Hindustan Unilever Jan-March net profit rises 9%, price hikes help beat estimates

Hindustan Unilever, India's biggest FMCG company, reported a 9% rise in January-March standalone net profit to Rs 2,327 crore from Rs 2,143 crore in the same quarter of the previous fiscal year.

Revenue from operations grew 10.40% to Rs 13,190 crore during the fourth quarter from Rs 11,947 crore a year ago. The volumes were flat, indicating that the growth in revenue must have been driven by price hikes that the company has been pushing in the face of rising costs of raw materials.

The bottom line topped most estimates that were in the range of Rs 2,000-2,300 crore. Edelweiss Securities had estimated the net profit at Rs 2,161 crore while Kotak Institutional Equities had projected a figure of Rs 2,215 crore.

The company said its operating margin during January-March was 24.6%, but did not give the comparative quarterly figure. For the whole of FY22, margins contracted 20 basis points to 24.8%.

For FY22, turnover and profit after tax both grew 11% each to Rs 50,336 crore and Rs 8,818 crore, respectively. The volume growth was 3% for the year.

"In the context of unprecedented inflation, we continue to manage our business dynamically driving savings harder across all lines of P&L and taking calibrated pricing actions using the principles of Net Revenue Management. We continue to invest competitively behind our brands," the company said.

The home care business, which comprises of brands such as Surf, grew a healthy 24% during the quarter, while beauty and personal care segment grew 4%, led by brands such as Lux, Dove and Pears. The growth in the foods and refreshment business was 5%.

OTHER KEY HIGHLIGHTS

1) The company declared a final dividend of Rs 19 per share, taking the full year dividend to Rs 34 per share.

2) Hindustan Unilever undertook calibrated price increases across fabric wash and household care portfolios to partly offset the significant inflation in input costs. 

3) Skin care and colour cosmetics had a muted quarter with the third wave of COVID pandemic and high inflation impacting discretionary consumption.

4) January-March operating profit grew 10% on year to Rs 3,245 crore.

5) Health food drinks continued to gain market share and penetration on the back of focused market development actions and new communications.

6) Ice cream segment had a strong quarter delivering high double-digit growth, broad based across brands and formats.

7) Tea continued its robust performance and grew competitively on an exceptionally high base.

MANAGEMENT COMMENTARY

"In challenging circumstances, we have grown competitively and protected our business model by maintaining margins in a healthy range. I am also pleased that we have become a Rs. 50,000 crore turnover company in this fiscal," Hindustan Unilever CEO and Managing Director Sanjiv Mehta said.

"While there are near term concerns around significant inflation and slowing market growth, we are confident of the medium to long term prospects of the Indian FMCG sector and remain focused on delivering a consistent, competitive, profitable and responsible growth," Mehta added.

A calibrated approach towards price increase in skin cleansing and hair care has helped protect business model even as vegetable oils continue to inflate at record levels, the company said.