Consumer goods major Hindustan Unilever Ltd (HUL) reported no increase in its net profit at Rs 1,059 crore in the first quarter ending June 30, 2015 as against Rs 1,053 crore in the year-ago period. Growth was impacted by the one-time profit on sale of investments in the base quarter and the higher tax rate.
The FMCG major’s net sales or the domestic consumer business at Rs 7,973 crore in the April-June quarter was up by 5 per cent compared to Rs 7,570 crore in the corresponding quarter in 2014.
Harish Manwani, Chairman, HUL said, “In a subdued market environment, the business delivered another quarter of healthy volume-led growth and strong improvement in operating margin. We are particularly pleased with the stepped up momentum in personal products and the sustained double-digit performance in packaged foods. With the near-term outlook largely dependent on a pick-up in rural markets and commodity costs expected to remain benign with little or no price growth across select categories, our focus will be to drive market development and simultaneously deliver cost efficiencies to sustain profitable volume-led growth.”
During the quarter, the company, which makes products such as Lux, Ponds, Surf Excel, and Knorr among others, posted a 6 per cent underlying volume growth. The growth in the quarter was impacted by the phasing out of excise duty incentives and price de-growth, as the benefit of lower commodity costs was passed on to consumers, the company said in a statement.
The soaps and detergents segment posted healthy volume growth due to offset by price deflation. In the skin cleansing segment, the performance was driven by the premium segment, with Dove and Lifebuoy Handwash delivering strong growth. In laundry, Surf maintained its strong volume-led growth momentum with broad-based double digit growth. Rin did well on the bars portfolio, while Comfort Fabric Conditioners delivered another quarter of high growth on sustained market development.
In household care, Vim delivered double-digit volume growth, driven by the tubs and liquids formats.The quarter witnessed further price deflation across these categories given benign input costs.
Meanwhile, in personal products, the quarter witnessed strong growth across skin, hair and colour cosmetics. Skincare delivered broad-based volume-led growth across Fair and Lovely, Pond’s, Lakme and Vaseline. Fair and Lovely saw an encouraging response to the newly launched BB cream. Pond’s performance was led by premium skin lightening and facewash, while Lakme's growth was buoyed by CC Cream, Perfect Radiance and new innovations.
Hair Care maintained its strong volume-led growth momentum. Dove's growth accelerated further, while Clinic Plus, Sunsilk and TRESemmé continued to deliver robust growth.
In Oral Care, Close Up grew in double digits, supported by impactful market activation. In Pepsodent, the Gum Care and Clove & Salt variants continued to do well, with the latter being extended nationally during the quarter.
In Colour Cosmetics, Lakme sustained its strong innovation-led performance across the core, Absolute and 9 to 5 ranges. Tea delivered double-digit growth with healthy volumes, led by Red Label and another strong quarter on Lipton Green Tea. In Coffee, Bru Gold sustained its robust growth momentum.
In the packaged food segment, the company posted a seventh successive quarter of double-digit growth. Market development continued to be the key driver of growth in this segment, the company said, adding that Kissan delivered one of its strongest quarters as growth accelerated across both ketchups and jams. Knorr grew despite a sharp market slowdown in the quarter, led by Instant soups. Ice Creams registered double-digit growth, driven by sharper in-market execution on Kwality Walls and the extension of Magnum to new cities.
Overall, competitive intensity remained high across categories. Investment behind brands was sustained at competitive levels with overall A&P up Rs 209 crore (+200 bps).