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FMCG major Hindustan Unilever (HUL) on Friday reported a 13.84 per cent increase in its net profit at ₹1,538 crore for the quarter ended March 2019, against ₹1,351 crore in the year-ago period.
However, at 7 per cent, the company’s volume growth was the lowest in six quarters as rural demand tapered.
HUL posted a lower sales growth of 8.95 per cent at ₹9,809 crore due to macroeconomic factors such as decreasing wage rates, liquidity crunch and a slowing down of the rural economy. Its sales in the previous year period had risen 12 per cent to ₹9,003 crore.
The company has announced a dividend of ₹22 per share of ₹1 each for the whole fiscal.
HUL’s MD and CEO Sanjiv Mehta said near-term growth will remain slightly under pressure given the macroeconomic indicators and volatility in commodity prices and currency.
“The moderation is happening primarily in the general trade and wholesale channel. From the lens of geography, it was more pronounced in rural markets,” Mehta said. “This is not a panic situation. This is not an economy going into a tailspin and consumption vanishing. This is about relative growth rate.”
The company, which makes shampoos, soaps, beverages and packaged foods among other products, is hopeful of a sales bump-up once a new government is formed and policies are announced to boost the economy. It is also optimistic of a reasonable monsoon.
HUL on Friday also announced the appointment of Anuradha Razdan as Executive Director, Human Resources, and Vibhav Sanzgiri as Executive Director, Research and Development.
Kaustubh Pawaskar, Research Analyst, Sharekhan by BNP Paribas said, “In the backdrop of slowing demand environment, HUL has posted decent operating performance with revenues growing by nine per cent and PAT growing by 14 per cent (with steady volume growth of 7 per cent). The weakening demand in the rural market will have impact on the performance in the near term. However, the possibility of better monsoon and a stable government at the Centre will trigger the demand in the subsequent quarters. We expect HUL to post double digit earning growth over the next two years with volume growth standing in high single digit. HUL remains one of our top picks in the large FMCG space.”
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