Emami says Middle East tensions disrupted exports, raised costs; expects recovery from Q2

Geopolitical tensions in the Middle East disrupted shipping routes, raised freight costs and hurt supply chains for Emami Ltd during the March quarter, dragging its international business even as the FMCG company expressed confidence of a recovery from the second quarter of FY27.

The Kolkata-based company said the disruption around the Strait of Hormuz affected operations across the GCC, CIS and South Asian markets, leading to a 5% decline in its international business during the quarter.

“Starting 28th February, we got a big jolt in the month of March where the entire Hormuz and supply chains were shut,” said Vivek Dhir, CEO of international business, during the company’s earnings call. “So entire Middle East is dependent on supply chains from different parts of the world. It’s more like a transnational supply chain.”

Emami reported consolidated revenue of ₹925 crore for the fourth quarter, down 4% year-on-year, while profit after tax fell 12% to ₹143 crore. EBITDA declined 15% to ₹187 crore. For the full year FY26, revenue slipped 1% to ₹3,780 crore while PAT declined 4% to ₹775 crore.

The company said the quarter was impacted not only by geopolitical headwinds but also by delayed summers, inconsistent temperatures and unseasonal rainfall that hurt demand for its summer portfolio.

“Our international business declined by 5% during the quarter primarily due to geopolitical disruptions in the Middle East which impacted shipping routes through the Strait of Hormuz, disrupted supply chains, increased freight costs and affected operations across the GCC, Middle East, CIS and South Asian markets,” said Mohan Goenka, vice chairman and whole-time director.

Supply chain stress and recovery plans

Dhir said Emami’s international operations were heavily dependent on imports and cross-border supply chains. Around 50% of goods are produced within the UAE but rely on imported raw materials and packaging. Another 30% of goods are imported from Europe and 20% from India and other parts of Asia.

“That got impacted very badly in the month of March,” he said.

However, the company indicated that conditions have started stabilising since April. “Come April, we have been able to streamline quite a bit of the disruption of supply chain despite costs going up,” Dhir said, adding that the business returned to around 2% growth in April.

The company expects the first quarter to remain in single-digit growth territory before returning to double-digit growth from the second quarter onward.

Despite the pressure on sales, Emami managed to expand gross margins by 250 basis points to 68.4% in the quarter through cost discipline and pricing actions. Advertising and promotion spending rose 12% during the quarter as the company continued investing behind brands and new launches.

The company’s summer portfolio remained under pressure, declining 22%, with talcum powder sales falling 40%. However, the broader domestic portfolio showed resilience. Pain management grew 11%, Kesh King rose 14%, healthcare products grew 7%, and Seven Oils in One surged 34%.

Goenka said Emami remains optimistic on the summer season going ahead despite a delayed start. “Overall, we are very confident in the first half. The summer brands are definitely going double digits, both Navratna and DermiCool,” he said.

Quick commerce also emerged as a strong growth driver for the company, posting 70% growth during the quarter, while organised channels contributed nearly 32% of domestic business. The company also reduced receivables by more than ₹100 crore during the year, improving its working capital cycle by 10 days.