Hindustan Unilever Q2 net rises 10.7% to ₹2,185 crore; sales up by 11.3% at ₹12,812 crore

Large parts of the HUL business continue to gain market shares and penetration

FMCG major Hindustan Unilever on Tuesday reported a 10.69% rise in its consolidated net profit to ₹2,185 crore for the second quarter ended September 30, helped by good performance across segments and price increases.

The company had posted a net profit of ₹1,974 crore in the July-September quarter of the previous fiscal.

Its revenue from sales during the quarter under review stood at ₹12,812 crore, up 11.31%, against ₹11,510 crore a year ago, Hindustan Unilever Ltd (HUL) said in a regulatory filing.

HUL’s total expenses were at ₹10,129 crore in Q2 FY2021-22 compared to ₹9,054 crore in the year-ago period.

"The September quarter witnessed a sequential improvement in trading conditions, albeit remained challenging with unprecedented levels of input cost inflation and subdued consumer sentiments. Against this backdrop, we have delivered a strong performance growing topline in double digits and stepping up profitability sequentially," HUL CMD Sanjiv Mehta said.

Large parts of the HUL business continue to gain market shares and penetration.

"Calibrated price increases and laser-sharp focus on savings have helped us protect our business model while ensuring the right price-value equation for our consumers," Mr. Mehta added.

Citing RBI data, Mr. Mehta said while consumer confidence for the long term is good, for the near term, it is still subdued due to the persisting fear of COVID-19, inflation and jobs prospects.

The rural demand for the last few quarters had been resilient due to various factors such as the government’s direct transfer of money, food subsidy, MNREGA and the decent harvests, thereby putting the base for rural at a much higher level.

"The base for rural (market) is certainly much higher when it comes to growth rate as compared to urban, as urban was impacted because of lack of mobility. As mobility improves, the urban demand should be picking up, modern trade has opened up.

“So, we will definitely see more and more demand in urban sector picking up and whereas rural is still growing but the growth rates have moderated," he said while addressing a virtual conference.

On inflation, Mr. Mehta said, "…what we have seen in certain commodities like palm oil, crude based derivatives, and related like ocean freight, etc, or even tea has been unprecedented. We haven’t seen this kind of inflation for many years".

Overall, HUL said its growth in the second quarter was "broad-based" with all three divisions growing competitively and "business fundamentals remained strong with more than three-fourths of the business gaining market share and penetration".

During the second quarter, home care segment revenue rose 15.67% to ₹3,838 crore as against ₹3,318 crore a year ago, driven by high double-digit growth in fabric wash. Household care continued to perform well and grew on a strong base, it added.

Moreover, calibrated price increases were taken across fabric wash and household care portfolios to partly offset the high inflation in input costs, the company said.

Revenue from beauty and personal care increased 10.46% to ₹5,026 crore from ₹4,550 crore in the same quarter last year. The rise was led by skincare, colour cosmetics and hair care products.

However, hand hygiene portfolio declined against the last year, but intimate hygiene brand VWash, which HUL acquired from Glenmark Pharmaceuticals last year, had another strong quarter.

"A calibrated approach towards price increase has helped protect the business model as vegetable oil prices remain at elevated levels," the company said, adding 30% of its beauty brand Lakme’s sales came through digital platforms.

The food and refreshment segment revenue surged 7.19% to ₹3,622 crore from ₹3,379 crore in the year-ago period, supported by growth in segments like tea, health food drinks and recovery in the ice-cream market.

"Tea grew on a very strong base and further strengthened its market leadership. Focus on market development in nutrition is yielding good results. Health Food Drinks volumes grew double-digit and it continued to gain penetration sequentially. Ice Creams recovered strongly driven by effective communications and innovations,” said HUL.

Revenue from the ”other” segment, which includes exports, infant and feminine care, rose 28.44% to ₹560 crore compared to ₹436 crore in the same quarter a year ago.

For the first half of this fiscal, HUL’s consolidated net profit increased 10.69% to ₹4,285 crore from ₹3,871 crore in April-September last fiscal.

Its H1 revenue from sales surged 12.36% to ₹24,808 crore against ₹22,080 crore in the year-ago period.

Over the outlook, Mr. Mehta said, HUL remains “cautiously optimistic about demand recovery”.

"In these times of uncertainty and unprecedented input cost inflation, we continue to firmly focus on delivering consistent, competitive, profitable and responsible growth," he said.

Shares of HUL on Tuesday settled at ₹2,546.65 on BSE, down 4.06% from the previous close.

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