Dabur Q4 net profit slips 22% on impairment expense, low margins

Fast-moving consumer goods company Dabur India today reported a 22% on-year fall in consolidated net profit for the January-March quarter to Rs 294 crore, mainly due to an exceptional expense and higher raw material costs.

The company accounted for Rs 85 crore impairment charge due to steep devaluation in Turkish currency over the past one year. Minus the exceptional item, Dabur's bottomline would have grown 0.4% during the quarter.

Consolidated revenue grew 7.7% to Rs 2,518 crore in the fourth quarter from Rs 2,337 crore in the same quarter a year ago.

The effect of rising raw material costs was visible on the company's earnings as operating margins contracted 90 basis points to 18.0% during the March quarter.

Most FMCG companies have reported erosion in margins due to a rise in inflation, mainly in edible oil and copra.

"The dramatic rise in input costs was the major challenge during the quarter. We responded to this challenge with a mix of pricing actions and cost control measures," the company said.

For the 2021-22 fiscal, the company's revenue grew 14% to Rs 10,889 crore. Net profit before exceptional items rose 7.7% to Rs 1,824 crore.

Home and personal care products accounted for nearly half of the company's sales in 2021-22, healthcare 36% and rest came from the food and beverages segment.

International business grew 15.8% in constant currency terms in 2021-22.

Other key highlights

1) The board recommended a final dividend of 270%, taking the total dividend for 2021- 22 to 520%.

2) Food and beverages business reported a 33.5% growth during the March quarter with its juices and beverages business growing at 35%.

3) The home care business, riding on strong performance of air fresheners, ended the quarter with an 11% rise.

4) The health supplements business, riding on strong demand for flagship brands like Dabur Honey and Dabur Glucose, grew 9.7% in the March quarter.

5) Dabur reported a 250-bps gain in its Chyawanprash market share and a 40-bps gain in shampoo market share during the quarter.

6) Dabur's Turkey business reported a 47% growth in local currency during the quarter.

7) Region-wise, domestic sales were 71.7% of the total sales and nearly a quarter came from international business.

Management commentary

"These are challenging times, and we are happy to have progressed well in this journey with consumer-centric innovations to expand our total addressable market and gain market share across 99% of our product portfolio," Dabur India Chief Executive Officer Mohit Malhotra said

Dabur had an underlying FMCG volume growth of 10.1% for the full year, Malhotra said.

"Despite the near-term concerns around heightening inflationary pressures and a resultant consumption slowdown, Dabur will continue to plough investments behind our Power Brands, coupled with investment in expanding the rural footprint and enhancing the go-to-market approach to drive sustainable, profitable growth, going forward," he said.