FMCG major Hindustan Unilever has reported 22 per cent increase in net profit at Rs 689 crore (Rs 566 crore) during the September quarter of this fiscal on strong volume growth and price increase in select category, especially in the soaps and detergent.
Sales revenue jumped 18 per cent to Rs 5,522 crore (Rs 4,681 crore).
Mr R. Sridhar, Chief Financial Officer, said despite cost pressure the company's sales growth of 18 per cent was the highest in last 11 quarters with its largest segment — soaps and detergents — logging a sales growth of 22 per cent. For personal products, it was 18.2 per cent.
“Though the impact of inflation on our raw material was about 25-40 per cent across products, we have witnessed commodity price rise has flattened when compared on a sequential basis. But the benefit of stabilisation in commodity prices was more than offset by 8-10 per cent depreciation of rupee during the quarter,” he said.
The board of directors has declared an interim dividend of Rs 3.50 a share.
The company managed cost pressure by sourcing raw material in bulk for the entire group coupled with judicious pricing. The impact of rising raw material was felt more in the soaps and detergent segment which saw the maximum price rise, he said.
Trims ad spend
HUL, the country's largest advertiser, has trimmed its advertising and promotional spend to 12 per cent of its sales compared with 14 per cent in the corresponding period last year.
The advertisement spend during the quarter was up marginally at Rs 651 crore (Rs 646 crore).
The company's soaps and detergents business recorded 28 per cent increase in gross profit (before tax and interest from ordinary business) at Rs 321 crore (Rs 250 crore), for personal products it was up 25 per cent at Rs 394 crore (Rs 314 crore), beverages was up marginally at Rs 88 crore (Rs 87.57 crore), packaged foods' rose 6 per cent to Rs 16 crore (Rs 15.51 crore).
The company's chemical and water business trimmed its loss to Rs 8 crore compared with Rs 18 crore in the same period last year.
The export business, which is being spun off into a wholly-owned subsidiary, was up 10 per cent to Rs 289 crore (Rs 263 crore).
The company has entered into a strategic alliance with Tata Teleservices and Tata Teleservices (Maharashtra) for distribution of telecom products leveraging the HUL's distribution network in rural markets. Both companies will now finalise the details of the alliance, said HUL.
Mr Harish Manwani, Chairman, said the global markets remain challenging with consumer spends in Europe and North America hard to come.
“Consumer confidence in some of the developed economy is low as they are more worried about saving their jobs, while in developing countries such as South-East Asia, Latin America and China the spends are more liberal,” he said.
On the current business environment, Mr Nitin Paranjpe, Managing Director, said though the high domestic inflation, coupled with increase in lending rate, adverse impact of rupee depreciation and intense competition remains a challenge, there are tailwinds in the form of strong domestic demand, good monsoon leading to better spends and diverse product portfolio with presence in every price point will help the company.
The company's shares hit an all-time high of Rs 377 and closed at Rs 375 on Monday.