first six months of the current financial year were only 4.5 per cent lower than a year ago.

However, the earnings of consumer companies in the first six months of the current financial year were 3% lower than in the second half of FY 2021. In comparison, the total earnings of all the companies have declined by only 4.5 per cent. This analysis is based on the half-yearly earnings of 313 listed companies. Six of them are in the consumer goods and services segment.

Analysts attributed the decline in consumer goods companies to lower-than-expected growth in profits and lower sales growth.

Consumer goods companies have not been able to raise prices despite cutting costs, which has led to a drop in their profits. Most companies are not in a position to raise the prices of their products due to poor demand for various consumer goods due to the Kovid epidemic. Weak demand is having a direct effect on corporate revenue. Consumer goods companies accounted for only 3% of the total net sales of all listed companies in the first six months of the year.