After slumping to a 3 per cent volume growth in the December 2014 quarter, Hindustan Unilever bounced back to 6 per cent volume expansion in the recent March quarter.

Sales growth also improved to 9 per cent in the March 2015 quarter over the year ago.

Relief on the raw material front allowed HUL to cut prices in its soaps and detergents range; brands across the price spectrum such as Lifebuoy, Wheel, Surf, and Rin all saw prices slashed, spurring volumes.

A good performance in personal products, HUL’s second-largest category, also aided overall revenue growth.

The category’s sales growth of 13 per cent in the March 2015 quarter over the year ago, leaps ahead of the 7 and 10 per cent growth in the two preceding quarters.

Marquee brands Lakme, Fair & Lovely and Ponds did their bit in pushing growth.

Margins up

The beverages category also bounced back from the single-digit growth of the previous quarters, driven by tea and premium coffee.

For the March 2015 quarter, the segment grew 12 per cent over the year ago. But rising prices of coffee beans weighed on the segment’s profit margin which stayed flat at 18 per cent in the March 2015 quarter compared with the March 2014 quarter.

But with prices of almost all other raw materials correcting, HUL saw its material to sales ratio drop to 51 per cent in the March 2015 quarter against the 54 per cent in the year-ago period.

Prices of main input palm oil, for example, are down 26 per cent over the past year.

Crude oil, whose derivatives have wide-ranging applications in FMCG including shampoos, cosmetics and packaging, is down around 38 per cent. Food prices turning lower helped pull the packaged foods segment back into profits.

HUL then channelled the savings in input prices into promotional activity which it had scaled back on.

For the March 2015 quarter, adspend-to-sales came in at 13.6 per cent, far above the 12.1 to 12.4 per cent it had been hovering at in the preceding quarters.

Even with the adspend hike, HUL improved its overall operating profit margin to 15.9 per cent in the March 2015 quarter against the 13.3 per cent in the year-ago quarter or even the December 2014 quarter’s 14.3 per cent.

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