HUL’s 21% Q3 net profit rise amid slowdown explained; premium play, home care drive growth

By: |
January 31, 2020 4:57 PM

Hindustan Unilever Ltd, the Indian arm of global FMCG major, released its fiscal third-quarter earnings on Friday and the company has posted strong growth numbers even amid slowdown.

Consumer staples, HUL, Surf Excel, Lux SKU, HUL in soaps brands, Lifebuoy, HUL advertising campaignsThe company had launched the premium version of its fabric conditioner Comfort range called Comfort Perfume Deluxe in this quarter.

Hindustan Unilever Ltd, the Indian arm of global FMCG major, released its fiscal third quarter earnings on Friday and the company has posted strong growth numbers. While the FMCG industry is still not out of the slowdown threat, HUL earnings show “resilience” to market conditions and the same was largely driven by performance of home care range along with the launch of premium products, HUL said in a statement. “Home Care continued its trajectory of good performance with double digit topline growth. In Fabric Wash, our focus on core and premiumization continues to yield strong results,” HUL said. The company had launched the premium version of its fabric conditioner Comfort range called Comfort Perfume Deluxe in this quarter. Further, with rising acceptance of liquid dishwash in urban areas, the Household Care category saw good growth.

In fact, HUL’s performance has helped Unilever’s global results as well. Unilever, which released its yearly performance on Thursday, said that its growth was levered by a premium detergent brand which was launched in India. “In fabric sensations, the performance was supported by ongoing market development-driven growth in India, where we also launched premium detergent brand Love & Care,” Unilever, the maker of Dove soap, said. Unilever’s global growth was also led by strong performance in the Home Care category. 

Slowdown woes

While HUL performed well in the Home Care segment, the company’s Beauty and Personal care “was impacted by a higher than expected slowdown to market growth and delayed winter”. HUL sells various products under Beauty and Personal category under brands such as Lakme, Done, Ayush, Lux, Vaseline, Sunsilk etc. HUL also recently launched the ‘Love Planet & Beauty’ brand in India. “In Personal wash, negative market growths coupled with the pricing actions to pass on benefits of lower commodity have impacted topline delivery. Skin care performance was impacted by delayed winter,” HUL said. 

Key takeaways from HUL earnings

  • HUL’s domestic consumer growth stood at 4% with underlying volume growth at 5%. 
  • HUL reported EBITDA improvement at 335 bps.
  • The FMCG major’s profit after tax (before exceptional items) grew by 21% at Rs 1,691 crore. 
  • Company’s EBITDA was at Rs 2,445 crore, up by 19%. 

Moving ahead, “demand outlook and market growth continue to be challenging … I remain confident of the medium to long term prospects of Indian FMCG sector and am hopeful that policy measures will spur the rural economy and drive consumption,” Sanjiv Mehta, Chairman and Managing Director, said. 

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