Ru­ral de­mand drives HUL Q2 net up 20%

Vol­ume up 10+% for 4th straight quar­ter

The Hindu Business Line - - FRONT PAGE -

Fast mov­ing con­sumer goods (FMCG) ma­jor Hin­dus­tan Unilever Ltd (HUL) on Fri­day re­ported a 19.51 per cent in­crease in net profit at ₹1,525 crore for the sec­ond quar­ter ended Septem­ber 2018 on the back of strong vol­ume growth, driven by a ru­ral pick-up, in­creas­ing con­sumer spend­ing, and a re­turn of nor­malcy to trade chan­nels.

Bet­ter dis­tri­bu­tion, en­hanced reach, price hikes, cost-cut­ting and bet­ter man­age­ment of in­ven­tory also con­trib­uted to im­proved CMD San­jiv Me­hta

mar­gins. Net profit stood at ₹1,276 crore in the year-ago pe­riod.

Sales dur­ing the quar­ter stood at ₹9,138 crore, against ₹8,199 crore in the same pe­riod last fis­cal. Vol­umes grew 10 per cent, mark­ing the fourth con­sec­u­tive quar­ter of dou­ble-digit growth for HUL, which makes Dove, Lakme, Surf Ex­cel, Ponds, Knorr and other brands. Over­all, the FMCG in­dus­try grew 7 per cent.

HUL Chair­man and Man­ag­ing Di­rec­tor San­jiv Me­hta said the com­pany ex­pects de­mand to be sta­ble. “Our strength of agility and re­spon­sive­ness gives us con­fi­dence to nav­i­gate the head­winds aris­ing from crude in­fla­tion and cur­rency de­pre­ci­a­tion,” he said. The com­pany would have to go in for price hikes given the un­cer­tainty over cur­rency fluc­tu­a­tions, he addd. The com­pany had hiked prices by 2-3 per cent across se­lect cat­e­gories dur­ing the July-Septem­ber quar­ter.

Me­hta noted that the ru­ral mar­ket was grow­ing faster than the ur­ban one, with small towns and vil­lages con­tribut­ing about 40 per cent to over­all sales.

An­a­lysts ex­pect the ru­ral mar­ket pick-up and a good mon­soon to help the com­pany sus­tain growth at 10 per cent. Te­jash­wini Ku­mari, an­a­lyst, IIFL Se­cu­ri­ties Ltd said, “We con­tinue to main­tain a pos­i­tive view on the com­pany as it would be a key ben­e­fi­ciary of new prod­uct launches, pre­mi­u­mi­sa­tion and sup­ply chain ben­e­fits from GST.”

The HUL board de­clared an in­terim div­i­dend of ₹9 per share of face value ₹1 each for the year end­ing March 31, 2019.

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