HUL posted Rs 11,996 crore in net sales, 13.5 per cent higher than the Rs 10,570 crore it had reported in the corresponding quarter last year
Hindustan Unilever (HUL), the country’s biggest fast-moving consumer goods (FMCG) company, on Thursday reported 10.7 per cent growth in its consolidated net profit at Rs 2,100 crore for the April-June quarter (Q1FY22), compared with Rs 1,897 crore in the year-ago quarter.
HUL posted Rs 11,996 crore in net sales, 13.5 per cent higher than the Rs 10,570 crore it had reported in the corresponding quarter last year. As its finances improved significantly during the second Covid-19 wave, HUL’s top management said it remained “cautiously optimistic about the demand recovery”.
The company's performance was better than Street expectations. According to the Bloomberg consensus estimates, analysts had pegged HUL revenues at Rs 11,914 crore and net profit at Rs 1,920 crore for the quarter. On the volume front, too, HUL’s performance was ahead of the estimates, which were in the range of 5 to 8 per cent.
Backed by strong double-digit growth in the rural market, its volumes surged 9 per cent year-on-year (YoY). The beauty and personal care segment, which contributes about 39 per cent to HUL’s top line, grew 13 per cent despite the overall slowdown in the category. The home care business, which rakes in a third of its sales, and food and refreshment (28 per cent of sales), grew by 12 per cent each.
However, the urban market continued to lag behind, with sales growth in cities at 96 per cent of the March 2021 levels, even as sales in the rural market grew by four percentage points in June.
“In a challenging environment, we have delivered a strong performance across top line and bottom line. We remain cautiously optimistic about the demand recovery. Our focus firmly remains on delivering volume-led competitive growth and margins in a healthy range,” said Sanjiv Mehta, chairman and managing director, HUL.
According to the company, as the extent of mobility rebounded in June, it managed to grow its skin care and colour cosmetics business in double digits. However, categories like water purifiers, food solutions, and ice creams got adversely impacted in spite of the summer season. Together, these segments grew by 91 per cent over the last quarter, when a stringent lockdown was in place, but remained 40 per cent lower than the 2019 levels.
Similarly, discretionary brands like Axe, Vaseline, Pond’s, and Grow & Lovely registered 39 per cent growth over the year-ago quarter, but remained 24 per cent lower than the 2019 levels. However, its health, hygiene and nutrition business, which contributes 85 per cent of its sales, grew by 8 per cent and 16 per cent, respectively, over the June 2020 and June 2019 quarters.
Mehta said that in spite of a more severe second Covid-19 wave, business activities were less impacted due to the government’s approach of “localised and calibrate lockdowns”. “It resulted in no panic buying and kept the supply chain and backend operations functional. Further, unlike the first wave in 2020, even in areas under the lockdowns retail stores were allowed to operate in limited hours, which helped us in catering to consumers,” he said.
Mehta remains hopeful that even if a third wave hits the country, its impact will not be very severe. Also, it is less likely to impact consumer demand, he said.
With the pandemic keeping consumers mostly at home, digital channels continued to grow in the June quarter. The share of digital channels rose over 10 per cent for the first time. HUL's in-house online ordering platform, Shikhar, contributed five times more over the same period last year.
The steady surge in commodity prices in the past one year impacted HUL’s margins during the quarter. Ritesh Tiwari, chief financial officer, said HUL’s gross margin compressed by 150 basis points over the same quarter last year. Its earnings before interest, tax, depreciation and amortisation grew by 7.7 per cent to Rs 2,850 crore but margin fell by 114 basis points YoY to 24 per cent. Margin, however, was a tad lower than the consensus estimate of 24.15 per cent.
“Three of the key raw materials – palm oil, crude oil and tea – are having record high inflation compared to the past several years. But we have mitigated some of the cost increase from our savings and judicious price increases,” said Tiwari. Driving consumption, growing its penetration and continuously developing the market will be crucial for achieving its volume-led growth targets.
came during market hours on Thursday. HUL’s stock closed 2.3 per cent lower at Rs 2,378.65 on the BSE, even as broader markets were up.
Executive director retires early
Dev Bajpai, executive director, legal, corporate affairs and company secretary, will take early retirement from HUL’s board with effect from 31 March, 2022, the company today said. A key member of the group’s south Asia leadership team, he had joined HUL in 2010, after leading legal affairs, compliance and taxation in leading companies
like Maruti Udyog, Indian Hotels Company and Marico.
Mehta said Bajpai played a key role in the successful execution of HUL’s acquisition of GSK Consumer Healthcare.
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