With above-normal rainfall being recorded across the country, FMCG giant Dabur announced ahead of its quarterly results for FY25 that its beverage segment has͏͏ been͏͏ impacted͏͏ by͏͏ these͏͏ weather͏͏ conditions.
Decline͏͏ in͏͏ Out-of-Home͏͏ Sales:
“Although͏͏ demand͏͏ trends͏͏ were͏͏ showing͏͏ signs͏͏ of͏͏ improvement,͏͏ heavy͏͏ rain͏͏ and͏͏ floods͏͏ in͏͏ various͏͏ parts͏͏ of͏͏ the͏͏ country͏͏ affected͏͏ out-of-home͏͏ consumption͏͏ and͏͏ consumer͏͏ offtake͏͏ during͏͏ Q2͏͏ FY25.͏͏ As͏͏ a͏͏ result,͏͏ we͏͏ experienced͏͏ some͏͏ impact͏͏ on͏͏ our͏͏ business,͏͏ particularly͏͏ in͏͏ the͏͏ beverage͏͏ category,”͏͏ stated͏͏ the͏͏ company͏͏ in͏͏ a͏͏ stock͏͏ exchange͏͏ filing.
Continue͏͏ Exploring:͏͏ Dabur to͏͏ invest͏͏ INR͏͏ 400͏͏ Cr͏͏ in͏͏ South͏͏ India’s͏͏ first͏͏ manufacturing͏͏ plant͏͏ in͏͏ Tamil͏͏ Nadu
Shares͏͏ of͏͏ the͏͏ FMCG͏͏ major͏͏ closed͏͏ yesterday͏͏ at͏͏ INR͏͏ 618.50,͏͏ reflecting͏͏ a͏͏ decline͏͏ of͏͏ 1.07%.
During͏͏ the͏͏ quarter͏͏ when͏͏ the͏͏ beverage͏͏ segment͏͏ was͏͏ affected,͏͏ India͏͏ experienced͏͏ 11.6%͏͏ above-average͏͏ rainfall͏͏ in͏͏ September,͏͏ following͏͏ 9%͏͏ and͏͏ 15.3%͏͏ higher-than-average͏͏ rainfall͏͏ in͏͏ July͏͏ and͏͏ August,͏͏ respectively,͏͏ according͏͏ to͏͏ IMD͏͏ data.
UBS͏͏ Downgrade͏͏ and͏͏ Competition:
Recently,͏͏ UBS͏͏ downgraded͏͏ the͏͏ FMCG͏͏ company’s͏͏ stock͏͏ from͏͏ ‘Buy’͏͏ to͏͏ ‘Neutral,’͏͏ citing͏͏ concerns͏͏ about͏͏ its͏͏ high͏͏ valuation͏͏ and͏͏ potential͏͏ risks͏͏ to͏͏ beverage͏͏ sales͏͏ growth.͏͏ Increasing͏͏ competition͏͏ from͏͏ cola͏͏ drinks͏͏ and͏͏ coconut͏͏ oil͏͏ brands͏͏ may͏͏ also͏͏ affect͏͏ Dabur’s͏͏ sales.
For͏͏ the͏͏ previous͏͏ quarter,͏͏ Dabur͏͏ reported͏͏ an͏͏ 8%͏͏ increase͏͏ in͏͏ its͏͏ consolidated͏͏ net͏͏ profit͏͏ for͏͏ the͏͏ quarter͏͏ ended͏͏ June͏͏ 30,͏͏ 2024,͏͏ reaching͏͏ INR͏͏ 500.12͏͏ crore,͏͏ compared͏͏ to͏͏ INR͏͏ 463.88͏͏ crore͏͏ in͏͏ the͏͏ same͏͏ period͏͏ last͏͏ year.
“The͏͏ company͏͏ has͏͏ made͏͏ a͏͏ significant͏͏ strategic͏͏ decision͏͏ to͏͏ adjust͏͏ distributor͏͏ inventory͏͏ in͏͏ the͏͏ GT͏͏ channel͏͏ and͏͏ enhance͏͏ their͏͏ ROI.͏͏ Although͏͏ this͏͏ proactive͏͏ measure͏͏ may͏͏ result͏͏ in͏͏ a͏͏ temporary͏͏ decline͏͏ in͏͏ topline͏͏ revenue,͏͏ it͏͏ is͏͏ crucial͏͏ for͏͏ the͏͏ long-term͏͏ health͏͏ and͏͏ hygiene͏͏ of͏͏ our͏͏ business.͏͏ Due͏͏ to͏͏ this͏͏ correction,͏͏ the͏͏ company͏͏ anticipates͏͏ a͏͏ mid-single-digit͏͏ decline͏͏ in͏͏ consolidated͏͏ revenue͏͏ for͏͏ the͏͏ quarter,”͏͏ stated͏͏ the͏͏ company͏͏ in͏͏ its͏͏ announcement.
