HUL Q3 net marginally declines at Rs 637.5 cr

Hindustan Unilever (HUL), the country's largest fast moving consumer goods company, has posted a marginal decline of 1.78 per cent in net profit at Rs 637.51 crore in the third quarter ending December 31, 2010 as compared to Rs 649.11 crore in the corresponding quarter of the previous year. Total income during the period under consideration, however, increased from Rs 4,573.23 crore to Rs 5,127.71 crore.

With sustained double-digit underlying volume growth in the domestic consumer business (13 per cent), net sales grew 12 per cent during the quarter and ahead of the market in aggregate. Home and personal care business grew by 11.6 per cent with competitive growth in both laundry and personal wash. Laundry portfolio was further strengthened with Rin delivering record volume growth.

Harish Manwani, chairman said: “Our strategy is working and is reflected in the consistent double digit underlying volume growth over the last four quarters and ahead of market growth. We continue to strengthen our leadership in core categories, even as we invest to build opportunities for the future. In an inflationary environment, we will manage our business dynamically, through judicious pricing actions and increased focus on cost effectiveness, while ensuring that we remain competitive in the market place.”

Personal wash grew ahead of the market with Lifebuoy growing strongly post the relaunch and the premium portfolio continued to deliver robust growth. Personal products grew strongly at 20 per cent across categories with skin care delivering a particularly strong performance.

Skin care growth was innovation led, both on the core and in emerging segments. Fair and Lovely, Ponds White Beauty and Vaseline Healthy White continued to deliver robust sales growth. Both Hair and Oral performed well across the key brands. Dove Hair range was relaunched with Fiber Actives and in Oral, a new variant Close-up, Fire-Freeze. was successfully introduced. Foods business grew 11.3 per cent.

In tea, Red Label was relaunched continuing to deliver double-digit growth. Coffee growth was robust, across conventional and instant coffee, with price point packs performing particularly well. Knorr soupy noodles sustained its strong momentum and is now available nationally. Ice-cream grew by 31 per cent with good growth across formats.

Pureit continued to expand its franchise with product offerings across multiple price and benefit positions. Overall, the water business grew strongly and in line with action standards. Input cost inflation continued to rise during the quarter.

Cost of goods sold went up by 220 bps, as a result of steep rise in material costs, especially in commodity sensitive categories. A&P spend grew by 17 per cent to maintain market competitiveness and to develop emerging categories. Consequently, operating margins were lower by 320 bps.

Financial income increased by Rs 38 crore through further improvement in working capital and sound treasury management. Profit after tax but before exceptional items declined by 2.1 per cent, while net profit declined by 1.8 per cent.

The shares of HUL were trading down 0.77 per cent at Rs 295.60 on the BSE at 1:12 pm.