Home / Companies / News /  HUL June quarter net profit jumps 19% to ₹1,529 crore

Mumbai: Hindustan Unilever Ltd (HUL), India’s largest listed consumer packaged goods company, said that it continues to see a gradual improvement in demand as consumers bought more of its products.

Net profit grew 19% to 1,529 crore in the three months ended 30 June from 1,283 crore a year ago.

Adjusted for the goods and services tax (implemented from 1 July 2017), revenue rose 16%, the company said in a press statement, without giving details. The revenue growth was driven by an underlying volume growth of 12%, it said.

A Bloomberg poll of 15 analysts had estimated profit at 1,540.3 crore and revenue at 9,669.1 crore.

“HUL Q1FY19 performance was in-line with the expectation with 22% growth in the bottom-line. The highlight of the quarter was sustenance double digit volume growth at 12% in the domestic business," said Kaustubh Pawaskar, an analyst at brokerage Sharekhan.

The India unit of Anglo-Dutch consumer goods maker Unilever Plc reported volume growth ahead of the market. “If we look at the last 12 weeks, then volume for overall market are in the vicinity of 5-5.5% and Nielsen reported growth is 6-6.5%. We believe it has bottomed out but the question is when will it be back to the full potential that exists in our country," said chairman and managing director Sanjiv Mehta while addressing the press at its Mumbai headquarters.

Even as the market saw crude prices firming by 35% over the preceding quarter and experienced currency-led inflation, it managed to widen margins. HUL’s operating profit margin expanded 100 basis points (bps) to 21% in the quarter from a year earlier. The improvement was on account of lower cost of goods sold, judicious pricing and savings and refunds from goods and services tax and excise duties. One basis point is one-hundredth of a percentage point. “Crude volatility and currency-led inflation are key risks going ahead and we will continue to manage our business dynamically while driving operational efficiencies," said Mehta.

To be sure, the macroeconomic environment is worsening. Retail inflation is at a five-month high in June at 5% against 4.87% in the preceding month. The Reserve Bank of India’s (RBI’s) Consumer Confidence Index in May was at the same level as March showing no improvement. This is worse than what it was in December.

All the same, rural continued to grow ahead of urban for the second quarter in a row, Mehta said.

In the June quarter, growth was driven by its homecare portfolio which grew 20% on a comparable basis. The personal care and beauty portfolio and food and refreshment segments grew 14% on a comparable basis. The growth was driven by brands like Fair & Lovely, Pond’s, Dove, Pears, Kissan and Knorr.

During the June quarter, the company increased its advertising and promotion spends by 27.4%, spending more on new launches as well as supporting its large brands.

The company has extended Lever Ayush brand into packaged foods with the launch of millet-based upma, khichdi and pongal in Tamil Nadu. HUL has also extended its Brylcream brand into men’s grooming products for beards and moustache in an exclusive partnership with Amazon. The range is available online only.

Meanwhile investors in anticipation of good numbers drove the stock price up 0.73% to close at 1,753.85 whereas the broader BSE Sensex shed 0.60% at 36,323.77 points. The bellwether for India’s consumer economy announced its earnings after market hours.

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