Dabur Q3 Results: Net profit dips 5% to Rs 476 crore due to weak rural demand, revenue rises 3%

FMCG major Dabur India reported a 5.4 per cent year-on-year (YoY) dip in its consolidated net profit to Rs 476 crore for the September-December quarter. This is against a net profit of Rs 504.35 crore reported a year ago, the FMCG company said in its regulatory filing. However, its revenue grew moderately by 3.4 per cent to Rs 3,043.2 crore, which was its slowest growth since the April-June quarter of 2020. It was Rs 2,941.75 crore in the year-ago period. 

The company in its statement said that the company is facing many headwinds in the rural markets due to inflationary pressures.   

“The impact of inflationary pressures was more pronounced in the rural markets as marked downtrading and shift to more affordable and smaller packs led to rural growth lagging urban markets for the second quarter in a row for Dabur,” Dabur CEO Mohit Malhotra said in a statement. 

He added: “However, we believe that this demand slump in rural areas has bottomed out as we are now seeing some green shoots of revival in the hinterland.”  

Dabur’s homecare business registered strong 18 per cent growth. The Ayurvedic OTC business grew a sharp 17 per cent in Q3, while the digestives category reported 12 per cent growth. The food and beverages business reported 6.4 per cent growth during the quarter, while the toothpaste business ended the quarter with 32 per cent growth, led primarily by the steady demand for the flagship Dabur Red paste. 

It added that the rural demand will revive on the back of a record farm output and increased government spending. For urban growth, the company said it is hoping that part will be driven by softening of inflation and buoyancy in new-age channels like modern trade and e-commerce. 

The company reported that input cost pressure saw consolidated operating profit decline nearly 3 per cent YoY to Rs 610 crore, and operating margin contracted a sharp 130 basis points to 20 per cent. 

Price increases coupled with cost optimisation partially mitigated the inflation in input prices and adverse product mix thereby restricting the fall in profitability. 

In terms of global business numbers, Dabur’s Turkey business grew 97 per cent, while the Egypt business was up 35 per cent. The Sub-Saharan Africa business reported 17 per cent growth , while the SAARC market grew 8 per cent. 

Before the Q3 results, ICICIdirect predicted that Dabur India is expected to report muted results with 4.4 per cent revenue growth, largely led by pricing growth. Weak rural demand conditions have continued to impact volume growth even in Q3. Though health supplements are expected to report positive growth numbers Dabur will be impacted by high growth in the base quarter, it said.