The country’s largest consumer goods major Hindustan Unilever Limited’s (HUL) net profit rose by 9 per cent to ₹1,444 crore during the quarter ending December 31, compared to ₹1,326 crore in the year ago period.
The net profit was slightly under pressure due to the restructuring of water purifier business along with the costs involving the acquisition of GlaxoSmithKline Consumer Healthcare during the quarter.
However, net profit before these exceptional items rose by 17 per cent during the period.
Stable demand outlook
The company expects demand to remain stable in the coming quarters as the country goes for general elections this year. Besides, macro economic factors such as volatile crude prices will also play an important part on how the demand pans out in the near-term.
HUL, while declaring its third quarter earnings, said that it has to keep a close watch on these factors and will monitor from the point of view of consumer demand and costs, while remaining focussed on the volume-driven profitable growth.
The company, which manufactures brands such as Lux, Dove, Surf and Ponds, amongst several others, has posted a double-digit volume growth of 10 per cent during the quarter on back of stable demand and rising consumer confidence at a time when the overall market grew grew 9-10 with volume growing at 8-9 per cent on a moving annual basis.
Water purifier segment
HUL plans to phase out the base and low-end model of its water purifier in the next couple of quarters and plans to focus on the RO and UV as the market has shifted to these segments.
Its domestic consumer demand grew by 13 per cent while its overall income, include its export business, grew by 10.5 per cent at ₹9,664 crore in the quarter as against ₹8,742 crore in the same period last year.
The company had witnessed a broad-based (across categories) growth during the quarter. While home-care grew by 15 per cent, personal care registered a 11 per cent rise and food and refreshment grew by 9 per cent.
Rural demand
While the overall demand has improved, the company indicated that there were concerns related to rural demand, which is still half of the national average of $29 (₹2,030 per consumer). The company said that the rural demand growth is, however, growing fast and is 1.3 times more than the urban growth.
HUL’s Chairman and Managing Director Sanjiv Mehta said, “The very fact that the governments in many States were forced to waive the farm loans, is certainly indicative of that. Though the monsoon rains started well, many pockets didn’t receive average rainfall. The important factor is wage rates because not all are farm owners and wage rates have to go up to put more money in the hands of farmers.”