Companies

HUL Q2 results: No pleasant surprises

Parvatha Vardhini C | Updated on January 16, 2018 Published on October 26, 2016

While the personal care segment did well, what pulled down growth was the lacklustre volumes of soaps (personal wash) due to price hikes during the quarter.

Hindustan Unilever’s September quarter results paint a tepid picture, similar to that of the June quarter.

Net sales grew by a 1.3 per cent over the September quarter of last year to ₹7,698 crore, the weakness driven by the de-growth of 1 per cent in overall volumes as also the flat revenues seen in the company’s biggest segment, personal care.

The personal care segment brings in 45-50 per cent of the company’s total revenues and is the most profitable, clocking margins of over 20 per cent.

While within the personal care space premium brands such as Dove , TRESemme (hair wash) BB and CC creams (skin care) did well, what pulled down growth was the lacklustre volumes of soaps (personal wash) due to price hikes during the quarter.

Besides, like in the past, home care, the next biggest segment, also registered subdued revenue growth of 3.2 per cent with only premium brands such as Surf doing well.

However, the company could expand its operating margins by 60 basis points over the year-ago period to 17.9 per cent now.

Cheaper raw material cost and lower advertisement spends predominantly helped margin expansion.

Raw material costs, as a percentage of sales, came down to 49.8 per cent, compared with 51 per cent a year ago.

Continuing with the trend seen in the first quarter, advertising spends as a percentage of sales came down from over 12 per cent a year ago to 11 per cent now.

Better operational performance along with a 30 per cent rise in other income helped net profit grow 11.6 per cent to ₹1,096 crore.

With 45-50 per cent of the demand for HUL coming from rural areas, good monsoon is expected to help volume growth in the quarters to come.

But with inputs such as palm oil heating up, as in this quarter, price increases may continue to threaten a recovery in volumes.

Published on October 26, 2016
null
This article is closed for comments.
Please Email the Editor