HUL net up in Q3 on property sale

Priyanka Pani Mumbai | Updated on January 12, 2018

Due to the note-ban, consumers bought smaller quantities, though more often   -  Bloomberg


FMCG major Hindustan Unilever Ltd (HUL) said on Monday it has been adversely impacted by the demonetisation move.

“The impact was varied across segments, channels and geographies. We responded to these adverse market conditions with speed by rejigging our supply chain, supporting our channel partners by extending credit and enhancing our direct distribution coverage,” the company while announcing its quarterly numbers.

The company, which manufactures and sells products under the Ponds, Dove, Surf and Lakmé brands, among others, witnessed a marginal decline in sales at ₹8,372 crore in Q3 of FY17. Net sales stood at ₹8,385 crore. HUL’s sales by volume declined 4 per cent in the quarter.

Net profit was up 7 per cent at ₹1,038 crore, against ₹971 crore in the year ago period, thanks to a one-time exceptional income from the sale of property. However, the profit after tax before these exceptional items was down 10 per cent.

Talking about the effects of demonetisation at a press conference here, HUL’s CEO Sanjeev Mehta said that while there was major impact in the first two weeks after November 8, the market showed recovery by December and is likely to stabilise by the first quarter of the new financial year.

In the initial few weeks, consumers were a little guarded and bought in small quantities, though more often, he said.

HUL also witnessed good growth and stability in the urban markets on the back of availability of modern trade (MT). Typically, MT, which consists of supermarkets and hypermarkets, contributes about 12-15 per cent of the overall sales for any FMCG company. General trade, especially the small mom-and-pop stores, was impacted by the note-ban. Premium products continued to perform well, which shows the consumers in that segment were hardly impacted by the cash crunch.

According to Nitin Mathur, equity analyst at Jefferies, 2017 will witness a major shift from unorganised to organised trade and this would come on the back of a weak macro environment.

Published on January 23, 2017

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