Mumbai, July 29: Hindustan Unilever Ltd (HUL) today said it would buy back shares at a maximum price of Rs 230 that would raise the stake of Anglo-Dutch parent Unilever by around 0.7 per cent and involve an outlay of up to Rs 630 crore.
The company reported a 29.6 per cent rise in net profit for the second quarter ended June 30, made possible by double-digit growth rates in key businesses and measures to cut costs.
The company’s board has agreed to pay an interim dividend of Rs 3 per share of Re 1 each.
Net profit after exceptional items rose to Rs 493.08 crore compared with Rs 380.59 crore in the same period last year. It came on the back of a 12.9 per cent jump in the company’s total sales, contributed by price increases in some products and higher growth rates in nearly all categories.
This is the first time Hindustan Unilever is offering to buy back shares.
Its aim is to effectively utilise its surplus cash, leading to a leaner balancesheet. Unilever now holds 51.42 per cent in the company.
The price of up to Rs 630 crore is a premium of 17 per cent over the closing price on Friday. Hindustan Unilever could buy between 2.7-3.2 crore shares from the market at price points ranging between Rs 200 and Rs 230 per share.
The double digit growth in its bottomline came against a backdrop of escalating costs. In such an environment, the company went for “judicious price increases’’ in some of its product categories, while cost-saving initiatives also aided margins.
During the quarter, home & personal care business grew 11.1 per cent, with sales rising to Rs 2,541.26 crore compared with Rs 2,286.37 crore in the same period last year.
All brands in laundry and shampoo continued to do good business, while the oral and personal wash segments reported strong growth.
However, the skin category was impacted by a reduction of stocks because of the relaunch of Fair & Lovely this month.
There was a 25 per cent growth in the foods business where net sales rose to Rs 555.24 crore from Rs 444.33 crore last year.
Total segment revenue of the company grew to Rs 3,522.31 crore from Rs 3, 117.54 crore a year earlier.
D. Sundaram, director-finance, Hindustan Unilever, said higher growth rates were seen in soaps and detergents, personal products, beverages, processed foods and ice creams. Nearly all these categories saw double-digit jumps. He added that advertising and promotion spends were lower, reflecting efficient planning of activities.
Harish Manwani, chairman, Hindustan Unilever, said inflationary pressures would continue to influence the company’s pricing and expenditure strategies.
The plans was to adopt a policy of selective price increases and better management of operations.
He pointed to the sustained investment in brands as a major reason for the double-digit growth rates in all product categories.
Manwani said the company was keen to launch products from the Unilever stable “in the fullness of time’’.
HUL is now focussed on the rollout of its water business which is spread over south India, Maharashtra and Bengal.
The response has been very good in all these states, the company said. The plan is now to enhance production capabilities and reach most towns of the country.