 "HUL Q3 results: PAT rises 18.9% to Rs 2,984 cr, volume growth remains flat")
Hindustan Unilever (HUL), India’s largest fast-moving consumer goods (FMCG) company by market capitalisation, on Wednesday reported 18.9 per cent year-on-year (Y-o-Y) rise in consolidated net profit (attributable to the owners of the company) for the third quarter of the current financial year (Q3FY25) mainly on the back of profit from the divestment of its “Pureit” business and a decline in advertising and promotion expenses.
Profit before exceptional items and tax, or gross profit, was flat at Rs 3,475 crore in Q3. However, exceptional income of Rs 507 crore in the quarter versus an exceptional loss of Rs 30 crore in the year-ago period boosted net profit.
HUL’s net profit stood at Rs 2,984 crore in Q3FY25 compared to Rs 2,509 crore in Q3FY24, while its underlying volume growth was flat in the quarter under review.
The FMCG major’s revenue was higher by 1.6 per cent Y-o-Y at Rs 15,818 crore. Bloomberg analysts had estimated revenue at Rs 15,791 crore and net profit at Rs 2,659.1 crore.
“FMCG demand trends remained subdued with continued moderation in urban growth while rural sustained its gradual recovery. In this operating context, we delivered competitive growth by driving unmissable brand superiority, investing behind brands and capabilities whilst maintaining healthy margins,” Rohit Jawa, chief executive officer and managing director (CEO & MD), HUL, said in a release.
The company’s PBIDT (profit before interest, depreciation, and tax) increased by 1.3 per cent in Q3FY25, reaching Rs 3,928 crore. During the quarter, HUL’s advertising and promotion expenses declined by 7.3 per cent compared to Rs 1,626 crore in Q3FY24.
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Sequentially, the company’s revenue was down 0.7 per cent and its net profit was up 15.2 per cent.
“While we keep a close watch on the pace of recovery and the broader economic outlook in the short term, we remain confident of the medium-to-long-term opportunity in the Indian FMCG sector and HUL’s ability to grow competitively,” Jawa said.
At the press conference after the results, Ritesh Tiwari, executive director, finance & IT, and chief financial officer (CFO), HUL, said: “Market data for the quarter shows a step-up in the pace of growth for small packs across the portfolio. This seems to be a transitory shift in consumer pattern due to current macroeconomic conditions and moderation in urban growth. The secular trend of premiumisation remains resilient, with the premium segment growing ahead of mass segment.”
While talking about commodity prices, Tiwari said that the company continued to see Y-o-Y inflation in crude palm oil and tea, while soda ash largely remained benign. “Crude oil prices continued to deflate during the quarter, and the rupee depreciated by around 1 per cent against the dollar. However, over the last couple of weeks, crude palm oil, crude oil and USD-INR rates have witnessed some volatility,” Tiwari added.
He also said that the company expects moderation in demand trends to continue in the near term. “If commodity prices remain where they are, we expect a low single-digit price growth in the near term amid inflationary material prices. We hope to maintain Ebitda (earnings before interest, taxes, depreciation and amortisation) at the lower end in 23 (per cent)-24 (per cent) range,” Tiwari said.
HUL took one round of price increases in Q3FY25. Tiwari explained that the company takes price increases in small chunks. The firm will observe commodity prices and once convinced, it will take a second round of increases. He added that the company will now take price increases in tea and skin-cleansing.
At the press conference, Jawa added that he expects rural demand to keep recovering gradually. While talking about the slowdown in urban consumption, he explained that consumers are opting for smaller pack consumption even for HUL’s premium brands.
“We are investing for the future and we are managing the near term by remaining competitive and making sure that we are stronger when we come out of this, and the tailwinds then actually benefit us,” Jawa said.
The board of directors of the company also approved a scheme of arrangement between HUL and its wholly owned subsidiary Kwality Wall's (India) to demerge the ice cream business into KWIL. The board also okayed the acquisition of the palm undertaking of Vishwatej Oil Industries as a part of its palm localisation strategy. The palm undertaking is based in the Kamareddy district of Telangana, HUL said in the release.