Content on this page requires a newer version of Adobe Flash Player.

Get Adobe Flash player

HUL Q2 FY14 net up 13% at Rs 914 cr; beverages lead growth

HUL Q2 FY14 net up 13% at Rs 914 cr; beverages lead growth

Author | Priyanka Mehra | Monday, Oct 28,2013 8:27 AM

A+
AA
A-
HUL Q2 FY14 net up 13% at Rs 914 cr; beverages lead growth

Amidst a volatile environment and economic slowdown, FMCG major Hindustan Unilever has announced its results for the second quarter ending September 30, 2013. Despite a sharp increase in A&P spends, profit before interest and tax (PBIT) grew by 11 per cent, with PBIT margin improving +20 bps. Profit after tax before exceptional items grew by 10 per cent to Rs 883 crore, while net profit was up 13 per cent at Rs 914 crore.

During the quarter, the domestic consumer business grew 10 per cent, ahead of market, driven by 5 per cent underlying volume growth.

Commenting on the performance in Q2 FY14, Harish Manwani, Chairman, HUL said, “We have delivered another quarter of competitive and profitable growth. The consistency and resilience of our performance, in what has been a challenging market environment for some quarters now, is a reflection of the discipline with which we are managing our business and executing our strategy. We continue to strengthen our business for the long term by driving innovation, investing behind our brands and further building organisational capabilities.”

The soaps and detergents category showed consistent growth of 6 per cent, with Lifebuoy, Breeze and Lux leading the pack. Interestingly, personal products showed an overall growth of 12 per cent, while the beverages category has been the highest contributor to this quarter’s growth with a 16 per cent growth, led by Bru Gold.

The company attributes the overall industry media spend being its highest levels in over 18 quarters, with a particularly sharp increase in Oral Care. HUL invested at competitive levels across segments with a significant step up in Personal Products – overall A&P spend was up by Rs 185 crore (+165 bps) in the quarter given the volatile environment.

“HUL’s Q2 FY14 revenues as well as profits have come in modestly ahead of our expectations. Underlying volume growth at 5 per cent is likely ahead of the industry growth. Personal products segment, the key negative for Q1 FY14 results, has recovered significantly in the quarter, with 12 per cent year on year growth. The beverages segment has continued to be a significant driver of profits for the company, with 37.5 per cent year on year growth in segment profits. The company’s EBITDA growth (11 per cent y-o-y), driven by gross margin improvements, is noteworthy, given high growth in advertising and promotional spends, during the quarter. Management commentary on the sustenance of growth in personal products, and gross margins of the company, shall be key to future price direction. Meanwhile, we believe the results are likely to be viewed with a sense of relief,” remarked Ritwik Rai, an FMCG analyst with Kotak Securities.

The detailed Q2 FY14 results for each category wise growth are as follows:

Soaps & Detergents grew 6 per cent, registering healthy volume growth
Skin Cleansing sustained its strong performance, registering its fourth successive quarter of double digit volume growth with Lifebuoy, Breeze and Lux leading category growth. The quarter saw price deflation arising from actions taken earlier in the year to pass on the benefit of lower commodity costs to consumers.

In Laundry, growth continued to be led by Surf and Rin, while Wheel sales showed signs of stabilising. Comfort fabric conditioners delivered robust growth on the back of sustained market development. Household Care continued to do very well with both Vim and Domex growing in double digit.

Personal Products grew 12 per cent in a slowing market; double digit growth across categories.

In Skin Care, growth stepped up to double digit growth, aided by good sales in advance of winter. Fair & Lovely was re-launched towards the end of the quarter with the new ‘Best Ever Formula’ and a focused activation plan. Vaseline and Dove lotions did particularly well, Lakme registered one of its strongest quarters of innovation led growth, while Ponds saw good growth on talc. The portfolio was expanded with the Lakme Youth Infinity range and differentiated offerings in facial cleansing under Lakme, Ponds and Dove.

Hair Care had another very good quarter with broad based double digit volume growth and TRESemmé gaining further ground. Hair conditioners continued to lead market development with sustained high growth. The global portfolio was further leveraged to launch the Toni & Guy range of premium hair care and styling offerings.

In Oral Care, both brands delivered double digit growth in the context of a sharp increase in competitive intensity and in media spends. Pepsodent was re-launched with a superior product and proposition while Close Up continued to be driven by exciting activation. A&P investments were significantly stepped up to sustain our competitive position in this category.

Colour Cosmetics maintained its strong innovation led growth momentum across the Lakme portfolio. Growth was driven by premium make-up with Absolute and 9 to 5 and a further acceleration in the growth of Elle 18.

Beverages grew 16 per cent; another strong performance by tea
Tea delivered one of its strongest quarters, sustaining broad based price-led growth and healthy volumes. All key brands grew in double digits led by mix improvements and strong in-market activities. The continued thrust on market development for tea bags enabled flavored and green teabags sales to nearly double in the quarter. In a slowing coffee market, Bru growth was led by the robust performance of Bru Gold.

Packaged Foods grew 9 per cent; Kissan accelerates, Kwality Walls steps up
Kissan maintained its double digit growth with a very good quarter for Ketchups while Knorr sales was driven by Instant Soups. Despite challenging market conditions, Kwality Walls stepped up to double digit growth through sharper in-market execution and the rollout of the ‘Perfect Stores’ program for the category.

Write A Comment