New Delhi: In a volatile and uncertain environment, Hindustan Unilever Ltd (HUL), the Indian unit of Anglo-Dutch consumer goods maker Unilever Plc, reported a 17% rise in net profit for the second quarter, sustaining margins as sales slowed.
The maker of Knorr soup, Surf and Wheel detergents and Lux soap said on Friday that net profit rose to Rs.806.72 crore in the three months ended 30 September from Rs.688.92 crore a year earlier.
A Bloomberg poll of 25 analysts had estimated net profit at Rs.772 crore and sales at Rs.6,272.9 crore.
Domestic consumer product sales, which include home and personal care, water and food, grew 16% to Rs. 5,875.77 crore from Rs. 5,066.14 crore. The growth was driven by higher price increases of close to 9% and volume growth of 7%. The volume growth is lower than what the company has had in the last few quarters at close to 9-10%.
The company said the lower volumes are on account of budget rationalization by the Canteen Stores Department of the armed forces. This accounts for 6.5-7% of the total turnover of the consumer business, according to R. Shridhar, chief financial officer.
High advertising budgets did not help in boosting volumes. Overall, the industry media budget was up significantly to its highest levels in more than 15 quarters. HUL stepped up advertising and promotion spending by Rs.118 crore or 0.7% in the quarter.
Total income, which includes other operating income, grew 12.5% to Rs.6,310.81 from Rs.5,610.12 a year ago.
The company’s soaps and detergents business, which accounts for more than 50.46% of overall sales, grew 22%. Personal products grew 12% and beverages grew 10%, led by premium tea and coffee.
“In a volatile and uncertain environment, we continue to sustain our growth momentum while steadily improving our margins,” chairman Harish Manwani said. “Our consistent performance is being driven by a relentless focus on brand building, bigger and better innovations and disciplined execution in the marketplace.”
Net sales were in line with estimates, said V. Srinivasan, research analyst, Angel Broking Ltd. “We maintain our neutral recommendation on HUL,” he said.
Rival Dabur India Ltd also announced its second-quarter results Friday. It posted a 16.4% increase in net profit to Rs.202.37 crore for the quarter ended September amid an economic slump, thanks to cost-control measures, marginally exceeding analyst estimates.
Procter and Gamble Hygiene and Health Care, the India unit of P&G, said net profit rose 5.82% to Rs.45.2 crore. Net sales rose 25% to Rs.374.96 crore. They fell short of Bloomberg estimates of Rs.53 crore for profit and Rs.368 crore for sales.
Procter and Gamble Co., the Cincinnati-headquartered parent of P&G India had announced first-quarter results on Thursday.
Emerging markets account for 38.0% of the parent’s revenue versus 54.5% for Unilever. The company said there had been a modest slowdown in China, Russia, Turkey and Brazil. Indian sales grew 25% organically.
“Thus, to enhance contribution of emerging markets, P&G is planning to introduce 20 new categories and is building 15 plants in these markets. P&G plans to invest Rs.1,540 crore in the Indian home products business,” Abneesh Roy, analyst, Edelweiss Securities Ltd, said in a report released on Friday.