Rural demand drives HUL Q2 net up 20%
Volume up 10+% for 4th straight quarter
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.