Dabur Q2 profit down 17.6% to ₹417.5 cr impacted by inflation, squeeze in urban demand

The company had posted a net profit of ₹507.04 crore in the July-September quarter a year ago, Dabur India said in a regulatory filing

Homegrown FMCG major Dabur India Ltd on Wednesday (October 30, 2024) reported a decline of 17.65% in its consolidated net profit to ₹417.52 crore in the September 2024 quarter on account of high food inflation and squeeze in urban demand.

The company had posted a net profit of ₹507.04 crore in the July-September quarter a year ago, Dabur India said in a regulatory filing.

Its revenue from operations slipped 5.46% to ₹3,028.59 crore during the quarter under review. It was ₹3,203.84 crore in the corresponding quarter of the previous fiscal.

Dabur India's total expenses were at ₹2,634.40 crore, down 1.31% in the September quarter.

"Despite a challenging demand environment marked by high food inflation and a resultant squeeze in urban demand, Dabur continued to drive consumer engagement across its key brands to end the second quarter of 2024-25 with a consolidated revenue of ₹3,029 crore," Dabur said in its earnings statement.

Its standalone revenue from operation, which mainly consists of the domestic business, was 8.17% lower at ₹2,143.58 crore in the September quarter.

"Our focused approach towards expanding our rural footprint to over 1.22 lakh villages reaped rich dividend as rural demand outpaced urban demand by 130 bps during the quarter," its CEO Mohit Malhotra said.

Dabur's International Business reported a growth of 13% on a constant currency basis during the second quarter.

"The Egypt business reported a near 73% CC (constant currency) growth, while MENA (Middle East/North Africa) business grew by 10% and Sub-Saharan Africa grew by 26%. The Badshah business also reported a 15% growth in Q2," it said.

In the September quarter, its consolidated revenue from the consumer care business segment dropped 4.13% to ₹2,487.60 crore.

Similarly, revenue from the food business declined 13.45% to ₹467.39 crore in Q2FY25.

Dabur's revenue from its retail business slipped 5.9% to ₹28.11 crore.

"Over the past couple of years, we have witnessed a marked shift in consumer buying patterns in favour of emerging channels like quick commerce, driven by the convenience this channel offers. This has resulted in the emerging channels growing at high teens, putting the General Trade under stress," Malhotra said.

To address the changing dynamics in the marketplace and support distributor partners, Dabur took a proactive decision to rationalise inventory in the General Trade, which resulted in a temporary dip in sales during the quarter, he said.

"However, the move has resulted in improving the long-term health and hygiene of our business, paving the way for healthy growth going forward," Malhotra said.

Dabur India owns brands such as Dabur Amla, Dabur Vatika, Dabur Chyawanprash, Dabur Honey, Honitus, PudinHara and Dabur Lal Tail and juice brand Real.

On the outlook, Malhotra said: “We expect a recovery in consumer demand in the coming quarters, both in urban and rural markets. We are focusing on strengthening our competitive edge in the marketplace by investing in scaling up our rural footprint and rolling out consumer-centric innovations."

To cater to this wider network, we have expanded our product basket with the launch of affordable and rural-specific pack bundles across categories, besides investing in consumer activations in the hinterland to establish a better connection with our consumers," Malhotra added.

Meanwhile, in a separate filing, Dabur India said its board had declared an interim dividend of 275% for FY 2024-25, which is ₹2.75 per share, having a face value of Re 1 each.

Shares of Dabur India Ltd settled 2.07% higher at ₹546.95 apiece on the BSE.

Published - October 30, 2024 10:12 pm IST