HUL Q3 net down 22.42% at Rs971.40 crore
15 January 2016
Consumer goods major Hindustan Unilever Ltd has reported a 22.42-per cent dip in standalone net profit at Rs971.40 crore for the fiscal third quarter ended 31 December 2015, registering a second successive quarterly decline in the current fiscal.
The company, which had posted a net profit of Rs1,252.17 crore in the year-ago period, said revenues were hit by phasing out of excise duty incentives and falling prices.
HUL also said its board has approved transfer of Rs2,187.33 crore from its general reserves to the profit and loss account to be paid out to shareholders.
HUL's net sales were up 3.21 per cent at Rs7,822.86 crore during the quarter ended 31 December 205-16, against Rs7,579.18 crore in the year-ago quarter.
Profit before interest and tax (PBIT) grew 7 per cent and PBIT margin improved by 60 bps. Profit after tax before exceptional items, PAT (bei), grew 7 per cent to Rs1,024 crore, despite the higher effective tax rate.
''We have stepped up investment behind our brands and delivered another quarter of profitable volume led growth, consistent with our strategic intent. In an environment of moderating growth and benign input costs, we remain focused on innovation and market development to drive volumes competitively whilst improving operating margins. As channels and markets evolve, we continue to make strategic interventions to strengthen our portfolio and sharpen our executional capabilities to serve our consumers even better,'' Harish Manwani, chairman, commented.
HUL said growth in the quarter continued to be impacted by the phasing out of excise duty incentives and price de-growth, as the benefit of lower commodity costs was passed on to consumers.
Addressing a conference call, HUL chief financial officer PB Balaji said the impact would continue to be felt in the next quarter as well.
"Besides, some of the products in the personal care segment were impacted by delayed winter this season," he said.
On the outlook, chairman Harish Manwani said, "In an environment of moderating growth and benign input costs, we remain focused on innovation and market development to drive volumes competitively whilst improving operating margins."
HUL's expenses in the third quarter were up 1.78 per cent at Rs6,632.34 crore, against Rs6,515.90 crore a year ago.
However, its tax expense was down 15.70 per cent at Rs437.20 crore compared to Rs518.66 crore of the same period last fiscal.
HUL stock closed at Rs804.15, down 2.70 per cent, on BSE.
On the transfer of Rs 2,187.33 crore from its general reserves to the profit and loss account, HUL said it has built up significant reserves over the years through the transfer of profits to the General Reserves.
"Given HUL's strong financial position and track record of cash generation, the funds represented by such accumulated general reserves is seen to be in excess of the company's current and anticipated needs... HUL has proposed a scheme between the company and its shareholders to give effect to the proposed transfer and its subsequent payout," it said.
During the quarter, HUL said, revenue from soaps and detergents segment was up 0.82 per cent at Rs3,629.82 crore, against Rs3,600.22 crore a year ago.
The robust volume growth in soaps and detergents segment, however, was offset by price deflation in the quarter given the benign input costs.
HUL's revenue from personal products was up 5.63 per cent at Rs2,592.93 crore during the third quarter, as against Rs2,454.55 crore in the same period of 2014-15.
"The reported growth of this segment was impacted by the delayed winter and the one-time realignment of channel spends undertaken with a view to driving its effectiveness in the marketplace," the company said.
In the beverage segment, sales were up 7 per cent at Rs984.07 crore, as against Rs919.65 crore.
"In Tea, Red Label, Taj Mahal and 3 Roses grew well, driven by focused in-market initiatives," the company said, adding that Lipton Green Tea registered another quarter of high growth on sustained market development.
HUL said packed foods sales were also up 11.82 per cent to Rs469.54 crore during the October-December period as against Rs419.88 crore of the same quarter of 2014-15.
"Sustained market development and recent innovations resulted in another quarter of double digit growth across all key brands," it said, adding that Kissan maintained its strong growth momentum across both ketchups and jams.
However, other segments which include exports, water, infant care business were down 16.65 per cent to Rs294.63 crore during the quarter as against Rs353.50 of the October- December period of the last fiscal.
In second quarter of 2015-16, HUL had reported a decline of 2.62 per cent in standalone net profit to Rs962.24 crore as against net profit of Rs 988.16 crore in the July-September quarter last fiscal.