HUL net spurts 21 per cent, but volume drags

Chennai: Benign raw material costs and new effective tax rates helped FMCG major Hindustan Unilever post strong net profit growth in the September quarter. However, volume growth, a key indicator of consumer demand, dipped to single digits.

HUL on Monday reported a 21.18 per cent rise in standalone net profit to Rs 1,848 crore for the quarter ended on September 30, 2019 against Rs 1,525 crore reported for the corresponding quarter last year. The corporate tax cut supported profit growth. Margin expansion was also driven by improved mix and benign commodity price movement in large segments, found Edelweiss Securities.

Standalone sales during the quarter stood at Rs 9,708 crore against Rs 9,138 crore for the same period a year ago, growing 6.2 per cent. Domestic consumer growth was 7 per cent with underlying volume growth at 5 per cent against 10 per cent in Q2FY19. Rural growth, which was at 0.5x of urban growth, kept the volume growth low.

Home care sustained another quarter of robust performance with consistent top line delivery in fabric wash. Within beauty and personal care, personal products showed a healthy show. Foods and refreshment saw broad-based growth across categories. Beverages delivered a good in quarter performance.

“The near-term outlook for demand, especially in rural India remains challenging, said Sanjiv Mehta, Chairman and Managing Director, HUL.

HUL remains well-positioned to unlock the structural FMCG India opportunity while navigating the short-term challenges, he added.

The company said that its board has declared an interim dividend of Rs 11 per equity share of face value Re 1 each. The company also announced the appointment of Willem Uijen as Executive Director, Supply Chain and a member of the HUL board with effect from January 1, 2020. Uijen succeeds Pradeep Banerjee who is retiring after a career of four decades.