Hindustan Unilever Limited announced its results for the quarter ending 30th June 2016. During the quarter, against the backdrop of a challenging environment where market growth further slowed down in both volume and value terms, the business continued to track ahead of market with sustained margin improvement.
Domestic Consumer business growth was at 4%, with 4% underlying volume growth and operating margin expanded by 70 bps. Net Sales grew by 3.6% during the quarter with Domestic Consumer Business (FMCG) growing by 4.0% (excluding the impact of acquisition in current year & disposal in base year). While Operating Profit (Profit from Operations before Other Income, Finance costs and Exceptional Items) for the quarter at Rs. 1,542.60 crores (JQ’15: Rs. 1,437.08 crores) grew by 7.3%.
Profit after tax before Exceptional Items for the quarter was at Rs.1,127.73 crores (JQ’15: Rs. 1,062.80 crores) and grew by 6.1%. The growth was broad based across the segments.
Home Care: Growth led by healthy volumes
In Fabric Wash, growth was driven by the premium segment with Surf, the largest brand sustaining its strong growth momentum. In Household Care, Vim liquids continued to do well while in Water, the strategic interventions taken to play in the wider market are starting to deliver, with devices registering robust growth in the quarter.
Personal Care: Step up in Personal Products, offset by deflation in Personal Wash
In Personal Wash, Lifebuoy, Pears and Dove led category volume growth while in Skin Care, growth was led by the premium segment with BB and CC creams delivering strong growth. Hair Care registered another quarter of volume led growth, with all key brands continuing to perform well. The acquisition of Indulekha was completed during the quarter and the brand started off on an encouraging note. In Oral Care, sampling activity was initiated during the quarter to induce trials on last quarter’s relaunch of Pepsodent core with the ‘best ever flavor’. Colour Cosmetics sustained innovation led growth with Lakme delivering another robust quarter on premium makeup. In Deodorants, Axe did well with the relaunch of the aerosol range during the quarter.
Refreshment: Steady growth
In Tea, Lipton Green Tea and the Natural Care portfolio led growth through market development. Coffee maintained its strong competitive position in a deflationary cost environment. Ice Cream & Frozen Desserts delivered another quarter of robust growth, driven by distribution expansion and sharper in-market execution.
Foods: Healthy underlying growth driven by market development
Kissan sustained its strong growth on ketchups, while Knorr delivered robust growth on Instant Soups and Noodles.
Margin improvement sustained
Lower input costs resulted in 100 bps reduction in Cost of Goods Sold. Brand investments were maintained at competitive levels across segments. Profit before interest and tax (PBIT) grew by 7% and PBIT margin improved by 70 bps. Profit after tax before exceptional items, PAT (bei), grew by 6% to Rs.1128 Crores. Net Profit at Rs.1174 Crores, was up 10%, aided by a one-time write back of provision for pension benefits arising from plan amendments.
Commenting on the results, Harish Manwani, Chairman HUL said, “In slowing market conditions, the business is tracking ahead of the market with sustained margin improvement. We continue to make progress on our priorities of strengthening the core of our business whilst driving operational efficiencies. While the near term market growth is likely to remain muted, we are optimistic for the medium term and remain focussed on driving competitive and profitable growth.”