What to look for in HUL’s first quarter results

It would be interesting to see if Hindustan Unilever bucks the trend of anemic sales growth which is expected for the sector


The ICICI Securities revenues growth forecast of 7.7% over the year-ago quarter is among the most optimistic. Photo: Pradeep Gaur/Mint
The ICICI Securities revenues growth forecast of 7.7% over the year-ago quarter is among the most optimistic. Photo: Pradeep Gaur/Mint

Mumbai: The country’s largest consumer packaged goods company by sales, Hindustan Unilever Ltd (HUL), will announce its first quarter earnings on Monday. While the revenues in the June quarter are likely to be slightly better than that in the preceding quarter, it would be interesting to see if the company bucks the trend of anemic sales growth which is expected for the sector.

“Our consumer universe has exhibited lacklustre sales momentum in the first quarter of fiscal 2017 with no cheer on either volumes or pricing. We expect aggregate sales and adjusted net profit to grow at 9.6% and 12.7% year-on-year, respectively, along with 70 basis points’ operating profit margin expansion,” said analysts at Religare Capital Markets in their 5 July preview report.

For the June quarter, expectations are that the Indian arm of Unilever Plc may see net profit growth of between 5.4% on the lower side and 12% on the higher side over the year-ago, according to reports of brokerages Nomura Securities International, Inc, ICICI Securities Ltd, Kotak Institutional Equities (Kotak Securities Ltd) and Religare Capital Markets.

The range for revenue growth in the first quarter of the fiscal year is from 5.1% to 7.7%, according to the four reports.

The ICICI Securities revenues growth forecast of 7.7% over the year-ago quarter is among the most optimistic. It will be led by a 3% revenue growth in the soaps and detergents segment and 4.5% growth in the personal products segment, the brokerage said. Beverages and processed foods are expected to report revenue growth of 7% and 12%, respectively, said analysts Anand Mour and Aniruddha Joshi of ICICI Securities.

Meanwhile, industry interaction suggests that rural demand remains tepid and even in the event of a good monsoon season, growth would have a lagged impact, possibly reflecting only in financial year 2018, said the Religare report. As such it will be interesting to hear the company’s views on demand recovery and volume growth, it said.

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