India’s largest FMCG company, Hindustan Unilever (HUL), saw a slightly better quarter than the previous one as the economy opened up some more, increasing the sales of detergents and discretionary products. The company also managed to maintain a stable margin while profits were driven by food and hygiene sector, which performed better than others. The management believes the near-term outlook is improving.
The stock closed down 0.34 per cent to Rs 2,390.75 on BSE before the company came out with its numbers.
Here are the key takeaways:
Ebitda margins at 24 per cent remain healthy. Profit after tax at Rs 1,921 crore increased by 19 per cent. “We have significantly dialed up investments behind our portfolio and in building future-fit capabilities. Net revenue management and savings agenda has enabled us to drive a healthy bottom line,” HUL said.
Business growth picks up
Domestic consumer growth, which was riding largely on Horlicks for the last couple of quarters, is finally showing some signs of revitalisation. The company said, excluding Horlicks and VWash impact, business grew at 7 per cent.
“Higher mobility, consumer relevant innovations and investments behind market development are driving business momentum. Our business fundamentals remain strong with 86% of our business gaining penetration. Health, hygiene and nutrition forming 80% of our portfolio continues to grow in double digits and we have seen significant improvement in discretionary categories,” said the company.
Food best segment
Foods & refreshment segment sustained the high growth momentum by growing at 19 per cent. Tea grew in double digits, beating its peers, the company claimed. Ice creams, Food solutions and vending businesses are improving progressively as out-of-home consumption increase.
Detergents sale increases
With increased mobility, Fabric Wash performance in the quarter improved sequentially. Household care continued its strong performance across segments, delivering double-digit growth.
Beauty segment up 9 per cent
Beauty & personal care segment grew 9 per cent with robust performance across categories and strong double-digit growths in skin cleansing, hair care and oral care. Skin cleansing performance was led by ‘Lifebuoy’ and double-digit growth in the premium segment. Skin care portfolio growths were led by good demand pick-up in the winter portfolio, the company said.
“I am particularly pleased with the performance of our Nutrition business and with the recovery in the discretionary segments of our portfolio; these are structurally attractive and offer immense growth potential. The near-term demand outlook is improving, and we expect to see revival in urban areas while rural areas should continue to do well,” said Sanjiv Mehta, Chairman and Managing Director, HUL.
Edelweiss said the numbers were in line with its estimates. “Good recovery in laggard parts, 80 per cent of portfolio grew in double digits, Minimal margin compression, strong brand Investments continue, which is the right strategy in our view,” it said.
Credit: Stocks-Markets-Economic Times