Dabur Q4 Results: Profit Falls 22%, Higher Input Costs Hit Margin
Dabur India Ltd.’s quarterly profit fell, missing estimates, as an increase in input costs and subdued consumption weighed.
Net profit of the Ayurveda products maker fell 22% year-on-year to Rs 294.2 crore in the quarter ended March, according to an exchange filing. That compares with the Rs 394.7-crore consensus estimate of analysts tracked by Bloomberg.
The drag in net profits also came on the back of goodwill impairment charge of Rs 85 crore relating to its wholly owned subsidiary Hobi Kozmetic, Turkey, amid steep currency devaluation, the company said in a statement.
Profit before exceptional items and tax stood at Rs 474.7 crore, up 5.1%.
Dabur Q4 FY22 Highlights (YoY)
Revenue rose 8% to Rs 2,517.8 crore, against the projected Rs 2,528.8 crore.
Operating profit rose 2% to Rs 453.57 crore, against the Rs 485.34-crore forecast.
Margin stood at 18% against 18.9% due to high material inflation.
Cost of materials consumed, including excise duty, rose 21.6% to Rs 1,298.4 crore.
"We delivered another quarter with steady revenue growth despite significant and increasing cost headwinds taking a toll on consumer purchases," Mohit Malhotra, the company's chief executive officer, said in a statement.
In terms of domestic volumes, Dabur grew 2% on a high base of 25%. New launches contributed 5% of its revenue. It has also increased its market share across 99% of its product portfolio, the company said.
Category-wise Growth (Q4 FY22)
Food and beverage: 33.5%
Home and personal care: 1.9%
The home care business rode on strong performance of air fresheners during the quarter, while Dabur Honey and Dabur Glucose aided growth of its healthcare business, the company said in its investor presentation.
Within the personal care segment, the company said the hair oil category recorded 2.6% volume growth on a high base of 24.6%, despite the industry seeing a decline to the tune of 7%.
Similarly, Dabur's toothpaste portfolio recorded 2.1% growth during the quarter, driven by Meswak, Dabur Red and Dabur Herb’l, even as the industry saw a 5% decline, according to the company.
The skin and salon portfolio, however, fell 10.6% impacted by lower consumption due to the Omicron wave-led restrictions in January and February. The food portfolio, Dabur said, crossed Rs 100 crore in gross sales in FY22.
For the fiscal ended March, the company has reported 13.87% growth in revenues to Rs 10,888.68 crore. "The year 2021-22 was a strong year for Dabur as we ended with an industry leading revenue growth, with an underlying FMCG volume growth of 10.1%," said Malhotra.
But like most consumer goods makers, Dabur’s margin, too, faced pressure because of a steep rise in commodity costs.
"The dramatic rise in input costs was the major challenge during the quarter. We responded to this challenge with a mix of pricing actions and cost control measures," he said.
Despite the near-term concerns around heightening inflationary pressures and a resultant consumption slowdown, Malhotra said Dabur will continue to "plough investments behind power brands", coupled with investment in expanding the rural footprint and enhancing the go-to-market approach to drive sustainable and profitable growth.
During the year ended March, Dabur added 30,000 new villages to its network, taking its current rural coverage to 90,000 villages, according to the company.
Among FMCG companies that have announced March quarter results so far, Hindustan Unilever Ltd. has its margin contract despite tight cost control. Its volume growth remained flat during the quarter. Nestle India Ltd., too, a drop in net profit and margin. Britannia Industries Ltd.’s margin narrowed, but its volumes grew 4-5%.
Shares of Dabur India fell 1.32% after the results were announced compared with a 0.34% gain in the benchmark Sensex.