Hindustan Unilever Ltd.’s profit surpassed analyst estimates in the quarter ended March on the back of double-digit growth in sales volume.
Net profit of India's largest fast-moving consumer goods manufacturer rose 14.2 percent to Rs 1,351 crore compared to the year-ago period, according to the company’s exchange filing. That’s higher than the Rs 1,333 crore estimated by analysts tracked by Bloomberg and despite an exceptional loss of Rs 64 crore during the quarter.
Revenue rose 12 percent to Rs 9,097 crore, also higher than the Rs 8,898 crore estimate. The top line growth was aided by a 11 percent growth in sales volume, considerably more than the Bloomberg consensus estimate of 5-6 percent.
The strong volume growth was driven by the home and personal care segments and can be attributed partly to a rise in rural demand, the management said at the earnings press conference, adding that it overtook urban demand in some pockets. HUL owns many commonly used brands including Ponds, Surf XL, Kwality Wall’s, Vaseline, Lux, Lakme, CloseUp, etc.
“Growth and improvement in profitability have been sustained through a combination of winning innovations and a relentless focus on operational efficiencies,” Chairman Harish Manwani said in the media statement accompanying the earnings filing. “We are particularly pleased with our track record of sustained margin improvement for seventh straight year,” he added.
HUL’s operational performance for the quarter was also better than estimates. Earnings before interest, tax, depreciation and amortisation rose 30 percent to Rs 2,148 crore while the operating margin expanded to 23.4 percent from 21.5 percent despite a rise in raw material costs.
- Home care segment saw double-digit volume led by strong performance in Vim.
- Personal care too grew in double digits. Growth in skin care was led by Fair & Lovely and Pond's. Growth in oral care and deodorants was led by new launches.
- The food segment witnessed healthy growth led by ketchups and the Knorr franchise.
- Kwality Wall’s also saw a double digit growth on the back of geographic expansion and new launches.
- Refreshments sustained robust growth with strength seen in tea and coffee.
Shares have risen 10 percent so far this year compared to a 4.5 percent rise in the benchmark S&P BSE Sensex Index.