New Delhi: Dabur India Ltd on Tuesday reported a 7.3% dip in consolidated net profit in the quarter ended 31 December as sales dipped 6% compared to the corresponding period a year ago.
The Delhi-based packaged consumer goods maker cited demonetisation as the reason as it led to liquidity crunch in turn hitting wholesale trade.
Profit dipped to Rs294.49 crore in the three months to December from Rs317.79 crore a year ago. Consolidated sales declined to Rs1,847.67 crore during the December quarter from Rs1,967.48 crore in the year-ago quarter.
“The wholesale trade was severely impacted by demonetization, and we had witnessed a massive amount of destocking across the entire trade channel,” Dabur India chief executive officer Sunil Duggal said in a statement.
The company adjusted its production plans, reduced inventory, tightened credit controls, and reduced spends on advertising, Duggal added. Dabur had cut down its spends for advertising and sales promotions by 21.13% to Rs177.2 crore during October-December 2016 quarter from Rs224.69 crore a year ago.
In its results statement, Dabur said that the company had increased consumer promotions, cutting media spends and revamped supply-chain to “increase focus on the relatively more resilient urban markets, particularly modern trade”. “We also stepped up direct distribution to tide over the situation. These proactive measures helped us arrest the slide and even report market share gains in key categories,” Duggal added.
During the quarter, Dabur’s consumer care business, its main source of revenue, was hit with sales at Rs1,562.52 crore, down 11.18% from the year ago. However, sales from foods business jumped 52.82% to Rs219.1 crore from Rs143.37 crore in the year-ago quarter.
In a statement, Dabur claimed that its packaged fruit juices and beverages brands gained market share by more than 5% in the quarter, and market share of its mosquito repellent brand Odomos rose by over 4%.
Sales in the international markets declined by around 6.2% (Indian rupee terms) due to unstable currency exchange rates in markets such as Egypt, Nigeria and Turkey. International markets account for about 30% of the company’s total sales.
“The overall business environment remained challenging in the third quarter with key geographies witnessing sharp currency devaluations. We are pursuing a prudent growth strategy and have taken steps to efficiently manage the emerging risks and challenges,” Duggal said.
Dabur shares closed down 1.36% to Rs276.25 apiece on the BSE, while the benchmark Sensex index was lower by 194 points or 0.70% to 27,655.96 points.