The country’s top FMCG company Hindustan Unilever Ltd reported a 7 per cent net sales growth in the first quarter ended June 30, 2013, accompanied by slower volume growth both sequentially and over the year-ago period. Net sales grew to Rs 6,787 crore for the quarter led by a 16 per cent growth in the beverages business and an 8 per cent growth in its key soaps and detergents business.
The firm also announced a top management shuffle (click here)
Its domestic consumer business grew 7.1 per cent with a 5.9 per cent growth in home and personal care unit and a 12.5 per cent growth in the food business.
Overall volume stood at 4 per cent against 6 per cent year-on-year growth clocked in Q4 FY13. The company’s operating profit was up 12 per cent with 70 bps margin expansion.
HUL scrip tanked over 5 per cent ahead of the results announcement only to recover partially and was quoting at Rs 661, down 3.7 per cent as of 3.30 pm on the BSE in a weak Mumbai market on Friday.
The firm saw its net profit decline 23.4 per cent to Rs 1,019.25 crore over the year-ago period. However, the firm’s profit in the same quarter last year was boosted by an exceptional item from sale of assets worth Rs 607 crore which shrunk to a one-time gain of Rs 106 crore last quarter. Profit after tax from ordinary activities before exceptional items net of tax and prior period adjustments for the quarter stood at Rs 885.13 crore, up 3.6 per cent over Q1 of FY13.
Soaps and detergents which contribute around half of total business of HUL, reported an 8 per cent growth in sales and improvement in margins. The firm said skin cleansing sustained its strong performance, registering another quarter of double digit volume growth. Lifebuoy, Breeze, Dove and Lux delivered robust volumes. The quarter witnessed price deflation as the benefit of lower commodity costs was passed on to consumers.
In laundry, Surf and Rin maintained double-digit growth as they continue to drive category upgradation. The liquids portfolio was expanded with the launch of Surf Excel Liquid Detergent. The household care segment posted double-digit growth and introduced Vim Anti Germ Dishwash and Domex acid based toilet cleaners.
Personal care products grew 2 per cent in a slowing market though the firm reported double-digit growth in hair, oral and colour cosmetics business. The unit, however, saw margin pressure last quarter.
In skin care, Ponds, Lakmé and Dove delivered double-digit volume growth. Fair & Lovely maintained its strong position in the mass skin lightening segment. However, it was affected by a challenging market scenario and a strong base effect, according to the firm.
Hair care had another good quarter and posted volume led double-digit growth. Sunsilk and Clinic Plus sustained robust growth momentum.
The oral care segment registered double-digit growth, driven by the Close Up and a step up on Pepsodent Expert Protection.
Colour cosmetics did particularly well, delivering double-digit growth across Lakmé and Elle 18 brands. Lakmé continues to strengthen its position in premium make up, driven by the growing momentum on Absolute and ‘9 to 5’ which nearly doubled sales last quarter.
In skin care, Ponds BB Cream and Lakmé CC Cream were introduced and the facial cleansing portfolio was further strengthened with a new Lakmé Fresh Fairness Clean up range. Hair care saw the launch of Sunsilk Radiant Shine, Dove Cellular Repair and TRESemmé Keratin Smooth.
Beverages and packaged food
Beverages grew 16 per cent with tea delivering one of its strongest quarters with double-digit growth across all key brands. Taaza did extremely well, on the back of a reinforced marketing mix.
Packaged foods grew 5 per cent, driven by double digit growth in Kissan and Knorr Soups. The Knorr portfolio was expanded with the launch of the ‘Easy to Cook’ range of meal makers. Kwality Walls grew modestly, affected by a slowdown in the ice cream market.
Overall, both the packaged foods and beverages unit, which are smaller part of the business mix of HUL, saw sharp margin expansion.
HUL chairman Harish Manwani said, “While there are near-term concerns particularly around slowing market growth, we are confident of medium- to long-term growth prospects of the FMCG sector and our strategy of driving growth and profitability through innovation and operational excellence.”
(Edited by Joby Puthuparampil Johnson)