The September 2014 quarter for Hindustan Unilever paled in comparison to the stellar show it put up in the June quarter. Still, the FMCG major managed to keep sales growth in the double-digits, aided by a good showing in its two bread-and-butter segments.

HUL’s domestic FMCG sales grew 10.4 per cent in the September 2014 quarter over the year-ago period, supported by volume growth of 5 per cent. The June 2014 quarter had far higher sales growth, at 14 per cent, backed by better volumes of 6 per cent. Soaps and detergents, which make up over half of HUL’s sales, grew 11 per cent for the July-September 2014 period over the year ago. With mass brand Wheel slowly gathering steam after its re-launch last year, growth may improve further, adding to the clout HUL has in Surf and Rin. In soaps, flagship brands Dove, Lux and Lifebuoy drove growth. Personal care, which had been HUL’s bugbear until Fair & Lovely was re-launched last September, has firmly returned to double-digit growth, expanding 10 per cent in the recent September quarter. The segment’s margins continued improving as well, up almost two percentage points to 24.4 per cent with the premium range of Ponds and Lakme selling well.

As personal care accounts for over 40 per cent of HUL’s profits, good performance in this segment can lift the overall picture.

Overall operating profit margins improved to 14.3 per cent compared with 13.8 per cent in the September 2013 quarter. After several quarters of increased spending on advertising and promotion, HUL has cut back on this over the past two quarters. As a proportion to revenues, ad spends were down to 13 per cent in the September 2013 quarter, against the 15 per cent in the year ago.

This move may have been in response to the higher input prices besides re-launch of various brands being undertaken.

But now, with cost of key raw materials, palm oil and crude oil, swiftly declining and set to remain thus, the cost picture is set to look up.

Related Topics
comment COMMENT NOW