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Consumer goods major Hindustan Unilever (HUL) has posted a decline in its profit at Rs 971 crore in the third quarter of financial year 2016. The profits tanked 22 per cent in the October-December quarter compared to last year thus disappointing the markets.
HUL shares finished 2.7 per cent or Rs 22.30 lower at Rs 804.15 on the BSE.
The dip in profits was despite the declining raw material prices which should have given the profits a boost instead. Slow revenue growth and lower other income in this quarter has put a dent on the profitability of the country's largest consumer company.
Revenues rise
The revenue in the quarter, however, increased 2.7 per cent to Rs 7,981 crore compared to Rs 7,774 crore in the corresponding quarter a year ago. The underlying volume growth was better at 6 per cent.
The company reported an exceptional loss of Rs 79.6 crore for the quarter, compared to that of Rs 12.14 crore in the same quarter last fiscal due to provision towards restructuring and select contested matters of Rs 116.52 crore. Exceptional item also included profit of Rs 36.91 crore on sale of surplus properties.
Other income declined 18 per cent to Rs 139.6 crore during the quarter from Rs 170.2 crore in a year-ago period.
The company said that the growth was impacted due to phasing out of excise duty incentives and price cuts that the company took during the quarter.
Harish Manwani, Chairman, HUL, said: “We have stepped up investment behind our brands and delivered another quarter of profitable volume led growth, consistent with our strategic intent. In an environment of moderating growth and benign input costs, we remain focused on innovation and market development to drive volumes competitively whilst improving operating margins. As channels and markets evolve, we continue to make strategic interventions to strengthen our portfolio and sharpen our executional capabilities to serve our consumers even better."
Operating profit (earnings before interest, tax, depreciation and amortisation) rose 7.5 per cent on yearly basis to Rs 1,430.8 crore and margin expanded by 80 basis points to 17.9 per cent in quarter gone by, which were expected with growth of 9.9 per cent and 70 basis points.
Cost of raw material declined 7.4 per cent year-on-year to Rs 2,689.4 crore on account of fall in crude oil prices.
Advertising & promotion expenses were down 0.6 per cent to Rs 1,137.8 crore in same period.
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