HUL VOLUME GROWTH SURPRISES, PBT UP 14%

The growth was even better than that of the sctor

Hindustan Unilever (HUL) on Friday reported volume growth of 5 per cent in the third quarter, ahead of analysts' estimates of 3-4 per cent. This is the fourth straight quarter of single-digit volume growth for HUL.

Hindustan Unilever (HUL), t he country's largest consumer goods company, on Friday reported a volume growth of 5 per cent in the third quarter, ahead of analysts' estimates of 3-4 per cent.

The better-than-expected growth was despite a challenging market environment, said HUL’S chairman and managing director Sanjiv Mehta.

This is the fourth straight quarter of single-digit volume growth for HUL. Of the four quarters, three in a row have seen HUL deliver volume growth at 5 per cent, Abneesh Roy, executive vicepresident, research (institutional equities), Edelweiss, said.

HUL'S volume growth is also ahead of the overall fast moving consumer goods (FMCG) sector's volume growth of 3 per cent in the quarter, experts said.

The company did this by cutting soap prices, driving low unit packs across categories and pushing penetration of its products using its ‘Winning in Many Indias’ strategy, Mehta said.

While HUL’S profit before tax (PBT) grew 14.3 per cent to ~2,229 crore, its net profit grew nearly 12 per cent ~1,616 crore year-on-year.

A consensus estimate of analysts by Bloomberg had pegged net profit at ~1,596 crore for the period. Revenue rose 2.6 per cent to ~9,808 crore, less than estimated ~10,034 crore.

Earnings before interest tax depreciation and amortisation (Ebitda) rose 19 per cent to ~2,445 crore—higher than analysts’ estimates of ~2,241 crore.

Ebitda margin expanded to 24.9 per cent from 21.4 per cent, higher than the consensus projection of 22.3 per cent.

“The demand outlook remains challenging in the short-term,” Mehta said, adding that he saw medium-to-longterm prospects for the domestic FMCG market improving.

“I remain hopeful that policy measures will spur demand and drive consumption,” he said, as attention shifts to the Union Budget to be announced on Saturday.

Market research agency Nielsen has said a recovery in the FMCG market is likely in the January-march 2020 period, and is expected to gain pace in the subsequent quarters.