Profit Falls 3% As Inflation Continues To Hit Margins


Dabur India Ltd.’s quarterly profit fell, in line with estimates, and margins remained under pressure as input cost pressures persisted.

Net profit attributable to shareholders of the ayurveda products maker fell 3% over the previous year to Rs 490.1 crore in the quarter ended September, according to an exchange filing. That compares with the Rs 496.6-crore consensus estimate of analysts tracked by Bloomberg.

Q2 Highlights (YoY)

  • Revenue rose 6% to Rs 2986.5 crore, against the projected Rs 3043.4 crore.

  • Operating profit fell 3% to Rs 600.7 crore, against the Rs 610.7-crore forecast.

  • Margin stood at 20.1% against 22%, in line with estimates, due to material inflation.

  • Cost of materials consumed, including excise duty, rose 9.4% to Rs 1316.6 crore.

“While the challenging economic environment continued to be a concern and impacted the purchasing power, we are seeing green shoots of recovery with the onset of festive season,” said Dabur India Chief Executive Officer Mohit Malhotra.

The impact of inflationary pressures, he said, was more pronounced in the rural markets with demand growth in hinterland lagging urban markets for the first time in five quarters. “However, we are hopeful of rural demand reporting a smart recovery in the coming quarters and we are investing ahead of the curve to ride this demand recovery by expanding our rural footprint,” said Malhotra.

The company added nearly 9,000 villages in the second quarter of 2022-23 to take its total coverage to over 1 lakh villages.

During the quarter, the company raised prices by 6%.

Dabur’s brands continued to grow ahead of the market, gaining market shares across 95% of our product portfolio, according to its statement.

The company reported a 410-basis-point market share gain in the juices & nectars category, while its share of the digestives category improved 270 basis points, the company said. The share of chyawanprash widened 120 basis oints and the shampoo’s share improved 40 basis pointss

Dabur’s share in the hair oils market increased 20 basis points. “Innovation continues to be the cornerstone of Dabur’s strategy with new launches contributing to 4% of sale,” said Malhotra.

Dabur’s international business grew 12.3% in constant currency terms, led by Turkey (86%), Nepal (25%) and Egypt (23%).

Category-wise growth:

  • Food business grew 21.2%, while beverages grew 30.5%.

  • Hair oil portfolio grew 1.8% on a high base of 27.9%.

  • Shampoo grew 9% despite a high base of 20.5%.

  • Oral care grew 9.2%, driven by Dabur Red, Meswak and Dabur Herb’l.

  • Home Care reported a 20.9% growth.

  • Skin & Salon contracted 15%.

  • Health supplements declined 12.6% on account of high bases of chyawanprash and honey.

  • Digestives saw muted growth of 0.1%.

  • OTC & ethicals declined 0.2% on account of high bases of Covid contextual products.

Peers that have so far announced second-quarter earning-—including Nestle India, Hindustan Unilever Ltd., Tata Consumer Products and ITC Ltd—have reported lower margins compared to the year ago period, thanks to unprecedented inflation. That hurt demand with overall FMCG market volumes falling 1%, said HUL’s CEO Sanjiv Mehta, citing Nielsen data.

Dabur on Wednesday has also announced a 250% interim dividend for FY23. The dividend of Rs 2.5 per share aggregates to a total payout of Rs 442.94 crore, the company said.

Shares of Dabur closed 0.93% lower on Tuesday as against a flat Nifty 50. The results were declared on a market holiday on account of Balipratipada.


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