Beating market expectations, the country’s largest consumer goods maker, Hindustan Unilever, today posted a 48 per cent jump in its Profit After Tax (before extraordinary income ) at Rs 855 crore (excluding exceptional items) for the April-June quarter.
Market analysts had forecast a 20 per cent growth in the net profit for most fast moving consumer goods (FMCG) companies in the April-June quarter.
Net profit of the soaps and detergent maker rose 112 per cent at Rs 1,331 crore from Rs 627 crore in the year-ago period.
The growth in profit came from exceptional items such as sale of its ten-acre Worli property named Gulita, the Bangalore Whitefield property and few flats across the country for around Rs 607 crore, said the company’s Chief Financial Officer, Mr R. Sridhar.
The gains from exceptional items for the company in the year-ago period was Rs 58.75 crore. The Indian unit of Anglo-Dutch Unilever Plc said its net income grew to Rs 6,379 crore from Rs 5,324 crore, a 19 per cent rise from the year-ago period. The company’s domestic consumer business (water and FMCG) grew by 18.7 per cent with a 20.6 per cent growth in home and personal care and ten per cent in the food business.
The underlying volume growth was 9 per cent. The growth in soaps and detergents was led by pricing, while personal products were largely led by a double-digit volume growth.
The maker of Dove soap, Clinic Plus shampoo and Close Up toothpaste, also saw its beverage section grow seven per cent with the coffee market gaining momentum.
The company, quoting market research reports, said the overall market grew by 16-17 per cent with six per cent volume growth. Officials said HUL performed better than the market. Asked about the impact of poor monsoon this year, Mr Sridhar said there would be a likely impact on the company’s bottom-line in the coming quarters.
According to market research firm, Espirito Santo, HUL seems to be gearing up for the next leg of growth.
“HUL is the best positioned consumer company to exploit the Indian demographic advantage and premiumisation trend. While companies like Nestle are still ramping up production capabilities to meet consumer demand, HUL is ahead of the curve with no such constraints,” said Mr Nitin Mathur of Espirito Santo.
He further added that the 48 per cent y-o-y is a testimony that HUL is reaping benefits of a successful ‘volume leverage’ strategy, as pricing power returned back to the soaps and detergents business.
“We have, however, tweaked our FY13/FY14 EPS estimates slightly to bake in de-merger of FMCG exports business and higher tax rates as more production units come out of tax exemption units,” Mr Mathur added.