Dabur India warns of margin hit on currency woes, inflation

Dabur India Ltd's operating margin for the third quarter could shrink due to currency fluctuations and inflation in its international business, the consumer goods maker said on Friday, even as it forecast an overall improvement in revenue.

The company, which earns a quarter of its revenue from overseas markets, said declines in Turkish and Egyptian currencies and high cost of sales have put a damper on its international business in recent times.

Dabur's shares, which fell 3% last year, declined as much as 3.6% on Friday.

Operating margin for the three months ended December would shrink by 200 - 250 basis points, the fast-moving consumer goods company said, adding that its gross margin would improve sequentially due to a pick-up in demand in India towards the end of the quarter.
Further, the company said its consolidated quarterly revenue could increase in the low- to mid-single-digit percentage range, with business in rural India showing signs of a recovery after coming under pressure early on in the quarter.

Publicly traded packaged goods makers in India have been reeling from high cost of living over the past few quarters, especially with cash-strapped rural buyers looking for cheaper alternatives.

"The improving macroeconomic environment, positive steps being taken by the government and the expected stimulus of the upcoming Union Budget should help speed up the recovery of the industry," Dabur said in an exchange filing.

The update from Dabur follows mixed forecasts from peers Marico and Godrej Consumer Products in recent days.

Dabur is expected to report earnings for the third quarter on Feb. 2