1. Weak rural demand sees Hindustan Unilever sales slow

Weak rural demand sees Hindustan Unilever sales slow

Hindustan Unilever (HUL) on Tuesday reported a net profit of Rs 1,059.14 crore in the three months to March, virtually flat year-on-year, missing analysts’ estimates of Rs 1,135 crore, according to Thomson Reuters data.

By: | Updated: July 22, 2015 2:31 AM
Hindustan Unilever Limite

The HUL scrip closed at R891.45, down 2.34% on the BSE. (Reuters)

Hindustan Unilever (HUL) on Tuesday reported a net profit of Rs 1,059.14 crore in the three months to March, virtually flat year-on-year, missing analysts’ estimates of Rs 1,135 crore, according to Thomson Reuters data. The profit was subdued partly because the company paid out taxes that were higher by 14%.

The Indian arm of Anglo Dutch group Unilever, which makes Lux soap and Lipton tea, notched up a volume growth of 6% in the quarter, more or less in line with forecasts, while net sales at R7,973.37 crore rose 5.31% year-on-year. The operating profit (before exceptionals) came in at R1,431.50 crore, an increase of 14.5% year-on-year with the key personal products portfolio faring well and the company able to rein in costs at R6,673.63, up just around 3% y-o-y. While the company is understood to have trimmed prices of some products by 5-6%, it also gained from softer commodity prices. The HUL scrip closed at R891.45, down 2.34% on the BSE.

hul

Management commentary confirmed rural demand remains muted; analysts estimate that close to half of the FMCG major’s revenues are earned from the hinterland. HUL chairman Harish Manwani observed that the environment remained subdued despite which the company had reported an improvement in operating margins. “The near-term outlook is largely dependent on the pick-up in rural markets but commodity costs expected to remain benign,” Manwani said. PB Balaji, CFO, said the environment remained challenging and the recovery was yet to stablise, especially in the rural market.

During the June quarter, revenues from soaps and detergents remained virtually unchaned at Rs 3854.4 crore but the profitable personal products reported a revenue increase of 11.4% rise to Rs 2405.6 crore.

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