HUL Q2 Net Profit Expands Most In Ten Quarters On Strong Volume Growth
Hindustan Unilever’s net profit rose 16% year-on-year.
Consumer goods major Hindustan Unilever Ltd.’s net profit expanded the most in ten quarters as it recovered from Goods and Services Tax-related disruptions and reported strong sales volumes in the July-September period.
Net profit rose 16 percent to Rs 1,276 crore as compared to the same quarter last year, the company said in a stock exchange filing today. This was higher than the Bloomberg consensus estimate of Rs 1,190 crore and was partially aided by a 6 percent fall in
total expenses. Revenue rose nearly 6 percent to Rs 8,309 crore on a year-on-year basis, the filing added.
The healthy growth came on the back of a 4 percent surge in sales volumes versus the Bloomberg estimate of 3-5 percent growth.
Retailers and wholesale distributors restocked after cutting back on inventories ahead of the transition to GST on July 1. “While transition to GST impacted trade purchases in the early part of the quarter, consumer offtake remained stable. Trade conditions to improve and the wholesale channel is steadily normalising,” HUL said in a media statement.
The fast-moving consumer goods major had also undertaken 3-4 percent price cuts during the quarter to pass on the benefits of lower taxes under GST.
Operating performance too surpassed analyst expectations. The standalone earnings before interest, tax, depreciation and amortisation rose nearly 20 percent to Rs 1,682 crore as compared to the same quarter last year. The operating margin expanded about 200 basis points to 20.2 percent in the same period.
“Despite short-term challenges, we are confident of the medium-term outlook for the FMCG industry and remained focused on driving consumer and profitable volume driven growth,” Chairman Harish Manwani said in the statement.
The company expects a gradual improvement in rural demand going forward, Sanjiv Mehta, chief executive officer at HUL said at the company’s press conference.
Segment-Wise Revenue
- Home care segment was almost unchanged at Rs 2,739 crore from Rs 2,777 crore year-on-year
- Personal care segment declined to Rs 3,910 crore versus 4,028 crore
- Revenue from food segment rose marginally to Rs 282 crore from Rs 278 crore
- Revenue form refreshments rose to 1,222 crore versus 1,169 crore
Shares of HUL rose 0.2 percent to Rs 1,272.45 on the NSE ahead of the announcement of earnings. They have jumped 54 percent this year, compared with the 24 percent gain in the benchmark S&P BSE Sensex.