Domestic consumer business grew at 5 percent in September quarter, with 7 percent underlying volume growth.
FMCG major Hindustan Unilever's (HUL) September quarter profit declined 2.6 percent to Rs 962.2 crore on slower growth in revenue and operational performance, while price cuts hit margin. Higher tax rate hurt HUL's Q2 and also there was an exceptional income from sale of properties in base quarter (Q2FY15).
Revenue during the quarter increased 4.1 percent to Rs 7,955 crore compared to Rs 7639 crore in same quarter last year.
The company missed expectations on both bottomline as well as topline. Profit was estimated at Rs 1,038 crore on revenue of Rs 8031 crore, according to average of estimates of analysts polled by CNBC-TV18.
"Environment continues to remain challenging. We saw negative price growth during the quarter," Harish Manwani, chairman said while addressing press conference.
Domestic consumer business grew at 5 percent in September quarter, with 7 percent underlying volume growth. It was at higher end of expected band of 5-7 percent for volume growth.
Growth during the quarter continued to be impacted by phasing out of excise duty incentives and price de-growth, as benefit of lower commodity costs was passed on to consumers, HUL said in its filing. Adjusted volume growth was 6-6.5 percent during the quarter.
The FMCG major said soaps & detergent business posted robust volume growth partially offset by price deflation. Even personal products segment has healthy double digit growth and packaged foods continued to post double digit growth for the eighth consecutive quarter, it added.
Soaps & detergents' EBIT (earnings before interest and tax) declined 4 percent year-on-year to Rs 490.3 crore with margin down 75 basis points despite good volume growth. Beverages EBIT also dropped 11.5 percent to Rs 137.8 crore with margin down 280 basis points while Personal products showed EBIT surged 17 percent to Rs 611.8 crore with margin showing 170 basis points growth.
Operating profit (earnings before interest, tax, depreciation and amortisation) increased 6.8 percent year-on-year to Rs 1,326 crore and margin expanded by 50 basis points to 16.7 percent in the quarter ended September 2015, which were also lower than forecast due to higher advertising & promotion expenses despite lower input cost. Operating profit was estimated at Rs 1,427 crore (up 15 percent) and margin at 17.8 percent.
HUL said exceptional loss for the quarter was Rs 12.14 crore against gain of Rs 48.7 crore in a year-ago period. Other income declined 14 percent to Rs 170.2 crore from Rs 197.8 crore during the same period.
Cost of goods sold dropped 2.4 percent year-on-year to Rs 2,902.8 crore in September quarter due to lower input cost. Employee cost declined 7.8 percent to Rs 380.82 crore from Rs 413 crore in same period.
Brand investments were sustained at competitive levels across segments, said the FMCG major, adding advertising and promotions expenses jumped 23.8 percent to Rs 1,145 crore during the quarter.
Tax cost for the quarter was Rs 445.5 crore, higher by 6.7 percent compared to Rs 417.6 crore in corresponding quarter of last fiscal.
HUL has declared an interim dividend of Rs 6.5 per share for the year ending March 2016.
Suruchi Jain of Morningstar says margin has once again surprised, perhaps on the personal-care portfolio. She was hoping for slightly better margins. But overall volume and topline growth is more or less in line, she says. She hasn't been too positive on the stock for some time now.
The scrip of Hindustan Unilever closed at Rs 797.40, down Rs 15, or 1.85 percent amid high volumes on the BSE.
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