Hindustan Unilever Ltd (HUL), India’s largest fast moving consumer goods (FMCG) company, reported a 17 per cent growth in net profit for the quarter ended September 30 at Rs 806.9 crore, up from Rs 688.9 crore a year ago.
However, the slowdown in discretionary spends seems to have taken a toll on the company with topline growth at about 12 per cent at Rs 6,155.4 crore from 5,516 crore a year ago. Underlying volume growth, which hovered in the 9-10 per cent range in the last few quarters, was seven per cent for the quarter under review.
Analysts had estimated volume growth to be in the region of eight-nine per cent for the second quarter, given that the June- September period is considered to be weak for FMCG companies.
While soaps and detergents, which give HUL half its turnover, grew 22 per cent in the quarter, it was personal products that had a disappointing show. The segment grew 12 per cent, compared to 14 per cent a year ago.
Analysts were estimating HUL to sustain momentum in this segment, because the company has invested significantly in personal care in the past few years.
“There are challenges in the short-term. Over the last few months, we have begun to see some slowdown in discretionary categories, where there is an opportunity for the consumer to defer the choice between today and tomorrow," said Nitin Paranjpe, CEO & managing director, HUL.
HUL's profit growth was helped by a 83 per cent jump in other income to Rs 149 crore from Rs 81.11 crore a year ago.
The company’s profit before exceptional items rose 23 per cent to Rs 806 crore, and profit before interest & taxes margins improved 100 basis points, said HUL’s chief financial officer R Sridhar.
HUL's raw material costs during the second quarter rose 18 per cent year-on-year to Rs 2,701 crore.
