Dabur Q2 Results: Profit Slips 17.5%, Misses Estimate

Dabur India Ltd. second-quarter profit declined, missing estimates, hurt by weaker demand in urban areas and heavy rains in parts of the country.

The honey-to-packaged juice maker's net profit dropped 17.5% over the previous year to Rs 418 crore during the July-September period, according to an exchange filing. That compares with the Rs 446 crore consensus estimate of analysts tracked by Bloomberg.

Dabur India Q2 FY25 Highlights (Consolidated, YoY)

• Revenue declined 5.5% to Rs 3,029 crore (Bloomberg estimate: Rs 3,042 crore).

• Ebitda declined 16.3% to Rs 553 crore (Bloomberg estimate: Rs 574 crore).

• Margin contracted to 18.2% versus 20.6% (Bloomberg estimate: 18.9%).

• Domestic revenue decreased 7.6% due to inventory rationalisation.

• Advertising expenses rose 4.2% to Rs 226 crore.

Besides a challenging demand environment marked by high food inflation and a resultant squeeze in urban demand coupled with the vagaries of weather, the strategic decision to rationalise inventory in the mainstay general trade channel impacted domestic sales, according to the company.

"Over the past couple of years, we have witnessed a marked shift in consumer buying patterns in favour of quick commerce, driven by the convenience this channel offers," said CEO Mohit Mathotra. "This has resulted in the emerging channels growing at high teens, putting the general trade under stress. To address the changing marketplace dynamics and support our distributor partners in tiding over the challenges, we took a proactive decision to rationalise inventory in the general trade, which resulted in a temporary dip in sales during the quarter."

Dabur's focused approach towards expanding its rural footprint to over 1.22 lakh villages reaped rich dividends as rural demand outpaced urban demand by 130 basis points during the quarter, according to Malhotra.

Category Growth

• Home and personal care revenue fell 8.1% to Rs 1,035 crore.

• Revenue in healthcare dipped 9.8% to Rs 598 crore.

• Food and beverages revenue fell 20.7% to Rs 317 crore.

• The secondary sales, which exclude the impact of inventory rationalisation, have grown 6% for home & personal care and 4% for healthcare.

• Secondary sales for food grew 20.6% but declined 11% for beverages.

Dabur's international business grew 13% in constant currency terms to Rs 847 crore, driven by Egypt (72.8%) and Sub-Saharan Africa (26.1%).

Going ahead, the company expects to grow ahead of the market with La Nina boosting its winter portfolio, particularly the Chyawanprash business.

Separately, Dabur said it is acquiring Ayurvedic hair care brand Sesa Care Pvt. for an estimated Rs 315-325 crore to expand its presence in the Rs 900 crore ayurvedic hair oil market.

"The proposed merger brings substantial revenue and cost synergies," according to the company. "Dabur's extensive distribution network, category expertise, and access to key international markets can be leveraged to grow the brand and expand its footprint."

Shares of Dabur were trading 1.47% higher at Rs 543.75 apiece on the BSE, a 0.51% decline in the benchmark Sensex at 3:27 p.m. on Wednesday.