On the back of price increase, volume growth and operational performance, the country’s largest consumer goods company Hindustan Unilever (HUL) on Friday beat estimates by posting a 19.5% y-o-y jump in its net profits at Rs 1,525 crore during the July-September quarter.
Chairman and managing director Sanjiv Mehta said that with increase in crude oil prices and other commodities, the company may look at calibrated price hike in the coming quarters.
Net sales during the period increased 11.45% at Rs 9,138 crore with a volume growth of 10%, which was ahead of the 7-9% estimated by analysts.
On the operational side, Ebitda grew by 20% to Rs 2,019 crore, beating estimates, while margin expanded by 170 basis points to 21.9% on a y-o-y basis.
The quarter saw raw material cost increasing by 15.9% y-o-y to Rs 3,343 crore, while crude oil prices rallied 4% and rupee fell nearly 6%.
“As a market leader we are not shying away from using pricing power,” Srinivas Phatak, chief financial officer, HUL, said in a post-earnings press conference. “We have taken price increase of around 2-3% for the quarter in our select home-care products. However, we will not outprice ourselves,” he added.
“Our market development and premiumisation initiatives are delivering good results,” the company said in a statement about its home-care products segment. In fact, home-care segment sales grew 12%, the beauty and personal care division rose 10% and the foods and refreshments business increased 12%. “In the near term, we expect demand to be stable,” chairman Sanjiv Mehta said in the statement. “Our strength of agility and responsiveness gives us confidence to navigate the headwinds arising from crude inflation and currency depreciation,” he added.
HUL said that the board of directors has declared an interim dividend of Rs 9 per share for the year ending March 2019.
The company appointed Leo Puri as an independent director on its board with effect from October 12.
On Friday, HUL’s share’s closed up 2.63% at Rs 1,568.65 on the Bombay Stock Exchange. The company announced the earnings after closing of trading hours.