Companies

HUL’s consolidated net profit rises 5.68% to ₹1,897 crore in Q1

Our Bureau. Mumbai | Updated on July 22, 2020

Sanjiv Mehta, CMD, HUL

The long-term structural opportunity of FMCG also remains intact, says CMD Sanjiv Mehta

Hindustan Unilever Limited (HUL) on Tuesday posted a 5.68 per cent year-on-year increase in its consolidated net profit to ₹1,897 crore for the first quarter ended June 30. It had posted a consolidated net profit of ₹1,795 crore during the same period last year.

The FMCG major’s total income during the first quarter was ₹10,885 crore, compared to the year-ago period’s ₹10,509 crore, an increase of 3.57 per cent.

HUL posted a de-growth of 7 per cent during the quarter when it comes to its domestic consumer growth (excluding impact of merger with GSK CH India).

“Our performance in the quarter has been resilient and reflective of the intrinsic strength of our portfolio, agility in operations, excellence in execution, purpose-driven leadership and our strong balance sheet...While constraints continue due to restrictions in several parts of the country and the near-term demand outlook remains uncertain, we remain well positioned to drive competitive, profitable, and responsible growth. The long-term structural opportunity of FMCG in India also remains intact,” said Sanjiv Mehta, Chairman and Managing Director, HUL.

Its heath, hygiene and nutrition portfolio, which constitutes 80 per cent of of its portfolio, grew by six per cent. Its discretionary products - which include skincare products - that take up 15 per cent of its portfolio, posted a degrowth of 45 per cent during the quarter. Its out of home portfolio, which constitutes five per cent of its portfolio, on the other hand, posted a de-growth of 69 per cent.

The integration of GSK-CH’s nutrition business with us was done seamlessly with good performance on both growth and margins, said HUL.

Rural push

The rural market has been more resilient compared to the urban market, said Srinivas Phatak, chief financial officer, HUL. Rural India constitutes around 40 per cent of HUL’s sales.

“While it is too early to pick up a discerning trend, looking at the past three months that have gone by, there is certainly a bounce back when it comes to rural growth, not in absolute terms, but certainly vis-a-vis the urban growth,” said Mehta.

“The negative impact of adverse mix and higher Covid-19 related costs were deftly managed by dialling up savings and unlocking synergies of GSK-CH merger enabling us to sustain healthy EBITDA margins of 25 per cent,” said HUL.

 

The National Company Law Tribunal, Mumbai Bench, pursuant to its order dated August 30, 2018 had approved the Scheme of Arrangement for transfer of the balance of ₹2,187.33 crore standing to the credit of the General Reserves to the Profit and Loss Account. “In accordance with the terms of the scheme, the board of directors at the meeting approved the distribution by means of a special dividend of ₹ 9.50 per share of face value of ₹1 each resulting in total dividend payout out ₹2,232 crore,” said HUL.

The near-term outlook remains difficult to estimate, the company said. The volatility in input costs and currency will continue, while liquidity pressures remain elevated, it said.

“There will be a couple of quarters of turbulence, definitely. And our objective is to navigate this turbulence in the most agile manner,” said Mehta.

Published on July 21, 2020

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