MUMBAI
Hindustan Unilever Ltd. (HUL) reported third-quarter standalone net profit grew marginally to ₹2,519 crore from ₹2,505 crore in the year-earlier period as the company said it preferred to invest in innovations and protected sales volume by cutting prices amid stiff competition from local brands.
Sales income was lower at ₹14,928 crore compared with ₹14,986 crore a year ago as rural markets remained under pressure on high inflation. The company’s reported consolidated net profit of ₹2,502 crore was lower than ₹2,505 crore a year-earlier.
Rohit Jawa, CEO and Managing Director, HUL on a conference call said, ‘HUL has delivered another quarter of resilient performance with strong operating fundamentals amidst a challenging operating environment. Our focus on providing the right consumer value, excellence in execution, increased investments behind brands and capabilities, premiumisation and market development continues to serve us well.”
“HUL posted a weak performance across major metrics. Due to uneven rains and delayed harvest season, the rural sentiment remained subdued. Market volume saw a gradual but soft increase led by urban volume growth of 3%. The declining raw material prices have also led to heightened local competition, leading to flat volume growth,” said Parth Shah, Research Analyst, StoxBox.
The company said it delivered a resilient performance in with Underlying Volume Growth (UVG) [refers to volume growth including the impact of mix of turnover realization of products sold]
Home Care and Beauty & Personal Care which constitutes about 75% of its business continued to see volume recovery and had mid-single digit UVG. Foods & Refreshment, on the other hand, saw a low-single digit decline in UVG primarily due to pricing taken in the year to offset impact of higher commodity cost.
Underlying Sales Growth (USG) [refers to the increase in turnover for the period, excluding any change in turnover resulting from acquisitions, disposal] was flat due to the impact of price reductions.
EBITDA margin at 23.7% was up 10 bps YoY. Profit After Tax before exceptional items (PAT bei) declined 2%, the company said in a filing with exchanges.
Mr. Jawa said, “Looking forward we expect gradual recovery in market demand to continue aided by increased Government spending, recovery in winter crop sowing and better crop realization. Rural income growths and winter crop yields are key factors that will determine the pace of recovery.”
“In this context, our focus remains on driving competitive volume growth whilst stepping up investment behind our brands and long-term strategic priorities. We remain confident of the mid to long term potential of Indian FMCG sector and HUL remains well positioned to unlock this opportunity whilst navigating the short-term challenges,” he added.
Ritesh Tiwari, CFO, HUL said the company has been managing its business dynamically by ensuring right price-value equation and investing competitively behind its brands and long-term capabilities.
