HUL Q3 Profit Up, Sales Slip: FMCG Giant Reports Results
By Rediff Money Desk, NEWDELHI Jan 19, 2024 20:12
Hindustan Unilever Ltd (HUL) reported a slight increase in Q3 profit, but sales dipped due to a decline in the food business. Read more about HUL's performance.
New Delhi, Jan 19 (PTI) Hindustan Unilever Ltd on Friday reported a muted 1.08 per cent increase in consolidated net profit to Rs 2,508 crore in the third quarter ended December 2023, impacted by a decline in food business.
The company, which had posted a consolidated net profit of Rs 2,481 crore in the same quarter of last fiscal, said the FMCG segment witnessed little recovery in the rural market, which has been declining in the past quarters.
Other main segments of home, beauty and personal care reported volume growth during the quarter under review.
Revenue from sales of products was marginally down to Rs 15,259 crore during the quarter. It stood at Rs 15,314 crore in the year-ago period, Hindustan Unilever Ltd (HUL) said in a regulatory filing.
HUL's total expenses in the December quarter were marginally higher at Rs 12,305 crore.
Its consolidated total income was marginally up at Rs 15,781 crore in the third quarter compared to Rs 15,707 crore in the year-ago period.
In a virtual interaction, HUL CFO Ritesh Tiwary said home care, beauty and personal care segments, which constitute about 75 per cent of HUL business "continue to see volume recovery and had mid-single digit underlying volume growth.
However, "food and refreshment business where we have declined volumes in low single digit because of higher commodity inflation compared to what the rest of the portfolio is seeing", he added.
On the overall market, he said, If you look at the CAGR of the market, it is in the low single digits, but if you look at the successive quarters, we have seen a recovery in urban, followed by rural, and we see sustained, although gradual recovery.
He further said, If I look at the CAGR of our FMCG market growth in the September quarter over two years CAGR the market was growing at one percentage. In the December quarter on a two-year CAGR basis, the market is growing at two per cent, he said.
What led to this swing from CAGR of 1 per cent growth to 2 per cent growth is a rural market demand. Rural in the prior quarter market was minus 1 per cent on two-year CAGR, that has now improved to plus 1 per cent CAGR. So there's a good two percentage momentum swing in rural areas, that is what we are seeing in terms of momentum compared to the previous quarter, he added.
On the margin front, HUL's EBITDA stood at 23.7 per cent in the December quarter, which was 10 basis point (bps) higher versus the number recorded in the third quarter of FY23.
"Gross margin and A&P (advertising and promotions) investments increased 400 bps and 270 bps respectively versus DQ'22 (December quarter). We continue to manage our business dynamically by ensuring right price-value equation and investing competitively behind our brands and long-term capabilities," it said.
During the quarter, HUL's revenue from home care segment, in which it has brands such as Rin, Surf Excel, Vim and Wheel, was down 1.26 per cent to Rs 5,444 crore. It was at Rs 5,514 crore a year ago.
"However, on a two-year CAGR basis, the business delivered a strong double-digit growth of 14 per cent with high single-digit UVG. Fabric wash volumes grew in mid-single digit YoY driven by outperformance in the premium portfolio. Household care volumes grew in low single-digit led by dishwasher," it said.
Similarly, its revenue from beauty & personal care was flat to Rs 5,782 crore. The figure was at Rs 5,764 crore in Q3 FY'23.
"Skin cleansing revenue declined due to the impact of price reductions taken to pass on the benefits of lower commodity costs to consumers. Market development actions in bodywash continue to yield good results," said HUL which operates in the beauty & personal care segment with brands such as Lux, Pond's, Lakme, Clinic Plus, Dove, Pears, Sunsil and Fair & Lovely.
While delayed winter impacted skin care performance in the quarter, premium non-winter portfolio continued to do well.
"Hair care delivered volume led double-digit growth with broad based performance across brands and future formats continuing to gain traction. Oral care grew mid-single digit led by Closeup," it said.
Besides, in the foods & refreshment segment, HUL had a marginal growth of 0.89 per cent to Rs 3,733 crore as against Rs 3,700 crore a year ago.
"Tea further strengthened value and volume market leadership. Green tea and flavoured tea performed well. Coffee grew in double digits driven by pricing. Health food drinks delivered competitive modest price-led growth driven by plus range," it said.
Foods solutions, mayonnaise and peanut butter continued to clock strong growths, while ice cream grew in mid-single digit on a high base.
Revenue from other segments which include exports, consignment, etc. was also down 1.77 per cent to Rs 608 crore.
Commenting on the performance, the company's CEO & MD Rohit Jawa said HUL delivered another quarter of resilient performance with strong operating fundamentals amidst a challenging operating environment.
"Looking forward we expect a 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," he said.
HUL's focus remains on driving competitive volume growth whilst stepping up investment behind brands.
Shares of Hindustan Unilever Ltd on Friday settled at Rs 2,564.75 at BSE, up 0.66 per cent from the previous close.
The company, which had posted a consolidated net profit of Rs 2,481 crore in the same quarter of last fiscal, said the FMCG segment witnessed little recovery in the rural market, which has been declining in the past quarters.
Other main segments of home, beauty and personal care reported volume growth during the quarter under review.
