HUL profit up 20% in Q2 on strong sales

The operating margins at the FMCG major fell 180 basis points to 23.3%, thanks to elevated raw material prices.

October 22, 2022 06:30 IST

Hindustan Unilever, Hindustan Unilever sales, Hindustan Unilever profit,

“Headline growth in the rural areas is improving. Rural volumes will further depend on crop realisations, oil prices going down and more economic activity,” Mehta said.

Hindustan Unilever (HUL) on Friday reported a 20% year-on-year increase in its net profit for the quarter ended September at Rs 2,616 crore.

The profits came on the back of improved revenues, which rose 16% y-o-y to Rs 14,514 crore. The underlying volume growth in the quarter was 4% y-o-y. The operating margins at the FMCG major fell 180 basis points to 23.3%, thanks to elevated raw material prices.

Sanjiv Mehta, CEO and managing director, HUL, said the company’s volumes had improved by 4%, whereas for the market they had declined by 6%. The urban markets, he said, had fared better than the rural areas, adding that HUL had gained a market share in over 75% of the business. “Headline growth in the rural areas is improving. Rural volumes will further depend on crop realisations, oil prices going down and more economic activity,” Mehta said.

Also Read: Reliance Retail posts record revenue

The net material inflation with regard to commodity prices was 22% in the September quarter. However, this is expected to trend down in the December quarter, thanks to lower palm oil prices. Mehta said it was hard to quantify how prices of products would move in the coming quarters.

CFO Ritesh Tiwari said growth in the December quarter would continue to be price-led. “Prices of all commodities except palm oil continued to remain at significantly elevated levels. This along with consumption of higher cost inventory led to an increase in the cost of goods sold in the quarter,” Tiwari said during the post-earnings conference call. Savings in several areas and a reduction in advertisement spends had helped HUL hold Ebitda margins at 23.2%, he added.

Tiwari further said the demand environment remains challenging with inflation impacting consumption. The softening prices of some commodities, largely palm oil, would lead to sequential improvement in gross margins, he added.

Elaborating on industry trends during the quarter, Mehta said premium brands are growing at a faster rate than popular brands, while popular brands are growing faster than the mass brands. “Price point packs are growing faster and at the upper end, the value packs are growing faster. When times are tough, the poor get hit more and people with more disposable income look at a better value,” Mehta said.

This article was first uploaded on October twenty-two, twenty twenty-two, at thirty minutes past six in the morning.