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HUL cuts ad spend in Q3, demonetisation hits margins

24-January-2017
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HUL cuts ad spend in Q3, demonetisation hits margins

Hindustan Unilever Limited (HUL) announced its results for the quarter ending 31st December 2016.Under challenging market conditions, HUL’s domestic consumer business was flat. EBITDA margin was down 70 bps and Net Profit after Tax, (PAT) at Rs. 1,038 crore grew 7 per cent.

During the quarter, the squeeze in liquidity resulted in reduced trade pipelines and lower consumer off take. The impact was varied across segments, channels, and geographies. HUL responded to these adverse market conditions with speed by rejigging their supply chain, supported their channel partners by extending credit, and enhanced their direct distribution coverage. They also sustained their brand building spends and innovation initiatives. Despite the short-term challenges of the quarter, the premium part of HUL’s portfolio continued to perform well.
 

Home Care:

Premium laundry performed well with sustained double-digit growth in Surf. Home Care Liquids had another good quarter.

 

Personal Care:

Premium Personal Care continued its growth momentum across formats. Personal Wash volumes were impacted due to calibrated price increases to manage steep inflation in commodity costs. Baby Dove range of products has been well received by consumers.

This quarter, HUL launched ‘LEVER Ayush’, an exclusive Personal Care range of high-performance products based on Ayurveda and supported by modern science. The LEVER Ayush range comprises soaps, shampoos, tooth pastes, hand washes, and face washes and has been launched across South India.
 

Refreshment:

Tea delivered broad based double-digit growth led by a differentiated region-wise focus. Ice Cream and Frozen Desserts delivered robust activation-led growth.

 

Foods:

Focus on market development continued. The recently launched premium range of Kissan Jams is progressing well in the market place.
 

EBITDA margins down 70 bps

Cost of Goods Sold was higher by 60 bps due to rising input costs. Brand investments were maintained at competitive levels across segments. Earnings before interest, tax, depreciation, and amortisation (EBITDA) was down by 5 per cent. While Profit After Tax before exceptional items, PAT (bei), at Rs. 920 crore was down 10 per cent, Net Profit at Rs.1,038 crore, was up 7per cent for the quarter on higher exceptional income.

Harish Manwani, Chairman, commented, “The gradual recovery of the market was temporarily impacted by adverse liquidity conditions. However, our performance demonstrated resilience and agility in this challenging environment. There are early signs of normalisation and our focus continues to remain on innovation-led volume growth and improvement in margins. Our strategic agenda of delivering Consistent, Competitive, Profitable, and Responsible growth remains unchanged.”

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