Mumbai: Rising inflation, driven by input costs, has led to a 1.7% drop in the December quarter net profit of India’s largest packaged consumer goods company by revenues, Hindustan Unilever Limited (HUL).
The company’s net profit for the quarter is Rs637.51 crore, down from Rs649.11 crore for the corresponding quarter a year-ago and operating profit declined by 9.9%.
Excluding the exceptional items such as profit on sale of properties and long term trade investments, HUL’s net profit dropped by 2.1%.
For the maker of Surf, Lux, Kissan and Dove, revenues grew 11.6% at Rs5,027.01 crore for the quarter-ending 31 December compared to Rs4,504.26 crore a year-ago.
Input cost inflation continued to rise during the quarter. Cost of goods sold went up by 220 basis points, as a result of steep rise in material costs, especially in commodity sensitive categories, the company’s release said. One basis point is one-hundredth of a percentage point.
With advertising and marketing spends up at 17% year-on-year for the quarter, Unilever Plc’s Indian subsidiary HUL sustained double digit underlying volume growth in the domestic consumer business at over 13%.
“Our strategy is working and is reflected in the consistent double digit underlying volume growth over the last four quarters and ahead of market growth. We continue to strengthen our leadership in core categories, even as we invest to build opportunities for the future. In an inflationary environment, we will manage our business dynamically, through judicious pricing actions and increased focus on cost effectiveness, while ensuring that we remain competitive in the market place,” Harish Manwani, chairman, HUL said in a press statement.
HUL shares dropped 1.04% to Rs294.8 on Tuesday on the Bombay Stock Exchange (BSE).