Dabur March quarter profit flat at ~333 cr

The net profit of Dabur India, the fast moving consumer goods (FMCG) major, inched up by 0.5 per cent to ~333.1 crore over a year before in the quarter-ended March. Net sales fell 4.8 per cent to ~ 1,909 crore, attributed to economic slowdown in the Gulf Cooperation Council markets.

After a six per cent dip in net sales during the December quarter, due to currency demonetisation, domestic sales improved this quarter. Sales by volume grew 2.4 per cent in India and revenue grew marginally to ~1,435 crore. Net profit improved by 5.3 per cent over a year, to ~302.3 crore.

Operating margin widened by 118 basis points to 21.9 per cent. Cost of materials went up by 1.7 per cent and was partially offset by a 1.4 per cent cut in the advertisements and publicity budget for the quarter.

Contribution of the domestic FMCG business grew to 71 per cent of consolidated revenue during the quarter, up from 66 per cent last year. The share of international business shrank by five percentage points, to 25 per cent.

“The business faced a tough economic environment, characterised by extreme volatility in currency, particularly in Egypt and North African markets, as well as crude oil-led economic turmoil in Saudi Arabia. In constant currency terms, consolidated net sales remained flat. Demand growth, still reeling under the impact of demonetisation, remained slow at the beginning of the quarter. It improved as the quarter progressed, led by a significant improvement in rural demand,” said Sunil Duggal, chief executive officer of Dabur India.

Net sales was ~7,680 crore for 2016-17, about 2.2 per cent less than in 2015-16. Unfavourable conditions in the domestic market after the note ban and currency devaluations in Egypt, Turkey, Nigeria and other markets in the region impacted its sales. Profit after tax grew 2.1 per cent to ~1,277 crore.

To impart growth Dabur is planning to revamp its hair care brand Vatika. “The naturals proposition has now become fairly generic and Vatika’s uniqueness has eroded. It’s market share has stayed stagnant at around 5 per cent. Duggal said in an investors’ concall on Monday. While it is decently profitable currently, we need to build scale to drive its profitability meaningfully. We are shifting Vatika brand towards the Ayurveda platform which we believe will be a key trigger to revive growth in the brand again”, Duggal said in an investors’ concall today. It would be a part of Dabur’s strategy to “strengthen its presence across key categories, leveraging its strong herbal and ayurvedic heritage”.

The stock closed at ~286.55, about 0.7 per cent lower than the previous close, on the BSE.