HUL drops after indicating challenging operating environment

Hindustan Unilever lost 4.78% to Rs 721.65 at 15:19 IST on BSE after the company said that operating environment remained challenging with low market growth across categories at time of declaring Q2 result during market hours today, 27 October 2014

Meanwhile, the S&P BSE Sensex was down 114.46 points or 0.43% at 26,736.59

On BSE, so far 3.31 lakh shares were traded in the counter as against average daily volume of 1.05 lakh shares in the past one quarter.

The stock hit a high of Rs 765 and low of Rs 719 so far during the day. The stock had scaled a record high of Rs 771 on 25 September 2014. The stock hit a 52-week low of Rs 536 on 15 January 2014.

The stock had outperformed the market over the past one month till 23 October 2014, rising 2.03% compared with Sensex's 0.28% rise. The scrip had also outperformed the market over the past one quarter, gaining 19.83% as against Sensex's 2.69% rise.

The large-cap FMCG company has an equity capital of Rs 216.32 crore. Face value per share is Re 1.

Hindustan Unilever (HUL's) net profit rose 8.13% to Rs 988.16 crore on 10.83% growth in total income from operations (net) to Rs 7639.33 crore in Q2 September 2014 over Q2 September 2013.

HUL said that the operating environment remained challenging with low market growth across categories. Brand investments were sustained at competitive levels across segments, albeit lower than an exceptionally high base quarter. The impact of input cost inflation continued to be felt in Q2 September 2014 through higher consumption costs although commodities softened towards the end of the quarter. Profit before interest and tax (PBIT) grew by 14% and PBIT margin improved by 50 basis points, despite the higher consumption costs, additional depreciation charge and phasing out of excise duty benefits. Profit after tax before exceptional items, PAT (bei), grew by 8% to Rs 957 crore while Net Profit at Rs 988 crore, was up 8%, impacted by the increase in the effective tax rate, HUL said.

The Board of Directors of HUL declared an interim dividend of Rs 6 per share for the year ending 31 March 2015.

Harish Manwani, Chairman commented: In a low growth environment, our emphasis on market development and innovations have helped deliver another quarter of double digit growth and a healthy improvement in operating margins. We will continue to manage our business dynamically for sustained competitive and profitable growth.

HUL said that the domestic consumer business grew at 10% in Q2 September 2014, ahead of market, with 5% underlying volume growth.

HUL is India's largest FMCG company in terms of sales with over 35 brands spanning 20 distinct categories such as soaps, detergents, shampoos, skin care, toothpastes, deodorants, cosmetics, tea, coffee, packaged foods, ice cream, and water purifiers.

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