FMCG company Dabur India, in its business update for the quarter ended September 30, 2022 (Q2 FY23), released on October 6, said that the geopolitical environment continued to have an unusually high inflationary impact on its business.
On expected gross margins, it said, due to high inflation during the second quarter, the pressure on input costs has a short-term effect, but due to this, the operating margin is anticipated to be between 150 and 200 basis points lower than in Q2FY22 but to increase sequentially.
"During the quarter inflation was at peak levels which impacted gross margins. The input cost pressure led to a near-term impact on operating margin which is expected to be lower by around 150-200 bps as compared to Q2 FY22 but will see sequential improvement," Dabur India said in a regulatory filing.
However, the company stated that its business in the country has been steady and the company is expected to report revenue growth in mid-single digits, despite the challenges posed by the macro-economic situation.
The firm also said the unprecedented inflation led to weak demand trends across categories, adding urban markets driven by modern trade and e-commerce saw double-digit growth.
And, as the rural market is concerned, the consumer goods major stated that it has witnessed some pressure in terms of liquidity, but is optimistic going forward, saying if inflation moderates, the festive season should support consumption growth.
It has said the Food & Beverages sector continues to lead with strong double-digit growth, due to its 43% growth in Q2FY22. The Home and Personal Care portfolio is expected to record mid-single-digit growth on a high base of 16.7 percent growth in Q2FY22. The healthcare vertical is anticipated to experience dampened performance during the quarter due to the large Covid base.
As far as its international business is concerned, the company said there are expectations that it may post double-digit revenue growth in constant currency. However, in Turkey and Egypt, it said currency depreciation persisted during the quarter, negatively affecting the translated growth.
The firm said it was gaining market share and outpacing category growth in most of the segments, both in the domestic and international markets.
The company also mentioned that to achieve profitable and sustainable growth, it would continue to invest in Power Brands, Innovation, Digitization, A&P, distribution expansion, and a strong back end.
While the company has shared its business update for the second quarter, the financial result for the July-September period is yet to be released.
For the first quarter ended June 2022 (Q1FY23), Dabur India reported a flat consolidated profit after tax (PAT) at Rs 441 crore. The PAT has improved marginally by 0.6 percent from Rs 438 crore last year. On a sequential basis, it surged 50 percent from Rs 294 crore PAT recorded during the previous quarter. Consolidated revenue for the quarter rose 8 percent year-on-year to Rs 2.822 crore. On a sequential basis, revenue increased by 12 percent.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
