Price cuts mar HUL’s Q3 show, posts flat revenue and profit growth

• HUL’s volumes grew 2% in the quarter ending December on a year on year basis.
• Home care revenues fell by 1%, BPC segment revenues were flat due to price cuts.
• Its EBIDTA margins expanded by 10 basis year on year to 23.7% in Q3.
  

Consumer goods major Hindustan Unilever posted a flat 0.5% growth in net profit to ₹2,519 crore in the December quarter from ₹2,505 crore in the corresponding quarter last year.

Its volumes grew at 2% year on year in the quarter ending December. Its sales growth was flat, registering a marginal decline of 0.3% to ₹14,928 crore due to price cuts taken by the company.

“Looking forward we expect gradual recovery in market demand to continue aided by increased government spending, recovery in winter crop sowing and better crop realization. Rural income growths and winter crop yields are key factors that will determine the pace of recovery,” said Rohit Jawa, CEO and MD of HUL.

The company also expects competitive intensity to stay due to benign commodity prices. Going ahead, the company expects price growth to be marginally negative if commodity prices remain where they are.

“HUL remains well positioned to unlock this opportunity whilst navigating the short-term challenges,” Jawa added. Its earnings before interest tax depreciation and amortization (EBIDTA) expanded by 10 basis points year on year to 23.7% in Q3.

Home care sales hit by price cuts

The FMCG major gets three-fourths of its business from home care and BPC business. Both these businesses saw mid-single digit growth in volumes. The company’s sales were affected due pricing action. Its home care’s revenues fell by 1%, with the BPC segment posting no change.

“Skin cleansing revenue declined due to the impact of price reductions taken to pass on the benefits of lower commodity costs to consumers. Market development actions in body wash continue to yield good results. While delayed winter impacted skin care performance in the quarter, premium non-winter portfolios continued to do well,” said HUL in its press release.

Food and refreshment business however saw a low-to single digit fall in volumes, as this segmental revenues went up by 1%. The company said that tea further strengthened value and volume market leadership, with green tea and flavoured tea performing well.

“Coffee grew in double-digits driven by pricing. Health Food Drinks delivered competitive modest price-led growth driven by Plus range,” HUL said.

During the quarter, it launched Knorr Korean K-Pot noodles; and Bru Gold in Vanilla, Caramel and Hazelnut flavours.

SEE ALSO

FMCG majors all set for a comeback against locals this year