Hindustan Unilever’s Shares down 5.2% on Decline in Q3 profits

Hindustan Unilever’s Shares down 5.2% on Decline in Q3 profits

New Delhi: The country’s biggest maker of household products, Hindustan Unilever Ltd, witnessed the biggest decline in its stock price in 15 months on the Bombay Stock Exchange (BSE), after third quarter earnings missed estimates because of a factory lockout.

Hindustan Unilever shares fell Rs11.4, or 5.2%, to close on Wednesday at Rs207.60 at BSE. That was the steepest percentage drop for Hindustan Unilever since 17 July 2006.

Net income was Rs408 crore for the quarter ended 30 September, the company said on Wednesday. That’s less than the Rs442 crore median estimate of five analysts surveyed by Bloomberg. Hindustan Unilever is the third worst performing benchmark stock in the past month, after a seven-week labour dispute shuttered its Doom Dooma factory in Assam, which makes about 30% of the company’s personal care products. Profit before interest and tax from personal care products such as skin creams and toothpaste fell 5.7% to Rs215 crore.

“The personal care segment has taken a hit because of the Doom Dooma lockout and the reshuffling of its products to focus on the premium end," said Anand Shah, an analyst at Angel Broking Ltd in Mumbai, and put a “hold" rating on the stock. Sales totalled Rs3,360 crore in the quarter.

Operating margin, the percentage of sales left after subtracting production, marketing and other expenses, declined to 13.2% in the quarter, from 13.5% in the year-ago period.

Hindustan Unilever said it will pay a one-time dividend of Rs3 a share to mark the company’s 75th anniversary.

Sales of Fair & Lovely skin cream, Pepsodent toothpaste and other personal care products rose 4% to Rs888 crore.

The company’s London- and Rotterdam-based parent, Unilever Plc., owns about 51.4% of the Indian unit. BLOOMBERG