Hindustan Unilever (HUL), the largest fast-moving consumer goods (FMCG) maker in the country, said its first quarter net profit grew 9.8% against the same period previous year due to a moderate business rise in all segments, while warning that the near-term outlook for its products did not look good.
The Mumbai-based maker of soaps and shampoos, which is a bellwether of consumption trends in the country, said its profit in the April-June period rose to Rs 1,174 crore against Rs 1,069 crore during the same period last year, also aided by a one-time write back of provision for pension benefits. Net sales during the quarter under review grew by 3.6% to Rs 7,988 crore against Rs 7,713 crore last year. Rural sales account for around 40% of the company’s total revenue.
HUL operates in four segments - home care, personal care, foods and refreshment, along with a residual category for others.
“While the near-term market growth is likely to remain muted, we are optimistic for the medium-term and remain focussed on driving competitive and profitable growth,” chairman Harish Manwani said on the performance.
The quarterly result was announced minutes before the stock market closed, sending the stock to fall sharply before ending 2.04% down to its previous close.
The company also announced its proposal to invest about Rs 1,000 crore towards building a new manufacturing unit near its existing factory in Doom Dooma, Assam. The new unit, likely to be ready by early 2017, will increase production of its personal care products.
HUL cited operational efficiencies for its quarterly growth.
“During the quarter, against the backdrop of a challenging environment where market growth further slowed down in both volume and value terms, the business continued to track ahead of market with sustained margin improvement. Domestic consumer business growth was at 4%, with 4% underlying volume growth, and operating margin expanded by 70 basis points,” said the company. The margin stood at 20.1% in the April-June period.
The company also announced a key change in the management committee, appointing Srinandan Sundaram in place of Punit Misra as executive director and vice-president, sales and customer development.