 "Premium play props up home care show for HUL in first quarter")
The outlier in Hindustan Unilever’s June quarter results was home care. The category carved out of the new accounting norms implemented by HUL include detergents, fabric care and surface cleaners such as Vim. It was the premium end of these categories that contributed to the 6.8 per cent sales growth that this segment saw in the June quarter. This was the highest among the four categories of HUL, which faced slowdown challenges during the quarter under review.
Analysts Amnish Agarwal and Gaurav Jogani of Prabhudas Lilladher in their report, dated July 18, said: “HUL’s home care sales were led by strong growth in premium detergents. Specifically, Surf’s growth momentum continued in the quarter. And, so did market development activity in premium products such as Comfort fabric conditioners and Vim liquid.”
HUL has been consistently premiumising its portfolio over the past few years. The biggest beneficiary of this strategy has been personal care, with brands such as Dove, Ponds, Close-up, Fair & Lovely and Vaseline driving growth for the company for some time now. Of late, segments such as premium laundry have been performing well, too, analysts tracking the market said, explaining how premiumisation as a growth strategy has broad-based for the company.
When announcing the company’s June quarter results, Managing Director and Chief Executive Officer Sanjiv Mehta said modern trade as a channel and premiumisation as a strategy had worked well for the firm. “We find that new and emerging categories show huge potential. And, the slowdown hasn’t quite affected their growth prospects,” he said.
Thanks to the performance of premium home care products, its earnings before interest and tax (Ebit) grew 22.7 per cent year-on-year, the highest for the June quarter. Ebit margins also showed improvement, growing 180 basis points year-on-year, Abneesh Roy, associate director, research, institutional equities at Edelweiss said.
Analysts say the premiumisation trend in home care is expected to continue in the next few quarters as well, as HUL looks for growth in a challenging market. The company, for instance, recently launched Surf Excel Matic liquid detergent as a step-up to its Matic detergent powders, basically, washing powders for clothes put in washing machines. The company has also stepped up its focus in the post-wash and surface cleaning categories in a bid to strengthen its premium home care portfolio.
Analysts Amnish Agarwal and Gaurav Jogani of Prabhudas Lilladher in their report, dated July 18, said: “HUL’s home care sales were led by strong growth in premium detergents. Specifically, Surf’s growth momentum continued in the quarter. And, so did market development activity in premium products such as Comfort fabric conditioners and Vim liquid.”
HUL has been consistently premiumising its portfolio over the past few years. The biggest beneficiary of this strategy has been personal care, with brands such as Dove, Ponds, Close-up, Fair & Lovely and Vaseline driving growth for the company for some time now. Of late, segments such as premium laundry have been performing well, too, analysts tracking the market said, explaining how premiumisation as a growth strategy has broad-based for the company.
When announcing the company’s June quarter results, Managing Director and Chief Executive Officer Sanjiv Mehta said modern trade as a channel and premiumisation as a strategy had worked well for the firm. “We find that new and emerging categories show huge potential. And, the slowdown hasn’t quite affected their growth prospects,” he said.
Thanks to the performance of premium home care products, its earnings before interest and tax (Ebit) grew 22.7 per cent year-on-year, the highest for the June quarter. Ebit margins also showed improvement, growing 180 basis points year-on-year, Abneesh Roy, associate director, research, institutional equities at Edelweiss said.
Analysts say the premiumisation trend in home care is expected to continue in the next few quarters as well, as HUL looks for growth in a challenging market. The company, for instance, recently launched Surf Excel Matic liquid detergent as a step-up to its Matic detergent powders, basically, washing powders for clothes put in washing machines. The company has also stepped up its focus in the post-wash and surface cleaning categories in a bid to strengthen its premium home care portfolio.