Consumer goods maker Dabur India forecast a decline in its second-quarter revenue on Tuesday, citing weak demand in its food and beverages segment — its first drop in more than four years.
Dabur forecast a revenue fall in the mid-single digit percentage range for the quarter ended September 30, as heavy rain and floods across parts of the country impacted “out of home” consumption, it said.
The food and beverage segment accounted for 14 per cent of its overall revenue, according to its annual report for the year ended March 2024.
Rainfall in the country from June through September was the highest since 2020, the state-run weather department said on Monday.
Data from LSEG showed Dabur last reported a decline in revenue in the June quarter of 2020.
The company said its operating margin — a key earnings metric — was also likely to decline in the mid- to high-teens percentage range as it spent heavily on advertising and promotions.
However, Dabur expects to post a double-digit percentage growth in constant currency terms in its international business, which accounts for about a quarter of its revenue.
Dabur will report its quarterly results on October 30 and is the first among peers Marico, Godrej Consumer Products and Adani Wilmar to release its quarterly update.
“The company has taken an important strategic decision to correct distributor inventory in the GT channel and improve their return on investment.
“This proactive step, while leading to a temporary decline, is essential for the long-term health and hygiene of our business,” it said.
Badshah Masala business continued to perform well, growing in double digits during the quarter, it added.
“This temporary corrective action is a necessary step to strengthen GT channel and enhance our efficiency and growth going forward,” the company said.
Further, Dabur said it will continue to invest strongly in marketing and media initiatives, building distribution infrastructure and enhancing its backend capability.
“We expect revenue growth to revive from October 2024 onwards,” the company said.