Dabur Q1 Results: Profit Meets Estimates But Demand Remains Weak
Dabur India Ltd.’s quarterly profit rose, in line with estimates, even as input cost pressures persisted.
Net profit of the Ayurveda products maker rose 50% sequentially to Rs 440.3 crore in the quarter ended June, according to an exchange filing. That compares with the Rs 442.8-crore consensus estimate of analysts tracked by Bloomberg.
In the quarter ended March, the company saw a drag in net profit because of exceptional items and tax which included a goodwill impairment charge of Rs 85 crore relating to its wholly owned subsidiary Hobi Kozmetic, Turkey, amid steep currency devaluation. Profit before exceptional items and tax, however, stood at Rs 474.7 crore in Q4 FY22, it said in its filings.
Year-on-year, Dabur reported a 0.63% increase in net profit in Q1 FY23. The effective tax rate for consolidated business decreased from 22.8% to 21.9%.
Dabur Q1 FY23 Highlights (QoQ)
Revenue rose 12% to Rs 2,822.43 crore, against the projected Rs 2,791.8 crore.
Operating profit fell 7% to Rs 544 crore, against the Rs 546-crore forecast.
Margin stood at 19.3% against 23.2% due to material inflation.
Cost of materials consumed, including excise duty, rose 5.8% to Rs 1,373.9 crore.
Margin normalised to pre-Covid levels for Q1 FY23 despite unprecedented inflation, said Mohit Malhotra, the company’s chief executive officer. Dabur, he said, mitigated the impact of inflation and supply chain constraints through cost control and price hikes of about 5% across categories.
The India FMCG business has seen an underlying volume growth of 5% over the previous year on a high base of 34%, the company said.
Rural demand was driven by expansion of its footprint to over 91,500 villages in Q1, up from 89,800 villages in Q4. Urban growth was driven by modern trade, which grew 42% during the quarter.
“The demand environment remained stressed in view of the heavy inflation, which saw consumers switch to more affordable smaller packs of branded consumer goods,” Malhotra said.
Category-wise growth:
Beverage business grew 51%.
Food business grew 36%.
Home Care business was up 52%.
Skin & Salon business reported a 11.4% rise.
Oral Care business ended the quarter with 12.5% growth.
Digestives business ended the quarter up 31%.
OTC and Ethical declined 15.4% on a high base.
Health supplement fell 36% of a high base of Chyawanprash and honey.
Shampoo and hair oil business grew 17% and 8.1%, respectively.
During the quarter, Dabur gained market shares across all 98% of its portfolio. In juices and nectars, Dabur grew ahead of the category and improved its market share by 330 basis points. It gained 240 bps in Chyawanprash market share and recorded a 190-bps gain in honey market share during the quarter.
The company also reported a 30-bps gain in hair oil market share to corner the highest-ever volume share in the category at 15.4%. Dabur’s shampoo market share reported a 50-bps gain, while its share of the mosquito repellent cream category grew 260 bps, the company said.
Innovation, it said, continues to be the cornerstone of Dabur’s strategy with new launches contributing to 4.4% of sales during April-June.
Dabur’s international business reported an 8% jump in constant currency terms, led by Turkey (88%), Sub-Saharan Africa (35%), Nepal (30%) and Egypt (17.5%). In rupee terms, however, the growth remained flat.
Shares of Dabur rose 0.68% after the results were announced against a flat Nifty 50 as of 3:15 p.m.