Revenue from sales of products was marginally down to Rs 15,259 crore during the quarter. It stood at Rs 15,314 crore in the year-ago period, Hindustan Unilever Ltd (HUL) said in a regulatory filing.
HUL's total expenses in the December quarter were marginally higher at Rs 12,305 crore.
Its consolidated total income was marginally up at Rs 15,781 crore in the third quarter compared to Rs 15,707 crore in the year-ago period.
In a virtual interaction, HUL CFO Ritesh Tiwary said home care, beauty and personal care segments, which constitute about 75 per cent of HUL business "continue to see volume recovery and had mid-single digit underlying volume growth.
However, "food and refreshment business where we have declined volumes in low single digit because of higher commodity inflation compared to what the rest of the portfolio is seeing", he added.
On the overall market, he said, If you look at the CAGR of the market, it is in the low single digits, but if you look at the successive quarters, we have seen a recovery in urban, followed by rural, and we see sustained, although gradual recovery.
He further said, If I look at the CAGR of our FMCG market growth in the September quarter over two years CAGR the market was growing at one percentage. In the December quarter on a two-year CAGR basis, the market is growing at two per cent, he said.
What led to this swing from CAGR of 1 per cent growth to 2 per cent growth is a rural market demand. Rural in the prior quarter market was minus 1 per cent on two-year CAGR, that has now improved to plus 1 per cent CAGR. So there's a good two percentage momentum swing in rural areas, that is what we are seeing in terms of momentum compared to the previous quarter, he added.
On the margin front, HUL's EBITDA stood at 23.7 per cent in the December quarter, which was 10 basis point (bps) higher versus the number recorded in the third quarter of FY23.
"Gross margin and A&P (advertising and promotions) investments increased 400 bps and 270 bps respectively versus DQ'22 (December quarter). We continue to manage our business dynamically by ensuring right price-value equation and investing competitively behind our brands and long-term capabilities," it said.
During the quarter, HUL's revenue from home care segment, in which it has brands such as Rin, Surf Excel, Vim and Wheel, was down 1.26 per cent to Rs 5,444 crore. It was at Rs 5,514 crore a year ago.
"However, on a two-year CAGR basis, the business delivered a strong double-digit growth of 14 per cent with high single-digit UVG. Fabric wash volumes grew in mid-single digit YoY driven by outperformance in the premium portfolio. Household care volumes grew in low single-digit led by dishwasher," it said.
Similarly, its revenue from beauty & personal care was flat to Rs 5,782 crore. The figure was at Rs 5,764 crore in Q3 FY'23.
"Skin cleansing revenue declined due to the impact of price reductions taken to pass on the benefits of lower commodity costs to consumers. Market development actions in bodywash continue to yield good results," said HUL which operates in the beauty & personal care segment with brands such as Lux, Pond's, Lakme, Clinic Plus, Dove, Pears, Sunsil and Fair & Lovely.
While delayed winter impacted skin care performance in the quarter, premium non-winter portfolio continued to do well.
"Hair care delivered volume led double-digit growth with broad based performance across brands and future formats continuing to gain traction. Oral care grew mid-single digit led by Closeup," it said.
Besides, in the foods & refreshment segment, HUL had a marginal growth of 0.89 per cent to Rs 3,733 crore as against Rs 3,700 crore a year ago.
"Tea further strengthened value and volume market leadership. Green tea and flavoured tea performed well. Coffee grew in double digits driven by pricing. Health food drinks delivered competitive modest price-led growth driven by plus range," it said.
Foods solutions, mayonnaise and peanut butter continued to clock strong growths, while ice cream grew in mid-single digit on a high base.
Revenue from other segments which include exports, consignment, etc. was also down 1.77 per cent to Rs 608 crore.
Commenting on the performance, the company's CEO & MD Rohit Jawa said HUL delivered another quarter of resilient performance with strong operating fundamentals amidst a challenging operating environment.
"Looking forward we expect a 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," he said.
HUL's focus remains on driving competitive volume growth whilst stepping up investment behind brands.
Shares of Hindustan Unilever Ltd on Friday settled at Rs 2,564.75 at BSE, up 0.66 per cent from the previous close.
Read More On:
DISCLAIMER - This article is from a syndicated feed. The original source is responsible for accuracy, views & content ownership. Views expressed may not reflect those of rediff.com India Limited.
You May Like To Read
TODAY'S MOST TRADED COMPANIES
- Company Name
- Price
- Volume
- Vodafone Idea L
- 9.50 (+ 3.60)
- 98491250
- GTL Infrastructure
- 2.32 (+ 4.98)
- 74918021
- Advik Capital
- 3.25 (+ 7.97)
- 34086998
- Jaiprakash Power Ven
- 20.03 (+ 8.45)
- 26873790
- Spicejet Ltd.
- 62.80 (+ 9.10)
- 26113604
MORE NEWS
Ola Electric Receives CCPA Show Cause Notice...
Ola Electric has received a show cause notice from the CCPA for alleged violations of...
DGFT Clarifies: RCMC Not Mandatory for...
The Directorate General of Foreign Trade (DGFT) has clarified that a...
Garuda Construction IPO Subscribed 1.9 Times on...
Garuda Construction's IPO received 1.91 times subscriptions on Day 1, with strong...