India`s Dabur reports drop in profit on higher costs, demand weakness
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Consumer goods major Dabur India reported a 2.8% fall in second-quarter profit on Wednesday, as sales moderated and higher commodity prices weighed on margins.
The impact of inflationary pressures was more pronounced in the rural markets where demand growth was slower compared to urban areas for the first time in five quarters. The company expects a recovery in rural demand in the coming quarters.
"While the challenging economic environment continued to be a concern and impacted the purchasing power, we are seeing green shoots of recovery with the onset of festive season," Chief Executive Officer Mohit Malhotra said.
Dabur said it had undertaken price hikes across key product categories to mitigate higher costs. Price increases and the recent easing in commodity prices helped consumer majors Nestle India and ITC report better-than-expected quarterly growth.
Dabur's consolidated net profit in the three months to Sept. 30 fell to 4.9 billion Indian rupees ($59.73 million), in line with analysts' estimates, according to IBES data from Refinitiv.
The company had reported a profit of 5.04 billion rupees a year earlier.
The toothpaste and packaged juices maker earlier this month warned that soaring inflation during the second quarter could lower its operating margin by around 150-200 basis points. India's annual retail inflation rate accelerated to 7% in August, driven by a surge in food prices.
The company's revenue rose 6% in the quarter to 29.86 billion rupees.
Dabur shares have jumped around 15.5% in the quarter, compared with 17.9% gains in the Nifty FMCG index.
