Dabur profit increases 3.3% as demand in urban areas picks up

livemint.com:

Dabur India Ltd on Thursday reported a 3.3% year-on-year increase in September quarter profit to ₹507.04 crore. Revenue from operations grew 7.27% to ₹3,203.84 crore. India FMCG volumes grew 3% y-o-y during the quarter, the maker of Vatika shampoo and Dabur Red toothpaste said in a stock exchange filing.

The company reported a “marked sequential improvement in urban demand", led by new-age channels. While rural growth still lags urban demand, the gap has reduced, said Mohit Malhotra, Dabur India’s chief executive officer. “Uneven monsoon impacted rural consumption in quarter two.

However, we expect the uptrend and FMCG consumption to continue, driven by new-age channels, MSP (minimum support price) increases, sustained infrastructure investments, robust crop sowing and the onset of the festive season," Malhotra said in a post-earnings call on Thursday. Gross margins expanded by 295 basis points to 48.3% led by moderating inflation, while Ebitda grew 10%. Advertising and publicity spends during the quarter were up 42.6%.

“As far as margin is concerned, we’ve seen a bit of deflation in most of our categories, but that said we have not seen too much of deflation in petroleum- linked products, while there is a deflation in packaging and in edible oil. But petroleum prices haven’t softened to what they were when the inflation cycle had not begun…We expect the margin upside to continue for us going forward in the quarter," Malhotra said. Dabur’s healthcare portfolio grew 8.3% in Q2, while health supplements reported flattish growth y-o-y as its chyawanprash brand saw muted growth; its home and personal care business reported a 6.46% rise in sales, while home care business reported double-digit growth.