Marginal increase in Dabur ad spends as sales grow 30 pc

Marginal increase in Dabur ad spends as sales grow 30 pc

Author | Dipali Banka | Friday, Apr 29,2011 8:54 AM

Marginal increase in Dabur ad spends as sales grow 30 pc

Dabur India Ltd, the diversified FMCG group with brands like Dabur for natural healthcare products, Vatika for premium personal care, Hajmola for digestives, Réal for fruit-based beverages, and Fem for fairness bleaches and skin care, has released its fourth quarter and financial results ending March 31 2011. The group’s ad spends for Q4 stood at Rs 1,274 million as compared to Rs 1,156 million in the corresponding quarter last year. However, what is interesting to note is the ratio of ad spends to sales has gone down from 13.6 per cent last year to 11.5 per cent this year.

Dabur has been on a stringent cost saving mission in order to mitigate the impact of rising inputs costs. Cost saving measures, coupled with price hikes and strong demand for products, have helped the group see a growth of 8.5 per cent in its consolidated net profit to Rs 1,470 million from Rs 1,355 million last year. Commenting on the group’s performance, Dabur India Ltd Chief Executive Officer Sunil Duggal, said, “While the external environment and inflation in raw material prices continued to play truant, a combination of calibrated price increases and cost management initiatives helped Dabur report a 28 per cent growth in EBITDA during the fourth quarter. Dabur continues to register sales growth ahead of the market in several key categories.”

Dabur has been reducing its ad spends gradually to battle the inflationary pressures and analysts see this trend continuing going forward. Chitrangda Kapur, Research Analyst - FMCG & Media, Angel Broking Ltd, notes in her update for the quarter results: “We expect Dabur’s operating margins to sustain at ~18.5-18.7 per cent levels owing to cost rationalisation and better product mix (premium product launches like NUtrigo).”

The group reported a consolidated growth of 30.6 per cent in net sales at Rs 11,082 million in the March quarter of 2011 from Rs 8,486 million a year ago. This includes income from the recently-acquired Hobi Kozmetik of Turkey and Namasté Laboratories of the US.

While the Hair Oils category reported a 15 per cent growth, Dabur’s toothpaste brands gained 16.8 per cent. Dabur’s home care business also registered a 32.5 per cent growth, while the skin care portfolio – riding on sustained demand for the Gulabari range of products and the expansion of the Fem offering – ended the year with a growth of 16.8 per cent. The foods business posted a 28.3 per cent growth during the year, while health supplements business ended the year with 23 per cent growth.

Duggal also said that the rise in volume growth had fundamentally been from the rural areas. “Dabur has been taking initiatives to drive rural growth and as a result, our growth from the hinterland has once again outpaced urban growth. Dabur is now putting in place several new initiatives to further expand its Rural India footprint, and remains on course to strengthen our brand portfolio and improve our competitiveness in the market place,” he said.

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