Hindustan Unilever Ltd (HUL) recorded a 18.8% rise in standalone net profit for the December quarter from a year earlier as India’s top fast moving consumer goods company gained from a sustained recovery in demand during the festive season and caliberated price increases in select products.
Profit in the three months ended 31 December rose to ₹1,921 crore from ₹1,616 crore a year earlier. The figure compares with the ₹2,052.6 crore consensus estimate in a Bloomberg survey of 17 analysts. Standalone revenue for the quarter jumped 21% to ₹11,862 crore from ₹9,808 crore a year earlier.
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Domestic consumer growth, excluding the impact of the merger of GSK CH and the acquisition of VWash, grew at 7% during the quarter, led by 4% volume growth, the maker of Lux soaps and Knorr soups said. The performance indicates an increase in demand for packaged household goods, as well as easing of supply constraints during the quarter.
The market trajectory is in the right direction as supply-side constraints cool off, rural demand remains “very resilient” because of government interventions and mobility improves across markets, chairman and managing director Sanjiv Mehta said. This along with a cohesive vaccine roll-out coupled with a demand-side stimulus in the government’s upcoming budget could help demand momentum, he said.
HUL has come back to “impressive” growth in the December quarter, said Abneesh Roy at Edelweiss Securities.
HUL’s business spanning soaps to packaged tea is a proxy for consumption in India. Health, hygiene, and nutrition, which form 80% of HUL’s portfolio, continue to grow in double digits even as the company reported a significant improvement in discretionary and out-of-home categories that were impacted in the initial months of the lockdown.
Demand in rural markets continue to charge ahead of urban markets where mobility restrictions and slower sales through large format or modern trade had affected sales earlier during the fiscal, HUL said. This is in line with demand trends reported by other consumer goods firms.
“The good bit is that urban demand, which was negative earlier, has moved to a positive territory, albeit still at a low level,” said Mehta, adding that he expects urban demand to shift to a faster growth trajectory helped by mobility in large cities linked to a faster roll-out of covid-19 vaccines. Growth trends in beauty and personal care and foods were largely because of price hikes in the soap and tea categories, analysts at ICICI Securities said.
In a separate development, HUL on Wednesday announced the appointment of Ritesh Tiwari as executive director, finance, and chief financial officer and a member of the board, HUL, with effect from 1 May 2021. Tiwari succeeds Srinivas Phatak who is set to move to the company’s headquarter in London as EVP, financial control and risk management.