Focus on core biz, cost-cutting steps help HUL deliver robust Q2 numbers

FMCG major Hindustan Unilever (HUL) on Friday posted a 20 per cent rise in its consolidated net profit at Rs 15.25 billion for the September quarter. Sales grew by 11 per cent during the period while EBIDTA came in at Rs 20.19 billion, up 20 per cent YoY. EBIDTA margin rose by 160 bps against the year-ago period.
 

The company said that its well-established savings programme and leverage in other expenses helped it to mitigate material inflation and drive margin improvement. 
 

Sanjiv Mehta, Chairman and Managing Director, said: “We have delivered another strong performance in the quarter and also for the half year. Our focus on strengthening the core, leading market development and driving excellence in execution has enabled us to deliver competitive and profitable growth."
 

HUL expects demand to be stable in the near-term. 
 

“Our strength of agility and responsiveness gives us the confidence to navigate the headwinds arising from crude inflation and currency depreciation. Our strategic agenda remains one of delivering Consistent, Competitive, Profitable and Responsible growth," Mehta added.
 

Here're the key highlights from HUL's Q2 results –
 

Broad-based growth across the segments
 

The company said Domestic Consumer Growth during the quarter was 12 per cent with underlying volume growth at 10 per cent. All the key segments, viz, Skin Care, personal care and food & refreshment segment delivered good performance during the quarter. 
 

Interim dividend

The company's board has declared an interim dividend of Rs 9 per equity share of face value of Re 1 each for the period ended September 30, 2018. The record date for payment of interim dividend has been fixed as October 26, 2018.

New acquisition

The company completed the acquisition of ice-cream and frozen dessert business consisting of flagship brand 'Adityaa Milk' and front-end distribution from Vijaykant Dairy and Food Products (VDFPL).  

Leo Puri appointed as independent director

The company has appointed Leo Puri as an Independent Director on its Board effective October 12, 2018. Puri, until recently, was the Managing Director of UTI Asset Management Company.
 

Analysts’ take

HUL has now delivered a fourth consecutive quarter of double-digit volume growth which reflects a strong recovery in rural demand, aided by good monsoon since last two years and increasing government spending in an election year, said ICICI Securities in a note. “We continue to believe this growth is structural in nature and momentum would continue in the medium-term," the brokerage firm added.