HUL profit up 19%, revenue rises 20% in December quarter

By: |
Updated: Jan 28, 2021 1:07 AM

While rural demand remained resilient, urban demand also made a comeback with the economy reopening. HUL’s volume growth sustained its positive momentum and came in at 4%. However, the company sounded caution on the inflationary pressures building up in palm oil and tea, which has resulted in HUL taking a 2.5% hike in prices in its skin-cleansing category in Q3.

Though HUL missed the Street’s expectations on net profit, it managed to beat estimates on revenues while operating income was in line with expectations. It reported a 19% year-on-year rise in net profit to Rs 1,921 crore.

The worst is behind for Hindustan Unilever, going by the sturdy earnings growth the company reported for the December quarter. The consumer behemoth posted robust double-digit growth in revenues and income for the quarter ended December 2020, as consumption picked up across the company’s portfolio.

While rural demand remained resilient, urban demand also made a comeback with the economy reopening. HUL’s volume growth sustained its positive momentum and came in at 4%. However, the company sounded caution on the inflationary pressures building up in palm oil and tea, which has resulted in HUL taking a 2.5% hike in prices in its skin-cleansing category in Q3.

Though HUL missed the Street’s expectations on net profit, it managed to beat estimates on revenues while operating income was in line with expectations. It reported a 19% year-on-year rise in net profit to Rs 1,921 crore.

Bloomberg consensus estimates had projected a net profit of Rs 2,052.56 crore. HUL’s revenue from operations surged 20% y-o-y to Rs 11,682 crore during the quarter against analyst expectations of Rs 11,566.66 crore. This includes the recently acquired Horlicks business.

HUL CMD Sanjiv Mehta said inflationary pressures are building up in select commodities and the company will manage them judiciously. “I am confident that we are very well-positioned to capture the growth opportunities and accelerate momentum,” he said.

CFO Srinivas Phatak said the prices will inch up further. “We are also taking in another 2.5% price increase as we speak into the market in cleansing. This brings it to about 5%, but one has to think of a price increase of anywhere between 7% and 9%. So, we will have to manage this through a combination of savings, positive mix while maintaining price-competitiveness and giving right value to the consumers,” he said.

The Ebitda during the quarter rose 16.6% y-o-y to Rs 2,804 crore. However, commodity price inflation, rise in investments behind brands and increase in advertising expenses resulted in an 80 basis points y-o-y decline in Ebitda margins at 24%.

Mehta said real demand is hovering around 5%, which augurs well. Rural demand remains resilient on the back of government interventions while urban demand, which had got severely impacted during the Covid crisis, is also starting to come back. “The near-term demand outlook is improving, and we expect to see revival in urban while rural should continue to do well,” he added.

Health, hygiene and nutrition, which forms 80% of HUL’s business has grown 10% in the October-December period, same as the preceding quarter. Discretionary segment continued its improving trajectory and fell 1% versus a decline of 25% and 45% witnessed in the September and June quarters. The ‘out of home’ category, which has suffered the most as people’s spends on ice-cream and food solutions have declined due to Covid-19, also saw a sharp improvement, indicating that market sentiments are improving.

“Our consumer-relevant innovations, market development and execution excellence have enabled us to drive broadbased growth across our categories. I am particularly pleased with the performance of our nutrition business and with the recovery in the discretionary segments of our portfolio; these are structurally attractive and offer immense growth potential,” Mehta said.

Changes in HUL management

HUL announced the appointment of Ritesh Tiwari as executive director (finance) and CFO and a member of the board with effect from May 1, subject to necessary government approvals. He will also take over as the vice-president (finance), South Asia, Unilever. Tiwari will succeed Srinivas Phatak who will move as EVP, financial control and risk management, based out of Unilever’s headquarters in London, and be part of the finance leadership executive team.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, Check out latest IPO News, Best Performing IPOs, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Australia passes landmark law to make Google, Facebook pay for news
2ITC secures temporary injunction against CG Foods on Wai Wai Majedar Masala noodles
3Firm resolve to privatise idling assets, CPSEs: PM Modi