HUL’s net profit jumps 8.58% to ₹1,974 cr in Q2

Indicating that the worst is over for the FMCG sector, Hindustan Unilever Ltd (HUL) on Tuesday posted a consolidated net profit of ₹1,974 crore for the second quarter ended September 30, a 4.05 per cent increase compared with the June quarter. During the first quarter of this financial year, HUL had posted a consolidated net profit of ₹1,897 crore.

The Board of Directors declared an interim dividend of ₹14 per share for FY 2020-21. HUL’s total income during the September quarter stood at ₹11,776 crore, an increase of 8.1 per cent compared to the previous quarter. HUL’s total income during the first quarter was ₹10,885 crore.

On a year-on-year comparison, HUL’s consolidated net profit saw an 8.58 per cent increase compared to the same quarter last year. HUL had posted a consolidated net profit of ₹1,818 crore in the same quarter last year. HUL’s total income during the September quarter increased 15.19 per cent compared to the year-ago period’s ₹10,223 crore.

The domestic consumer growth during the September quarter — excluding the impact of merger of GSK CH and acquisition of VWash — stood at 3 per cent. HUL had posted a de-growth of 7 per cent in its domestic consumer growth during the first quarter (excluding impact of merger with GSK CH India).

Pre-Covid levels

“In the context of a challenging economic environment, our growth has been competitive and profitable. We continue to demonstrate execution prowess, agility, adaptability, resilience, and passion of our people. We have expanded our portfolio with consumer relevant innovations and have invested strongly behind our brands. Our operations and service levels are now back to pre-Covid levels and we have accelerated the pace of digitising our operations under the ‘Re-imagine HUL’ agenda,” said Sanjiv Mehta, Chairman and Managing Director.

The economic outlook has improved given the various initiatives taken by the Government and Reserve Bank of India, said Mehta. “In our sector, rural markets have been resilient but the demand in urban India, especially in metropolitan cities, has been muted. We believe that the worst is behind us and we are cautiously optimistic on demand recovery,” Mehta added.

While growth in the rural market is looking resilient, the outlook for urban demand looks uncertain, said HUL.

Key segments growth

The health, hygiene and nutrition segment, which constitutes 80 per cent of its portfolio, grew by 10 per cent during the quarter. The company’s discretionary segment, which constitutes 15 per cent of its portfolio, and its out-of-home segment, which constitutes five per cent of its portfolio, both posted a degrowth of 25 per cent each.

Skin cleansing grew in double digits on back of a very strong performance in ‘Lifebuoy’ and a good delivery in ‘Lux’, while hand sanitizers and handwash segments continue to gain penetration and have delivered robust growths, it said. The foods and refreshment category sustained the high growth momentum and grew in double digits. While there was sequential improvement, ice creams, foods solutions and vending businesses continue to be impacted due to out-of-home consumption loss, it said. In the fabric wash segment, it has reduced its prices to pass on benefits of lower commodity costs to consumers.