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HUL, Dabur, & Colgate-Palmolive ad spends see healthy double-digit growth despite low net sales in Q1

03-August-2015
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HUL, Dabur, & Colgate-Palmolive ad spends see healthy double-digit growth despite low net sales in Q1

As results of the first quarter of the financial year FY2016 get released, we take a look at the results of FMCG companies. The FMCG brand category is one of the largest ad and marketing spending categories in various media and is also an integral contributor to the Indian economy. We take look at the results of some of the top FMCG brands in terms of their ad spends and their net sales during Q1FY2016 (April – June 2015 quarter).

Hindustan Unilever (HUL), announced its results a few weeks ago. The FMCG major’s advertising and promotion expenses in Q1FY2016 increased by a large 22.06% over the Q1FY2015. The ad and promotion spends of HUL grew to Rs.1,153.39 crore from Rs.944.88 crore during the corresponding quarter last year. However, the net sales during the quarter saw a very low growth as it increased by just 5.3% with domestic consumer business (FMCG + Water) growing by 5.4%. Net sales had increased to Rs.7,973.37 crore in Q1FY2016 from Rs.7,570.78 crore in Q1FY2015.

Dabur India saw a better growth in terms of net sales as it grew by 10.7% in Q1FY2016 in comparison with Q1FY2015. Advertising and publicity expenses too saw a large increase of 15.5% in comparison to the corresponding quarter last year. Net sales during the quarter grew to Rs.2,064.1 crore from Rs.1,863.1 crore in Q1FY2015. Advertising and publicity expenses increased to Rs.330.6 crore in Q1FY2016 from Rs.286.3 crore in Q1FY2015.

ITC another FMCG giant reported poor results during the June ended quarter as the net sales growth dropped by 7.7%. The reported net sales during Q1FY2016 was Rs.8,505.53 crore, while in Q1FY2015 the net sales reported was higher at Rs.9,164.42 crore. While advertising and promotion spends are not reported separately the other expenses for the company which would include it increased by 2.08%. The other expenses of the FMCG major increased to Rs.1,515.43 crore in Q1FY2016 from Rs.1,484.48 crore in Q1FY2015.

Colgate-Palmolive India too recorded a low single digit growth in net sales during the quarter, while advertising and sales promotion saw a double digit growth since the corresponding quarter last year. Colgate-Palmolive’s net sales grew by 5.5% during the June ended quarter in comparison to same period last year, while advertising and promotion expenses increased by 11.08% during the same period. The net sales grew to Rs.1,002.9 crore in Q1FY2016 from Rs.950.6 crore in Q1FY2015. The advertising and sales promotion expenses on the other hand had increased to Rs.200.5 crore in Q1FY2016 from Rs.180.5 crore in Q1FY2015.

United Breweries (UBL) too saw its net sales grow in lower single digits and while sales promotion expenses (ad spends) increased marginally in comparison to the corresponding quarter last year. Sales promotion expenses increased by 3.8%, while the net sales increased by 4.6% in comparison with Q1FY2015. The ad spends increased to Rs.238.2 crore in Q1FY2016 from Rs.229.4 crore in Q1FY2015 and net sales increased to Rs.1,337.88 crore in Q1FY2016 from Rs.1,278.85 crore in Q1FY2015. While in comparison to Q4FY2015 the sales promotion expenses increased by 27.4% and the net sales too saw a similar growth of 27.9%.

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