Hindustan Unilever (HUL), the fast moving consumer goods (FMCG) major announced an 18 per cent growth in its net profit for the third quarter of fiscal 2014-15 at Rs 1,252 crore. This was however, aided by an exceptional gain of Rs 407.29 crore during the period on the sale of surplus properties. The profit before exceptional items was flat at Rs 955.32 crore (Rs 954.74 crore).
Net sales grew 7.7 per cent to Rs 7,579 crore with the domestic consumer business growing 7.6 per cent with 3 per cent underlying volume growth, an HUL statement said, adding that operating profit at Rs 1,258.4 crore, grew 8.3 per cent.
During the period, input costs were benign led by crude and this has resulted in lower cost of goods sold. The operating margin improved by 10 basis points. "This was after absorbing the impact of a one-time provision in employee costs for select contested matters, additional depreciation charge and phasing out of excise duty benefits," the statement said.
The quarter saw HUL sustain competitive growth in the soaps & detergents segment while personal products saw double digit growth in the skin and hair segments. Oral care had a subdued quarter according to HUL as growth was impacted by the phase out of excise duty benefits. However, on the positive side, beverages saw a continued healthy performance while packaged foods witnessed the fifth successive quarter of double digit growth and water strengthened its category leadership.
"We have delivered another quarter of competitive growth and margin improvement," Harish Manwani, Chairman, HUL said in a statement. "We continue to strengthen the core of our business and drive the competitiveness of our brands in the market. At the same time, we are leading market development in relatively nascent categories such as packaged foods and premium personal care with strong results. Given the fast changing external environment, we are managing our business dynamically for sustained volume led growth and margin improvement."
The HUL results disappointed the bourses and analysts felt the 3 per cent volume growth missed estimates. The HUL share scaled a 52-week high of Rs 948.5 on the Bombay Stock Exchange in early trade before reacting to close trade at Rs 892.8, down 5.27 per cent.
"We would expect that sales growth of the company shall pick up in the coming quarters, as lower inflation, improvement sentiment help lift volume growth," said Ritwik Rai, FMCG analyst, Kotak Securities. "Benefits of lower commodity prices are visible in the quarter and will continue to be a useful tailwind for the company."
