FMCG major Hindustan Unilever on Tuesday beat estimates by posting an 11% year-on-year jump in its standalone net profit to `2,289 crore on the back of price hikes taken during the April-June quarter.
The company’s revenues during the period rose 19% to Rs 14,016 crore — 12% on account price hike on products and 6% due to volume growth — the company said in its post-earnings conference call.
The 6% volume growth was on a low base as demand last year was hit due to the second Covid-19 wave. The quarter saw the company’s home care segment grow 30% driven by fabric wash and household care. Beauty & personal care segment saw 17% growth, while foods & refreshment segment grew by 9% driven by sales of ice-cream, coffee and food solutions.
While net profit and sales saw double-digit growth, operating margin during the quarter declined 110 bps to 23.2% because of inflationary pressure on input costs. The company said margins could have fallen more had it not taken cost-saving initiatives and calibrated pricing action on products.
During the July-September quarter, HUL expects to continue taking price hikes on its products to pass on the spike in commodity prices to customers.
“The net material price inflation during the June quarter has been 20%, but we have taken price increase of only 12%. Which means price increase has been lower than the impact of commodities,” Sanjiv Mehta, CEO and managing director, said during the post-earnings conference call. The September quarter would see impact of higher commodity prices in books for the inventory that already has been booked by the company, Mehta said.
However, with softening commodity prices of products like palm and crude oil, the company said if the trends remain the way they are or taper further, the positive impact would be seen from the December quarter.
On the demand front, the company said markets still remain ‘soft’ and inflation is still a concern. Urban demand is better than rural currently, however, with forecast of a normal monsoon, and fiscal measures taken by the government, rural demand could bounce back, HUL said.