FMCG major Hindustan Unilever Ltd (HUL) on Tuesday reported an increase of 14.40 per cent in its consolidated net profit to Rs 1,795 crore for the first quarter ended June 30, helped by volume growth and improvement in margins.
The company had posted a net profit of Rs 1,569 crore in the corresponding quarter of the previous financial year, HUL said in a regulatory filing.
Net sales during the June 2019 quarter stood at Rs 10,197 crore, a rise of 6.04 per cent as against Rs 9,616 crore in the year-ago period.
"Domestic consumer growth was 7 per cent with underlying volume growth at 5 per cent" during the quarter, said HUL in a statement.
The company further added, "Margin expansion was driven by improved mix, leverage in operating and advertising spends and our savings agenda."
HUL Chairman and Managing Director Sanjiv Mehta said, "Against the backdrop of moderate market growth, HUL has delivered a resilient performance driven by expansion of our consumer franchise, improvement in portfolio mix and sustained growth in margins."
Its focus on strengthening the core, leading market development and premiumisation, driving channel transformation and building brands with purpose, continues to serve it well, he added.
HUL Chief Financial Officer Srinivas Phatak said there has been some moderation in the market condition as rural growth rate which was ahead of urban growth for several quarters has slowed and has almost become equal to urban growth.
"In the quarter, the rural growth has been at par with urban. Earlier, rural use to grow faster than urban, now rural is still growing but its par with urban," he said in an earnings call.
However, Phatak also expects that the government's emphasis on "gaon, garib and kisan" in the Union Budget 2019-20 by spending more on the rural areas would lead to "rural upliftment and give impetus on overall consumption".
HUL's total expenses for the quarter was Rs 7,896 crore as compared with Rs 7,604 crore, a rise of 3.84 per cent.
Its revenue from the home care segment during the quarter stood at Rs 3,464 crore, a growth of 10.10 per cent as compared with Rs 3,146 crore in the corresponding period a year ago.
"Home care sustained its journey of double-digit growth. Fabric wash performance was driven by our relentless focus on core and market development initiatives," said HUL adding that 'household care' also delivered strong performance.
While contribution from the 'beauty and personal care' segment was up 4.18 per cent to Rs 4,626 crore during the June 2019 quarter, compared with Rs 4,440 crore a year ago.
"Within 'beauty and personal care', personal products' performance was steady while personal wash witnessed a muted delivery particularly in the popular segment. Skin care registered broad based growth across brands," it added.
Its 'foods and refreshment' segment was also up 9.36 per cent during the quarter to Rs 1,950 crore as against Rs 1,783 crore of the first quarter of 2018-19.
"Beverages witnessed a reasonable quarter driven by consistent strategy across brands and markets. Ice cream and frozen desserts had a good season and delivered strong double-digit growth led by innovations. In foods, our core segments performed well," it said.
However, its 'other' segment, which includes, exports, infant and feminine care declined 20.78 per cent to Rs 324 crore as against Rs 409 crore in the corresponding quarter a year ago.
On the outlook, Mehta said, "We believe our business is well-positioned to unlock the structural FMCG India opportunity as well as in terms of navigating the short-term challenges arising from softening of growth."
HUL has also received approvals from its shareholders and creditors for the proposed merger with GSK Consumers Healthcare Ltd and expects integration of the business before the end of 2019, subject to approvals of National Company Law Tribunal.
Shares of HUL Tuesday settled at Rs 1,693.20 apiece on the BSE, up 0.86 per cent from the previous close.
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