Companies

Price cuts, new launches drive HUL profit in Sept quarter

Priyanka Pani Mumbai | Updated on January 08, 2018 Published on October 25, 2017

Taking the new accounting structure into consideration, the net sales at ₹8,199 crore during the quarter will be 2 per cent lower than ₹8,335 crore in the year-ago period

The country’s largest consumer goods maker by volume and profits Hindustan Unilever Ltd (HUL) has posted a better than expected earnings of 16 per cent profit growth at ₹1,276 crore in the quarter ending September 30, 2017, on the back of price cuts, new launches and higher consumer demand.

The company's total sales grew by 10 per cent at ₹8,199 crore during the quarter, which also witnessed the country's biggest tax reforms in form of Goods and Services Tax (GST). However, earnings for this quarter is not comparable with the same quarter in the previous year due to change in the excise duty accounting structure as required by the SEBI, wherein the total sales is inclusive of the excise duty, that is replaced by GST during the quarter.

Taking the new accounting structure into consideration, the net sales at ₹8,199 crore during the quarter will be 2 per cent lower than ₹8,335 crore in the year-ago period, the company said. Volume growth for the quarter came in at 4 per cent, which was more or less in line with estimates.

HUL, which claims that about nine out of 10 households in the country consumes its products daily, said that despite the challenges that GST had on trade pipeline, the company was able to manage the transition and maintain demand by passing on the net benefits of the GST to the consumers in terms of price cuts and discounts. The company had taken about 3-4 per cent price cuts in the July-September quarter. The board has announced an interim dividend of ₹8 per share.

HUL's CEO Sanjiv Mehta said that while GST had impacted the business in the early part of the quarter as the traders and wholesalers cut down their orders in anticipation of the new tax regime. “However, the GST situation is slowly normalising and interestingly, there has been no slowdown in consumer offtake (demand) during the quarter. We expect things to get normal by end of December this year," Mehta said, adding that “GST will be particularly good for the country in the long term”.

He also mentioned that despite demonetisation and GST, the consumer demand from the rural market has seen a substantial improvement due to several factors such as better monsoon and farm loan waiver.

HUL, the maker of brands such as Dove, Lux, Ponds and Kissan, said it has performed better than expected results in all its categories on back of new launches, constant innovations and a focus on naturals.

Oral care

However, one category that remains a concern is oral care, where the company accepted that it has lost market share to natural-based products.

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Published on October 25, 2017
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