Hindustan Unilever’s Third Quarter Profit Rises 7% Even As Volumes Decline 4%
HUL posted its second straight quarter of volume degrowth
Hindustan Unilever Ltd. (HUL) reported a 6.8 percent growth in profit in October to December quarter even as its volumes declined for the second consecutive quarter.
Net profit rose to Rs 1,037 crore from Rs 971 crore during the corresponding quarter last year, according to the company’s filing on the stock exchanges. The consensus estimate of analysts tracked by Bloomberg stood at Rs 973 crore. However, the consumer goods giant booked an exceptional gain of Rs 153 crore compared to a loss of Rs 79.6 crore in the year-ago quarter.
Total revenue fell 0.8 percent to Rs 8,318 crore, surpassing the Rs 7,395 crore forecast of analysts. Volumes declined 4 percent in the quarter.
The liquidity squeeze triggered by the government’s demonetisation decision resulted in reduced trade pipelines and lower consumer offtake, HUL management told reporters at the press briefing in Mumbai.
But HUL Chairman Harish Manwani said there were early signs of normalisation. Managing Director Sanjiv Mehta added that demand would return as liquidity situation improves.
Earnings before interest, tax, depreciation and amortisation stood at Rs 1,355 crore, a 5.2 percent decline. EBITDA margins contracted 80 basis points to 16.3 percent from 17.1 percent year-on-year.
Price Hikes
Raw material costs grew 2.4 percent, and purchase of stock-in-trade grew 11.5 percent, dragging gross margins lower by 40 basis points to 55 percent. In order to compensate for the rise in input costs, the management undertook price hikes aggregating to 4 percent, which reflects in the higher-than-expected revenues for the third quarter.
Segment-Wise Performance
Personal care segment, which contributes nearly half of HUL’s total revenues, continued to show weakness. Income from the segment fell 2.7 percent to Rs 3,980 crore, while EBIT margins fell to 23.1 percent from 24.2 percent in the corresponding quarter last year.
Home care segment revenue grew 1 percent to Rs 2,689 crore with its EBIT margins dropping to 8.7 percent from 8.9 percent.