Dabur India Q2 net profit climbs 7% to Rs 403 crore, revenue up 4%

Homegrown fast moving consumer goods (FMCG) company Dabur India has reported a 7 per cent year-on-year growth in consolidated net profit at Rs 403 crore for the second quarter ended September 30, 2019, "despite the impact of one-time impairment in value of investments worth Rs 40 crore". Excluding this impairment, the net profit for the quarter grew 15.1 per cent on yearly basis, the company says.

"The world's leading ayurvedic and natural health care company had posted the consolidated net profit of Rs 377 crore in the same quarter last year," Dabur India said in a filing to the Bombay Stock Exchange.

Consolidated revenue from operations of the owner of Vatika hair oil and Real juices stood at Rs 2,211.97 crore as against Rs 2,124.97 crore in the year-ago period, a growth of 4.09 per cent.

"Dabur India Ltd mitigated the impact of macro-economic headwinds and a prolonged slowdown to deliver a 4.1 per cent growth in consolidated revenue and an improvement of 90 bps in operating margin during the second quarter of 2019-20 financial year," the company said in the regulatory filing.

Domestic FMCG business reported a volume growth of 4.8 per cent during the quarter. Excluding the foods business, the domestic FMCG volume growth stood at 7.4 per cent, the company said.

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The company's operating profit (EBITDA) rose by 8.6 per cent y-o-y to Rs 489.5 crore as compared to Rs 450.9 crore last year. The operating margin stood at 22.1 per cent in Q2FY20.

Commenting on Q2 earnings, Dabur India, CEO, Mohit Malhotra 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. Despite a sharp fall in growth rates in most consumer products segments, Dabur continues to focus on brand-building across our key categories while leveraging our strong herbal and Ayurvedic heritage."

"We also continued to move forward on our distribution expansion strategy in rural India. 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," he added.

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Segment-wise, Dabur's health supplements business reported a 14.4 per cent growth led by strong demand for its flagship health supplements brand Dabur Chyawanprash. The digestives category ended Q2 with a 10.2 per cent growth during the quarter, while the Ayurvedic Ethicals business grew by 7.2 per cent.

Dabur's shampoo business, on the back of the re-launch of its Vatika Shampoo, grew by 12 per cent during Q2. The homecare business sales was up 7 per cent, riding on strong demand for our mosquito repellent brand Odomos. The toothpaste category grew by nearly 5 per cent during the quarter with the flagship brand Dabur Red Paste reporting a nearly 10 per cent growth.

Dabur's board has declared interim dividend of Rs 1.40 per equity share having face value of Re 1 each (i.e. 140%) for the financial year 2019-20, which will be paid November 25, 2019 onwards.

Reacting to Q2 earnings, shares of Dabur India were trading 4.85 per cent higher at Rs 482.05 apiece on the Bombay Stock Exchange.

Edited by Chitranjan Kumar