India’s largest consumer products company, Hindustan Unilever Ltd (HUL), reported a 24% growth in net profit for the quarter ended December (compared with a year ago), helped by price increases, strong sales of premium products, and one-time gains from sale of property and reduction in liabilities related to retirement benefits and restructuring costs.
Excluding the one-time gains, the company’s net profit rose 15%. HUL ended the quarter with revenues of Rs3687.40 crore and a net profit of Rs631.44 crore.
“We took judicious price hikes, cost-saving measures and improvement in product mix to offset rising input costs, which increased our margin by 10 basis points,” said D. Sundaram, HUL director, finance.
The company said sales in terms of unit volumes as well as revenue grew 8% in the December quarter. HUL, one of India’s largest advertisers, also increased its ad spend by 32% to Rs376 crore for the period.
HUL announced a dividend of Rs3 per share of Re1 each on top of the Rs6 per share paid earlier.
Judicious pricing: D. Sundaram, director of finance and information technology at Hindustan Unilever Ltd.
Revenue from sales of soaps and detergents, which accounted for more than 45% of the company’s total revenues in the December quarter, grew 18%, compared with a year ago, to Rs1,689 crore. Revenue from beverages registered an 11% rise for the quarter although profits from this category fell by 14% due to higher advertising spends on the segment.
Revenue from sales of processed foods rose 41% and that from personal care products, another important category, 19%. The company also announced the launch of a range of nutritional drinks and snacks for children, Kissan Amaze Brainfood. Mint had reported on 21 December that HUL would launch the Amaze Brainfood brand in early 2008. Amaze is part of HUL’s parent Unilever Plc.’s global food portfolio.
Two weeks ago, the company started test marketing the product in Karnataka and Tamil Nadu; it now plans a national roll-out. “We will invest on building a large food business and more brands will be introduced in the next two years,” said Doug Baillie, chief executive officer of HUL
Analysts said the company’s performance was in line with expectations.
“The soaps and detergents segment has grown well and personal product business has finally picked up. Even the margins have expanded and the future prospects look good,” said Anand Shah, an analyst with Mumbai-based brokerage Angel Broking Ltd.
For the financial year ended December, the company reported a 15% increase in net profit at Rs1,769 crore on revenues that grew 13% to Rs13,718 crore. The 15% growth doesn’t take into account exceptional items.
Shares of HUL closed at Rs193.05 each, down 0.34%, on the Bombay Stock Exchange, on a day when the exchange’s benchmark Sensex index rose 2.05%.
Reuters contributed to this story.