HUL Q3 profit meets Street estimates: Key takeaways

Mumbai: Hindustan Unilever (HUL) posted an in-line 12 per cent year-on-year rise in standalone net profit, but warned demand outlook and market growth may continue to be challenging in the short term.

The country’s largest consumer goods maker posted a profit of Rs 1,616 crore for the December quarter compared with Rs 1,444 crore in the same quarter last year. Analysts in an ET NOW poll had projected the number at Rs 1,643 crore.

HUL’s sales for the quarter rose by a modest 3.62 per cent to Rs 9,696 crore from a year ago.


Here are key takeaways from HUL’s quarterly numbers:

Worrying short-term outlook: “In the short term, demand outlook and market growth continue to be challenging. In this environment, we will continue to invest in our brands and offer superior value to our consumers. We will continue to manage our business with agility by leveraging our data and tech capabilities,” Chairman and Managing Director Sanjiv Mehta said in a release.

“I remain confident of the medium to long term prospects of Indian FMCG sector and am hopeful that policy measures will spur the rural economy and drive consumption,” he added.

Management commentary: “This quarter witnessed an overall challenging market environment, mainly reflecting a sharp slowdown in rural and discretionary spends. In this tough environment, HUL has delivered a resilient performance which is reflective of the strength of our brands, consistency in strategy and execution prowess,” Mehta said.

Margins improve: Earnings before interest, tax, depreciation and amortisation (Ebitda) at Rs 2,445 crores was up by 19 per cent (14 per cent on a comparable basis after adjusting for accounting impact of Ind AS 116. Margin expansion was driven by the company’s savings agenda and leverage in other expenses.

Tepid volume growth: Domestic consumer growth was at 4 per cent with underlying volume growth at 5 per cent. Reported Ebitda improvement was 335 basis points (bps) (210 bps on a comparable basis after adjusting for accounting impact of Ind AS 116 on leases).

Home care shines: Home care category continued its trajectory of good performance with double-digit topline growth. During this quarter, the company launched Comfort Perfume Deluxe in select geographies. Household care saw good growth on the back of market development. Upgradation to liquid dishwash in urban areas continues to build momentum.

Lacklustre beauty & personal care: Beauty and personal care was impacted by a higher-than-expected slowdown in market growth and delayed winter, while hair and color cosmetics performed well. In personal wash, negative market growth coupled with the pricing actions to pass on benefits of lower commodity impacted topline delivery. Skin care performance was impacted by delayed winter while the company saw good growth in the non-winter part of the portfolio. Hair care registered healthy performance across the portfolio. Oral care delivered a steady quarter driven by Close Up.

Robust quarter for foods & refreshment: Foods & Refreshment delivered robust growth across categories. Beverages saw broad-based growth in the quarter. Ice cream and frozen desserts sustained focus on distribution expansion and building the innovation pipeline ahead of season.