HUL Q3 profit up 18% at 754 crore

Profit Rises On Price Hikes, Higher Volumes, But Growth Slower Than Q2

Mumbai: Buoyed by a mix of product price increases and volumes, fast-moving consumer goods (FMCG) major Hindustan Unilever (HUL) posted an 18% growth in net profit at Rs 754 crore for the third quarter ended December 31, 2011, compared to Rs 638 crore in the corresponding period last year. Net sales rose 16% to Rs 5,853 crore from Rs 5,027 crore during the period. Trebling of its rural reach as well as the expansion in the number of urban outlets bolstered growth in the December quarter, said the maker of Lux soap, Dove shampoo and Lipton tea. 

    During the quarter, domestic consumer business grew at about 17% with an underlying volume growth of 9%. Soaps and detergents grew by 21% with growth ahead of the market, with laundry registering a double-digit growth across all brands. Personal products delivered a broad-based volume led growth of 14%, with Fair & Lovely, Vaseline and Ponds growing in double-digits. The company's growth in hair care was steered by Dove, Clinic Plus and Clear; however, oral care registered a modest growth in a competitive environment. Beverages, on the other hand, delivered competitive growth of 11% with both tea and coffee growing in double digits, while packaged foods grew by 14%. However, the performance of Knorr soups was muted during the quarter on account of slowdown in the market. 
    However, the topline and bottomline growth in the December quarter is a tad lower than what HUL posted in the September quarter. Inflationary pressures during the third quarter were primarily on account of currency depreciation. The company said cost pressures were managed dynamically through aggressive savings programmes coupled with judicious pricing. The intensity of competitive environment pushed HUL to continue investing behind brands with advertising and promotion at nearly 12% of its turnover. 
    "We have delivered another strong quarter of competitive growth with improvement in margins. The results, delivered against a backdrop of an uncertain economic environment, are reflective of the strength of our brands, consistency in our strategy and relentless focus on execution. We will continue to manage our business dynamically to deliver competitive, profitable and sustainable growth," said Harish Manwani, chairman, HUL. 
    Despite the challenging environment, operating profit margins improved by 2.3% during the quarter. HUL's scrip declined 3.5% on BSE on Monday to close at Rs 387.