HUL profit up 6% in 4th quarter on improved consumer sentiment

Priyanka Pani Mumbai | Updated on January 11, 2018

HUL-RESULTS   -  Reuters

Focus on premium products pays off as rural markets remain under pressure, says Chairman

Consumer goods manufacturer Hindustan Unilever Ltd (HUL) has posted a better-than-expected quarterly numbers with a 6 per cent rise in its net profit at ₹1,183 in fourth quarter ended March 31, 2017.

This is due to improved consumer sentiment, a clear indication that the negative impact due to demonetisation may have receded.

Harish Manwani, Chairman, said at a press conference that the strategy of focusing on premium products has also paid off as the rural market continues to remain under pressure.

The company also witnessed a 7 per cent growth in its net sales at ₹8,969 crore in Q4FY-17 against ₹8,430 crore in the corresponding quarter last year.

HUL has seen a volume growth of 4 per cent in the fourth quarter compared to negative growth in the third quarter.

Analysts tracking the segment were expecting the revenues growth to be around 5-6 per cent and the underlying volume growth at around 2-3 per cent.

“The overall market conditions have improved and the inflation has moderated and so has the input costs. This has resulted in a good growth in both volumes and margins,” Manwani said.

The company, which makes products like Dove, Ponds, Lakmé, Lux and Surf Excel to name a few, has witnessed a broad-based growth, which means all it’s categories performed well in the January to March quarter also indicating demonetisation did not impact the sales during the quarter as it did in the October to December quarter in the same fiscal.

GST impact

However, the company has cautioned the market by forecasting a tepid performance for the next one to two quarters due to the possible impact of Goods and Services Tax (GST).

The company’s chairman said that GST will impact the wholesale trade negatively as there will be some de-stocking by the trade on a temporary basis.

“We welcome the introduction of GST as it widens the tax base and levels the playing field. However, there is some uncertainty among retailers and the trade pipeline will narrow,” Manwani said indicating that this will impact the sales for sometime.

Organic products

The company is, however, bullish on its overall growth across its categories, especially on the natural and organic products.

The company has been extending a few of its brands such as Tresemme, Fair and Lovely, Clinic Plus into the natural or ayurveda products. Besides, the company also has Lever Ayush and Indulekha in the natural segment.

The company also today announced that it is launching another natural brand called Citra in the skin care segment.

Placed in the premium category, the 30-year-old brand has been brought from Indonesia and been developed for the Indian market.

HUL, whose share price touched all-time high at ₹1,009 at close on the BSE on Wednesday, has also proposed a final dividend of ₹10 per share, subject to the approval of the shareholders at the AGM.

Published on May 17, 2017

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like