News Analysis

HUL sales growth shows co weathered note ban well

Parvatha Vardhini C BL Research Bureau | Updated on January 11, 2018 Published on May 17, 2017

bl21_bmpur_fmcg+GG215NJK1.3.jpg.jpg



Following the strong show put up by Marico and Godrej Consumer in the quarter ended March 2017, Hindustan Unilever (HUL) too, reported good numbers. Like these peers, the company has shrugged off the effect of demonetisation with aplomb, reporting a domestic consumer sales growth of 8 per cent in the March 2017 quarter, over the year-ago period. Domestic consumer sales growth was at zero per cent in the December 2016 quarter (over December 2015 quarter).

With premium products such as Surf and Vim liquid (homecare), Pears and Dove (personal care) and Bru Gold (refreshments) driving growth, the trend of urban consumption bettering rural, seen in Marico and Godrej Consumer, is visible in the results of HUL as well. The company also benefited from the relaunch of products such as Fair & Lovely and Close up during the quarter.

HUL reported sales growth of 7.1 per cent year-on-year (including exports) to ₹8,773 crore, supported almost equally by both volumes as well as realisations. The home and personal care segments, which bring about 80 per cent of the company’s revenues, witnessed sales growth of 7-8 per cent each over the year-ago period. In the December 2016 quarter, homecare revenues grew by 1 per cent, while that of personal care dropped by 3 per cent.

Thanks to stable input costs for the company, raw material as a percentage of sales stood almost flat at 46.6 per cent in March 2017 quarter. But robust margin expansion in the homecare segment coupled with savings in employee and advertising and promotion costs helped operating margins. Margins expanded by about 190 basis points in the homecare segment, thanks to strong growth in both Surf and Vim Liquid. Advertisement and promotion expenses as a percentage of sales came down to 9.7 per cent compared with 10.5 per cent a year ago. Employee expenses dropped by 12 per cent. These factors helped operating margins for the company as a whole expand to 19.5 per cent, compared with 18.8 per cent in the March 2016 quarter. Adjusted net profit grew by 11 per cent to ₹1,184 crore.

In the months to come, premium products are expected to continue to do well, thanks to the strengthening urban demand. Besides, raw material costs are expected to remain stable, giving the company enough room to push for further volumes, especially in the rural markets.

Published on May 17, 2017

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill. Everyone has been impacted.

Including your favourite business and financial newspaper. Our printing and distribution chains have been severely disrupted across the country, leaving readers without access to newspapers. Newspaper delivery agents have also been unable to service their customers because of multiple restrictions.

In these difficult times, we, at BusinessLine have been working continuously every day so that you are informed about all the developments – whether on the pandemic, on policy responses, or the impact on the world of business and finance. Our team has been working round the clock to keep track of developments so that you – the reader – gets accurate information and actionable insights so that you can protect your jobs, businesses, finances and investments.

We are trying our best to ensure the newspaper reaches your hands every day. We have also ensured that even if your paper is not delivered, you can access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute, so that you can access the information you want anywhere, anytime.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. Sustaining our quality journalism has become extremely challenging. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all or readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. Doing so is easy. You can help us enormously simply by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section that offers rich investment advice from our highly qualified, in-house Research Bureau, the only such team in the Indian newspaper industry.

A little help from you can make a huge difference to the cause of quality journalism!

Sincerely,

Support Quality Journalism
This article is closed for comments.
Please Email the Editor
You have read 1 out of 3 free articles for this week. For full access, please subscribe and get unlimited access to all sections.