FMCG. HUL net profit rises 11 per cent to Rs 2,100 cr in Q1

Hindustan Unilever Ltd posted a consolidated net profit of Rs 2,100 crore in the first quarter of the financial year 2022. This was 10.7 per cent higher than the Rs 1,897 crore posted at the same time last year.

Revenue from operations also improved to Rs 11,996 crore in Q1 FY22, compared to Rs 10,570 crore in Q1 FY21. While volume rose 9 per cent year-on-year, volume growth slowed sequentially.

According to Chief Financial Officer, Ritesh Tiwari, the company delivered a robust performance in a challenging environment, reporting domestic consumer growth of 12 per cent, and total sales growth of 13 per cent during the quarter.

Segment revenue across three categories -- Homecare, Beauty & Personal Care, Foods & Refreshment -- posted double-digit growth in Q1 FY22 in comparison to Q1 FY21. “Localised lockdowns enabled us to still fulfil demands for our customers, as retail stores remained open, albeit for a limited period of time,” Tiwari said.

Uptrend in commodity prices

However, the company has continued to flag rising commodity prices as a cause of concern, which has resulted in a calibrated price increase in the skin cleansing, tea as well as laundry segment. “We are facing a multi-year high price in palm oil, and crude oil prices have also increased significantly in the past year. Tea as well is facing a massive hike,” Tiwari explained.

Products for which demand is mobility driven, such as ice cream and cosmetics, were also affected by the second wave, although a few recovered sharply from the weak base in the first quarter of FY21. Tiwari believes that once mobility resumes, demand should rise strongly again.

Premiumisation across all categories was also noted, with products priced above Rs 120 faring better in sales in comparison to cheaper goods. Overall, the company is cautiously optimistic about the near term, with volatile commodity prices and a surge in infections being major hurdles. However, Tiwari maintains that green shoots remain, with rural India continuing to show resilience in driving growth in July. A bumper crop and strong monsoon are expected to further accelerate recovery.

Chairman, and Managing Director, Sanjiv Mehta said, “In a challenging environment, we have delivered a strong performance across topline and bottomline. Our performance in the quarter has been resilient and is reflective of our capabilities, the agility in our operations, and the intrinsic strength of our portfolio.”

Separately, HUL’s parent Unilever said the second wave of the coronavirus pandemic and subsequent restrictions in India have impacted sales in the country.

The operating environment across its markets in H1 (January-June) has seen some improvements, but broadly remain ‘volatile’, the company said in its post-earnings statement for the first half.