Hindustan Unilever (HUL) on Thursday reported a 9% year-on-year increase in its net profit at Rs 1,444 crore for the three months to December 2018. The numbers were marginally lower than the consensus estimates from Bloomberg, which projected the net profit for Q3FY19 at Rs 1,455.5 crore. The company had a tax write-back of Rs 510 crore during the quarter.
The country’s largest fast-moving consumer goods firm reported revenue of Rs 9,558 crore, an increase of 11.3% y-o-y, which was higher than the consensus estimates of Rs 9,446.7 crore from Bloomberg. Volume growth was sequentially flat at 10%. But it had grown by 12% in Q1FY19. The domestic consumer growth was at 13% against 17% in the year-ago period.
“The demand from the rural market has grown around 1.3 times higher the urban market,” Srinivas Phatak, chief financial officer (CFO), HUL, said. Profit before exceptional items grew at 17%, however, a spend of Rs 62 crore in expectional items has brought the net profit growth for the quarter down to 9% y-o-y,” he added.
The operating margin improved to 21.4% by 170 basis points against 19.6% in the year-ago period.
Prudent management of volatility in costs along with the improved mix and operating leverage has driven margin improvement, the company said.
The FMCG major’s earnings before interest tax depreciation and amortisation (Ebitda) increased by 22% y-o-y to Rs 2,046 crore. The company had reported an Ebitda of `1,680 crore in Q3FY18.
Referring to volatility in external markets, Phatak said, “the agility across the value chain continues to be critical, however, HUL is well-positioned, better than anyone else”. “Innovations land today significantly faster than historically,” he added.
“We have delivered another strong performance in the quarter, with double volume growth and improvement in margins,” Sanjiv Mehta, chairman and managing director, HUL, said. The company’s focus is on strengthening the core and leading market development by tapping emerging trends, he added.
Taking about the demand scenario, Mehta said, “In near term, demand is likely to be stable, we’ll keep a close watch on macro-economic environment and respond with agility.”
The beauty and personal care segment revenue grew by 11% y-o-y during the quarter. Personal wash growth continued to be driven by premiumisation of the portfolio, skincare growth was backed by steller execution of winter portfolio, the company said.
The food and refreshments (F&R) business of HUL ember announcement of merger with GlaxoSmithKline Consumer Healthcare (GSK); however, Q3FY19 financials do not reflect the transaction which is expected to be completed in twelve months.
The F&R business revenue was up 10% y-o-y at Rs 1,728 crore for the three months ended on December 31, 2018. Beverages delivered a good growth by leveraging the opportunity in mass segment and driving premiumisation through green tea, the company said.
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The home care segment revenue grew the most at 15%, with a margin growth of 13%, as it continued impressive performance with both fabric wash and household care, the company said.
In December 2018, National Anti-profiteering Authority (NAA) had fined HUL to the tune of `462 crore. However, the Delhi High Court on Wednesday stayed the demand. The high court also directed NAA to not take any corrective action or to continue any penalty proceedings against HUL until the final determination of matter in the court. Court has asked HUL to deposit `90 crore in consumer welfare fund by May 15, the company said in an emailed statement.
The HUL stock closed down 1.1% at Rs 1,750.10 on Thursday on the BSE.