Hindustan Unilever Limited rode on the resilience of the rural markets during the pandemic to post an 8.25 per cent growth in consolidated net profits for the second quarter ended September 30. Net profit of the FMCG giant stood at Rs 1,967 crore compared with Rs 1,817 crore in the corresponding period of the previous year.
Sales during the quarter jumped 16 per cent to Rs 11,510 crore against Rs 9,931 crore in the year-ago period. Domestic volume grew 1 per cent against a contraction in the preceding three months.
“In the context of a challenging economic environment, our growth has been competitive and profitable. Our operations and service levels are now back to pre-Covid levels and we have accelerated the pace of digitising under the ‘Re-imagine HUL’ agenda,” Sanjiv Mehta, chairman and managing director of the company, said.
The steps taken by the Centre and the RBI has improved the economic outlook. The rural markets have been resilient but the demand in urban India especially in the metropolitan cities have been muted, Mehta said. “We believe that the worst is behind us and we are cautiously optimistic on demand recovery.”
HUL said growth in the quarter was “competitive and profitable” and that the strength of its portfolio was evident from the fact that 70 per cent of its business is gaining penetration. According to the company, health, hygiene and nutrition, forming close to 80 per cent of its portfolio, grew in double digit.
Home care sales fell 1 per cent, with the laundry category affected by confined living. Fabric wash made inroads with the company passing on the benefits of lower commodity costs to consumers.
The liquids and fabric sensations segments grew strongly because of the focus on driving market development.
Beauty & personal care saw flat sales growth though skin cleansing grew in double digits while hand sanitisers and hand wash segments continued to gain penetration. Oral care and hair care grew in double digits.
While the essential part of skin care saw pickup in demand, the “winter portfolio sell-in” was impacted because of muted trade sentiment.
Foods and refreshment sustained the high growth momentum and grew in double digits. The company said its consumer-focused activations and innovations are leveraging the “in-home consumption” trend.
Shares of HUL on Tuesday ended marginally lower at Rs 2,172.10 as the markets were not enthused by the results.
“About 80 per cent of the company’s portfolio (including hygiene and nutritional) products registered double digit growth while discretionary categories continue to post a decline in the revenues,” Kaustubh Pawaskar, AVP — research, Sharekhan by BNP Paribas, said.
He said higher input prices would continue to put pressure on margins. Recovery in the rural markets and strong traction to new launches coupled with improving penetration of nutritional portfolio would help HUL to sustained revenue and net profit growth in the near to medium term,’’ he said.
