HUL’S strong results indicate revival in consumer demand
MUMBAI: Hindustan Unilever Ltd, India’s largest packaged consumer goods maker, on Wednesday reported a 16.42% increase in net profit during the September quarter, beating estimates, helped by domestic demand and lower costs. Analysts said the firm’s results signal that the worst is behind the packaged consumers goods sector.
HUL’S profit rose to ₹1,276 crore in the quarter, compared with ₹1,096 crore a year earlier. Analysts polled by Thomson Reuters estimated a profit of ₹1,185 crore on average.
Net sales fell to ₹8,199 crore from 8,335 crore in the year ago period, but that was mostly because of an accounting change for GST which kicked in from July 1, the company said. On a comparable basis, revenues grew 6.5%; domestic consumer revenues grew 10%.
“While GST did impact the trade purchases in the early part of the quarter, subsequently, things have started stabilising and are now recovering,” said chief financial officer PB Balaji in a press briefing. “Wholesale and CSD (canteen stores department, which sells products to armed forces personnel) were the two primary channels which were impacted significantly earlier in the quarter, and are now stabilising gradually. In the midst of all this, consumer offtake has continued to remain stable.”
HUL’S volumes grew 4% during the quarter which is being seen as a positive by analysts, even if it came off a low base; in the year ago period, volumes had declined 1%. “The worst is over for all the consumer companies, because as seen in HUL numbers today, volume growth has bounced back,” said Sachin Bobade, an analyst at Dolat Capital.
The firm reported growth across segments. Home care (that includes detergents) revenues grew 13% and personal care (which includes soaps and skincare items) by 8%.
“I believe by the end of December, there should be a near normalcy,” said chief executive officer Sanjiv Mehta.