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Mumbai: Despite a challenging environment in terms of high inflation and an economic slowdown, Hindustan Unilever Ltd (HUL), the Indian unit of Anglo-Dutch consumer goods maker Unilever, beat market forecasts with a 48% jump in adjusted net profit growth for the first quarter.

The maker of Knorr soups, Surf and Wheel detergents, and Lux soaps said on Monday that adjusted net profit rose to 854.58 crore in the three months ended 30 June from 578.41 crore a year earlier. A Bloomberg poll had estimated net profit at 670 crore and sales at 6,320 crore.

“This growth is driven by 9% of underlying volume growth and an equal price growth," said R. Sridhar, chief financial officer.

The adjusted net profit number is on account of profits from the sale of real estate, including in Mumbai and Bangalore, worth 607.24 crore during the quarter. Including this, net profit for the quarter increased by 112% to 1,331 crore.

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R. Sridhar talks about HUL’s growth plans and how the company has adapted to adversity since 2009

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The year-ago figures are not strictly comparable as the company has changed accounting practices. Additionally, in the January-March quarter, it has hived off its export business to wholly owned subsidiary Unilever India Exports Ltd. Comparable revenue for the quarter grew 19.81% to 6,378.77 crore from a year ago.

“We have delivered another quarter of strong volume-led growth with an improvement in margins. The environment continues to be challenging in terms of inflation and a general economic slowdown. In this context, we are implementing our strategy with even greater rigour and managing our business dynamically to remain competitive and cost efficient. We continue to drive innovation and execution to strengthen our core business, while leading market development in the emerging categories," said Harish Manwani, chairman of HUL.

Rivals Dabur India Ltd, Tata Global Beverages Ltd and Colgate-Palmolive (India) Ltd, which also announced their results on Monday, registered strong volume growth in the quarter ended June.

“All the consumer goods companies, which have declared their results today, have had strong volume growth, which makes my belief stronger on the Indian consumption growth story remaining robust even in a challenging environment," said Shirish Pardeshi, executive director and co-head of research at Anand Rathi Securities Pvt. Ltd.

However, concerns persist about the effect of a weak monsoon on the consumer packaged goods industry.

“The monsoon outlook is alarming. It will erode demand," said Sunil Duggal, chief executive officer at Dabur. “We might not be able to sustain the over 12% volume growth that we have seen during the quarter. It may come down to high single digits."

Dabur reported a 16.9% increase to 149.4 crore in net profit and 21% increase in net sales to 1,461.97 crore for the first quarter. A Bloomberg poll had estimated net profit at 213.5 crore and sales at 1,450 crore for Dabur.

Tata Global Beverages posted a consolidated net profit of 77.69 crore for the quarter ended 30 June. In the year-ago period, the company had a consolidated net profit of 160.92 crore that included a one-time gain of 88.9 crore. Consolidated revenue at 1,725 crore was up 18% over the corresponding quarter in the previous year.

Colgate-Palmolive saw net sales rise 20% to 736.1 crore. Net profit grew 17% to 117.4 crore. Volume growth was 11%.

For HUL, revenue from selling soaps and detergents, which account for close to 45% of the total, rose 24% to 3,163 crore, largely because of price increases. Personal care product sales registered double-digit volume growth, increasing 17% to 1,847 crore. The foods and beverage business growth of 7% was led by turning coffee brand Bru into a premium one.

HUL increased its advertising spending by 16% to 187 crore over the corresponding quarter last year, driven by increasing competition and the relaunch of Fair and Lovely men’s fairness cream.

Its operating profit margin widened by 1.37 percentage points to 13.4% from 12.03%, while that of rival Colgate-Palmolive expanded by 0.14 percentage point, and that of Tata Global Beverages by 2.51 percentage points. However, Dabur witnessed a narrowing in its operating profit margin by 1.37 percentage points.

HUL’s shares fell 0.67% to 442.85 at the close of trading on BSE on Monday, while the benchmark Sensex lost 1.64% to close at 16,877.35 points. Dabur rose 0.13% to 118.15, Colgate-Palmolive fell 0.05% to 1,167.85, and Tata Global Beverages fell 2.69% to 115.60.

PTI contributed to this story.

Also Read | HUL’s growth story intact, rising advertising spends a concern

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