Strong volumes push HUL net up 24%

Country's largest FMCG company beats forecast board says sharp focus on cost management helped margins

Hindustan Unilever, the country’s largest fast moving consumer goods company (FMCG), reported a 24 per cent growth in net profit for the quarter ended March 31, beating market expectations.

Analysts had estimated net profit for the quarter at Rs 660 crore. The actual figure was Rs 687 crore, as against Rs 552 crore last year, thanks to a strong volume growth of 10 per cent. HUL was also aided by the exceptional gains of Rs 29 crore during the quarter.

Net sales rose 22 per cent to Rs 5,660 crore against Rs 4,656 crore reported a year before. For the full year ended March 31, it reported a 20 per cent jump in net profit to Rs 2,691 crore, while revenue jumped to Rs 21,736 crore, about 18 per cent higher from the previous year. Underlying volume growth for the full year was nine per cent, said R Sridhar, chief financial officer.

“Our performance through the year has been consistent, with broad-based growth ahead of the market, driven by a relentless focus on innovation and in-market execution,” said chairman Harish Manwani. “In a year of competitive intensity and high volatility, a sharp focus on cost management helped the business to continue to invest behind our brands and capabilities, while delivering an improvement in margins.”

Operating profit jumped 32 per cent for the fourth quarter, while operating margins jumped 170 basis points year-on-year, Sridhar said. Advertising and sales promotion expenditure rose 8.6 per cent to Rs 677 crore against Rs 623 crore last year.

Soaps and detergents, the division which brings in the bulk of HUL’s revenue (48 per cent), grew 28 percent during the quarter, aided largely by price increases. Momentum was sustained in both bars and powders, with Rin benefiting from the bar’s relaunch in the December 2011 quarter.

Personal care products, the segment giving HUL 30 per cent of its revenue, grew 17 per cent, led by strong volumes. In the skin care division, Fair and Lovely, Ponds and Vaseline continued to grow in double digits. In hair care, Dove, Sunsilk and Clear delivered double-digit growth. Dove doubled volumes in the quarter, said Nitin Paranjpe, managing director.

Beverages, which account for about a tenth of revenue, grew eight per cent during the quarter. Packaged foods, which fetch six per cent of revenue, grew 10 per cent, buoyed by Kissan and Kwality Walls, said Paranjpe.

"HUL has delivered a strong set of financials for the fourth quarter this year. A 10 per cent volume growth is impressive, given the strong fourth quarter 2011 base of 14 per cent," said Ritwik Rai, FMCG analyst at Kotak Securities.

The stock was trading down 0.1 per cent on the Bombay Stock Exchange, at Rs 416.35. It hit an intra-day high of Rs 421 and a low of Rs 414.