Photo: Mint
Photo: Mint

Dabur Jul-Sep net up 7%, hurt by one-time costs, sluggish foods business

  • Dabur’s domestic FMCG business reported an underlying volume growth of 4.8% during the quarter
  • Dabur posted a 4.1% rise in consolidated revenue for the quarter ended 30th September to Rs2,212 crore from Rs2,125 crore a year earlier

Dabur India Ltd said on Tuesday its quarterly consolidated net profit jumped 7% from a year earlier to 403 crore, impacted by one-time impairment in value of investments undertaken by the company. The consumer goods firm posted a 4.1% rise in consolidated revenue for the quarter ended 30th September to Rs2,212 crore from Rs2,125 crore a year earlier.

The fast moving consumer goods company’s domestic FMCG business reported an underlying volume growth of 4.8% during the quarter. Excluding the foods business, where its Real fruit juices continued to post weak growth, the domestic FMCG volume growth stood at 7.4%, the company said. “The domestic business continues to face heavy headwinds in the form of a sustained slowdown in demand, aggravated by the liquidity crunch in the market," said Mohit Malhotra, chief executive officer, Dabur India Ltd.

Rural demand for the maker of Vatika hair oil and Real fruit juices continued to grow ahead of urban as the company pushed to expand its rural reach in India’s hinterland in a market where companies have been reporting weak rural demand. “During the second quarter of 2019-20, we have expanded our rural footprint to over 51,000 villages, up from 48,000 villages in June 2019. Riding on this expansion, rural demand continues to grow ahead of urban demand for Dabur," Malhotra said.

During the quarter, sales at the company’s domestic healthcare division (digestives, health supplements and OTC brands) grew 11.1% to 478 crore led by brands such as Chyawanprash and Glucose; while home and personal care grew 4.3% with brands such as Vatika registering good growth. Categories such as hair oils and oral care were impacted by the consumption slowdown. During the quarter, the company extended its Vatika hair oil brand to a kids range.

"Healthcare continues to be the out-performer for Dabur, which is in line with our strategy of focusing on the consumer health categories and investing disproportionately behind our power brands, a majority of them being in the healthcare space," Malhotra said.

The company’s foods division (that largely comprises the Real juice brand) saw a 5% drop in sales especially as consumers opted for cheaper variants of fruits juices. “As per Nielsen, juice and nectars category declined by 7.2% (in volume) in Q2 due to downtrading to lower price alternatives," the company said in an investor presentation.

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