In a weak market with benign input costs and heightened competitive activity, fast moving consumer goods major, Hindustan Unilever Ltd. (HUL) reported a 17 per cent growth in its net profit at Rs.1,018 crore, for the fourth quarter of 2014-15.
Owing to the lower commodity costs, the company’s operating profit during the period was up 23.3 per cent at Rs.1,247.66 crore and net sales were up 9 per cent at Rs.7,555 crore.
During the quarter, the domestic consumer business grew at 9 per cent with 6 per cent underlying volume growth, both ahead of the market. “The performance during the quarter is due to broad-based growth across all our categories,’’ Harish Manwani, Chairman, HUL told a press conference.
Final dividend In 2014-15, HUL’s domestic consumer business grew 10 per cent with a 5 per cent underlying volume growth. The net profit rose 12 per cent to Rs.4,315 crore was aided by exceptional income from sale of property. HUL’s operating profit grew 17 per cent and operating margin grew 90 basis points. Net sales were up 10 per cent at Rs.30,170 crore.
The board of directors of the company have proposed a final dividend of Rs.9 per share, which together with an interim dividend of Rs.6 per share, works out to Rs.15 for the year.
Sanjiv Mehta, Managing Director and CEO, HUL, said “During the year, skin, hair colour grew at double digits. Surf, Rin and Wheel detergents are all Rs.2,000 crore brands each and our Kwality Walls’ Magnum ice cream became a Rs.500 crore brand.
“We have delivered another year of strong performance with broad based growth and sustained margin improvement,” said Mr. Manwani said adding that the FMCG market in 2014-15 was the softest in the last 8-10 years.
“In the near term, the pace of the FMCG market recovery depends on the rural market, although the medium to long-term outlook for the market is positive.”
“The rural market grew faster than the urban market but there is no definite trend yet,” he said, adding, “We will have to wait for 1-2 more quarters for a definite trend. Rural markets tend to grow faster than urban because of lower penetration.”
On possible price cuts, Mr. Mehta said the company on an average cut prices of its products by 5-6 per cent during the year. “There are a host of factors for the cut during the year including lower crude and input prices but the economic situation currently does not warrant any further price cuts.”
Speaking on the importance and need for omni channel retailing including e-commerce, Mr. Manwani said companies would increasingly spend more on digital and digital mobile as ‘these are becoming increasingly important.’
Being channels of the future, many models will evolve due to the size of the Indian market. “However, there is a very good chance that India will evolve its own ‘hybrid’ model,” Mr. Manwani said.
The better than expected results seem to have enthused the stock price which surged 3.34 per cent on BSE to close at Rs.894.60.
POINTERS:
FMCG market in 2014-15 was ‘softest’ in last 8-10 years
Near-term FMCG recovery depends on pick-up in rural demand
Board proposes final dividend of Rs.9, taking total dividend for 2014-15 to Rs.15 per share
