FMCG major Hindustan Unilever (HUL) will report its quarterly earnings on Friday. Profit after tax is expected to increase 9.8 percent to Rs 958 crore for the quarter ended March compared to Rs 872 crore in the year-ago period, according to a CNBC-TV18 poll.
PAT adjusted for the exceptional gain (of Rs 66 crore reported in corresponding year's quarter) is seen rising 15 percent.
Additionally, higher depreciation costs, lower other income and higher tax outgo could curtail bottomline growth, feel analysts.
Total income from operations is likely to climb 7.7 percent to Rs 7,643 crore during January-March quarter from Rs 7,094 crore in the corresponding quarter of last fiscal.
Operating profit (EBITDA) may jump 18.1 percent year-on-year to Rs 1,272 crore and margin may expand 140 basis points to 16.6 percent during the quarter, aided by input price decline.
Gross margin is expected to expand by 150–280 basis points led by fall in key raw material prices like PFAD (prices fell around 14-18 percent) and LAB (Linear Alkyl Benzene prices down 32 percent Y-o-Y).
However, higher advertising and promotional spends could neutralise part of the gains from lower input costs.
Analysts said overall demand environment remained soft and HUL has not seen any material pickup on sequential basis. HUL has already passed on the benefits from the fall in input costs (related to crude oil) to consumers through 4-5 percent price cuts/incremental promotions.
Hence, that price cuts could help spur volumes especially in the soaps & detergents segment.
Pricing growth may be muted during the quarter. Around 60 percent of the company’s business is facing pricing headwinds due to stiff competition from competitors and small local players, who immediately pass on the benefit of low commodity inflation to the end consumer.
Volume growth could be in the range of 5-6 percent or could be close to previous quarter's 5 percent growth.
Segmental expectations
Soaps and detergents segment (which contributes 45-50 percent of revenues) could witness volume growth recovery on the back of price cuts undertaken.
Pressures in skin care and oral care are expected to sustain while growth in personal products segment may be driven by some pick up in urban demand.
Key factors to watch out for are commentary on volume growth & consumer demand environment, growth in personal products and early impact of deficient monsoon, if any.
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