Hindustan Unilever (HUL) would continue to improve operating margins by modest measure in the medium-to-long term, helped by better product mix, said chief financial officer Ritesh Tiwari, at the company’s Q4 earnings press conference on April 24.
HUL’s latest fiscal fourth quarter results showed that the EBITDA margin (Earnings Before Interest, Tax, Depreciation, and Amortisation) fell 30 basis points on-year to 23.4 percent, as stiff competition and demand slowdown continued to squeeze operating profitability. Gross margins grew by 350 basis points on-year to 51.3 percent during the same period.
However, going forward, modest margin improvement, coupled with increasing investments in future growth categories would be the growth recipe for HUL, said Tiwari. The improvement in product mix includes addition of premium products.
The company has also identified six growth categories: facial cleansers; serums; weather-proof body care; masstige; sun-care; and light moisturisers. Tiwari said the six growth areas have major tailwinds and would be focused on urban markets.
The FMCG bellwether is eyeing to clock a double-digit earnings per share (EPS) growth going ahead, he said.
HUL reported a 6 percent fall in standalone net profit at Rs 2,406 crore for the January-March quarter. The fall was bigger than estimated in a Moneycontrol poll of analysts. The company’s sales rose only marginally to Rs 14,693 crore during the quarter, with beauty and personal care revenue -- the key segment -- declining 2.7 percent.
Analysts had projected a profit of Rs 2,435 crore on revenue of Rs 14,913 crore, according to the average of nine brokerage estimates.
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