Dabur Q1 net rises 20%; overseas buy boosts

Dabur Q1 net rises 20%; overseas buy boosts

New Delhi: Personal care and food products maker Dabur India’s quarterly profit rose by a fifth aided by overseas performance that helped counter inflation pressures in the domestic market.

Dabur reported a consolidated profit of 128 crore for April-June quarter on a sales of 120 crore that rose 31.5%. Its standalone profit representing India business rose only 2% to 91.10 crore.

The overseas acquisitions of Turkey’s Hobi Kozmetik Group and Namaste Laboratories of the US in the second half of last year boosted sales and profits at Dabur.

At home, stubborn inflation pushed costs higher and price hikes taken to partly mitigate rising costs slowed volume growth for Dabur during the quarter. Margin declined 50 bps in a year to 15.9% in April-June.

“We are closely watching the inflation situation...and monsoon," chief financial officer S. Raghunathan told Reuters over the telephone.

A good monsoon means higher farm output and lower food prices, which increase rural income and spurs consumption benefitting manufacturers such as Dabur.

Most mid-cap Indian consumer goods firms have been using a mix of price hikes and cost-efficiency measures to deal with high commodity inflation that has weighed on their margins.

The wholesale price index , the most widely watched inflation gauge in India, rose 9.44% in June from a year earlier on higher manufacturing and fuel prices.

India’s central bank has raised interest rates 11 times since March 2010 to fight the persistently high inflation despite slowing growth in Asia’s third-largest economy.

Dabur has increased prices by about 6% in April-June and would decide by September if further hikes were needed, Raghunathan said.

“We have seen some slowdown in our volume growth because we have taken significant price increases but we are still at a healthy 8-8.5% volume growth," he said.

During the quarter, Dabur’s food category grew 31.5%, while home care clocked a 25% growth and international business doubled on acquisition.

Shares in Dabur, valued at about $4.3 billion, ended flat on Wednesday in a Mumbai market that fell 0.5%.