A timely deal with GSK closed during the lockdown has helped Unilever three quarters in a row in India

A timely deal with GSK closed during the lockdown has helped Unilever three quarters in a row in India
BCCL
  • India’s largest maker of consumer staples reported a 19% growth to ₹1921 crore ($263 million) in its standalone net profit for the third quarter ending December 31
  • The 20% growth in its topline was led by the stellar growth in its foods and refreshment post the merger with GSK, a deal that was closed in April 2020.
  • The company said its volumes of the company rose 7% excluding the consumer businesses acquired from GlaxoSmithKline Plc and VWash.
India’s largest maker of fast moving consumer goods, Hindustan Unilever (HUL), added nearly 20% to its quarterly profit, thanks to the growth in its foods & refreshment business This segment includes popular brands such as Horlicks milk powder, Bru coffee, and Kissan Ketchup, which together contribute around 28% to the total revenue.

The 20% growth in its topline was led by the stellar growth in its foods and refreshment post the merger with GSK. The company said its volumes of the company rose 7% excluding the consumer businesses acquired from GlaxoSmithKline Plc and VWash, compared to the same quarter last year.

The $452 million deal with GSK, which was closed in April 2020, couldn’t have come at a better time for HUL. Brands acquired from GSK have been big contributors to HUL’s volume growth and margin for three quarters now, at the height of the COVID-19 pandemic. “Given that GSK has better margins vs HUL, it would augment overall company margins going ahead,” a DART report highlighted after the company reported earnings post-September.

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A timely deal with GSK closed during the lockdown has helped Unilever three quarters in a row in India

The signal from HUL’s earnings is that economic recovery among consumers is still uneven and tilted in favour of essential products like food. The recent spike in goods and services tax collection, e-way bills, and railway freight movement in the month of December may not have trickled down enough for more discretionary items like home care products, where HUL saw a decline in revenue.

HUL SegmentRevenue (October to December)Year-on-Year Growth %
Home Care₹3409 crore -1.3%
Beauty & Personal Care₹4841 crore8.8%
Foods & Refreshment₹3356 crore44%
Others₹256 crore70%

HUL’s standalone net profit between October and December 2020 grew 19% to ₹1,921 crore ($ 263 million) compared to the same period last year. However, the profit was 4.3% less compared to the preceding three months. The revenue from the sale of products was up 20.48% to ₹11,682 crore year-on-year.

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“Health, hygiene and nutrition forming 80% of our portfolio continues to grow in double digits and we have seen significant improvement in discretionary categories,” the company said in a statement.

Meanwhile, the share price of HUL ended 0.14% higher on Wednesday even as the benchmark index Sensex plunged over 900 points. The shares are up 15% since September 30.

A timely deal with GSK closed during the lockdown has helped Unilever three quarters in a row in India

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