Volume-price mix props HUL's growth in Q4

FMCG major reports 15% net profit jump on robust sales in key categories

After disappointing the Street with weak numbers for three quarters, Hindustan Unilever (HUL), the country’s largest fast-moving consumer goods (FMCG) company, reported net profit of Rs 787.2 crore for the quarter ended March 31, compared with Rs 686.6 crore in the year-ago quarter — a jump of nearly 15 per cent.

Driven by a mix of volume and price, its net sales grew 12.5 per cent during the quarter to Rs 6,367 crore, from last year’s Rs 5,660 crore. For the quarter under review, underlying volume growth was six per cent, while price-led growth was seven per cent.

Most analysts were expecting the maker of Lux and Dove to deliver four-five per cent volume growth. Nitin Mathur, analyst (retail & consumer), Espirito Santo Securities, said: “This is a good volume growth number in a difficult macro environment. Most were expecting the numbers to be lower.”

Investors were quick to react to the numbers — the company’s scrip rose about seven per cent to close at Rs 497.60 apiece on BSE.

Managing Director Nitin Paranjpe said the company’s top-line growth was broadbased, implying the growth was across categories like soaps & detergents, personal products and beverages.

HUL’s sales growth in soaps & detergents during the quarter stood at 13 per cent, as it passed on to consumers, in the form of price cuts, 12-20 per cent of its benefits from fall in prices of commodities like palm oil. The company’s sales grew 12 per cent in personal products and nearly 18 per cent in beverages. Within beverages, HUL Chief Financial Officer R Sridhar said, the company had grown both in its tea and coffee portfolios.

“All of our packaged tea brands like Three Roses (in the South), Brooke Bond Red Label and mass-market brand Taaza did well. In coffee, Bru has been clocking good numbers,” he said.

HUL also appeared to hold the fort in operating margins — seeing a 60-basis-point improvement during the quarter, despite advertising & sales promotion expenditure rising 90 basis points and royalty payouts increasing 30-35 basis points.

For full 2012-13, the firm’s net profit grew 41 per cent to Rs 3,796.7 crore, while net sales were up 16 per cent over the year-ago period to Rs 25,206.38 crore. Underlying volume growth was seven per cent, while operating margins expanded 80 basis points.