HUL’s Q1 net up 11% at Rs 2,289 crore

Mumbai: Remaining consistent in its financial performance, Hindustan Unilever (HUL) posted an 11% increase in its standalone net profit at Rs 2,289 crore in the first quarter ended June 30, as compared to Rs 2,061 crore in the corresponding quarter of previous year. Its turnover rose 19% to Rs 14,016 crore (from Rs 11,730 crore) with an underlying volume growth of 6%, albeit on a low-base effect.
More than 60% of HUL’s turnover has come from price increases as the net material impact of commodity costs was 20%. Product price increases taken by the company in the June quarter were at 12%. Historically, volume growth formed nearly 60-65% of its sales growth, with the balance coming from pricing actions. Inflationary pressure over a longer duration has now tilted that ratio.
HUL CEO & MD Sanjiv Mehta said, “The (FMCG) market value growth is about 7% and volume growth minus 5%. And the difference between the two is the price growth, which incidentally is not very different from the price growth that we have taken.”
He added, “For the markets, volumes still remain soft. Our twin objective, since the advent of the high inflation, has been to gain consumer franchise and to protect our business model. From both these lenses, it’s been a good success for us, where we have increased our market shares handsomely for a very large part of our business and we have been reasonably good in protecting our business model, which is reflected in the kind of margins which are still at a very healthy levels.”
Ebitda margin at 23.2% remained healthy despite unprecedented inflationary headwinds. Mehta said it is not only imperative for the country to ensure inflation is controlled, but it’s equally important to keep the economy growing to be able to navigate the crisis. He said it is important that the Indian rupee — which breached the 80 mark against the US dollar on Tuesday — does not move around in a violent manner. “One would want a moderated approach to currency depreciation,” he said.
CFO Ritesh Tiwari said HUL’s growth in the quarter has been comprehensive across portfolios and channels, with the company growing ahead of the market. Although inflation is still a concern, Tiwari said if the commodities continue to remain soft, the company’s margins would be positively impacted sequentially December quarter onwards. Growth, he said, is expected to continue to remain price-led. Any softening in commodities is not likely to translate into price reductions as the company plans to utilize the difference for marketing spends to remain competitive.