Hindustan Unilever Q2 net profit up 13.24 pct at Rs 913.8 cr

The company,which sells brands like Lux,Dove,Rin and Surf among others,said it has seen a growth of 10 per cent in revenue terms in its domestic consumer business with underlying volume growth of 5 per cent.

The market growth for the industry is in mid single-digit in revenue terms and the volume growth is very low,the company said.

“We have been talking about slowdown in the market growth and that has continued in this quarter,both in volume growth as well as in value,” HUL Chief Financial Officer R Sridhar told reporters this evening.

Analysts said the company’s September quarter earnings are marginally ahead of expectations.

Kotak Securities FMCG Analyst Ritwik Rai said: “HUL’s 2QFY14 revenues as well as profits have come in modestly ahead of our expectations. Underlying volume growth at 5 per cent,is likely ahead of the industry growth.”

During the quarter,HUL’s advertising and promotional spends stood at Rs 954.02 crore,up from Rs 768.98 crore in the year-ago period.

With the general slowdown,and with people curtailing their discretionary spends,the segments in higher price points were impacted during the quarter,Sridhar said.

“In particular,premium segments,discretionary categories were sort of impacted much more and they continue to be under pressure. Input cost environment was volatile,further aggravated by the sharp depreciation of the rupee.

“Competitive intensity has actually stepped up in this quarter. We have seen some big competitive launches,but more importantly we have seen a big step up in the industry spends on the media.

“Media gross rating points have gone up significantly especially in personal products category and notably in oral care,” the HUL CFO said.

He further said the company is seeing competitive intensity across all product categories.

Meanwhile,the company’s Board of Directors today declared an interim dividend of Rs 5.50 per equity share of face value of Re 1 each for the fiscal year ending March 2014.

Additionally,they approved an additional investment in the equity shares of Bhavishya Alliance Child Nutrition Initiatives,a Section 25 Company,to make it a wholly owned subsidiary.

HUL has spent a lot in terms of advertising and promotions in its soaps and detergent category during the quarter but the company said they passed on the benefit of lower input cost to the consumers.

During the quarter under review,sales revenue of soaps and detergents grew by 6 per cent and personal products grew by 12 per cent.

Its beverages segment grew by 16 per cent,with all brands delivering double-digit growth while packaged foods,sold under Kissan range and Kwality Walls grew 9 per cent.

The company,which had earlier said it would look at the hinterlands,said the growth in rural has been higher than the urban market.

“We are seeing growth in rural markets being higher than growth in urban markets. We have been doing significant investments in rural to expand our coverage,etc,and we have been seeing the results being translated into superior growth in rural market,” Sridhar said.

HUL Chairman Harish Manwani said: “We have delivered another quarter of profitable growth. The consistency and resilience of our performance,in what has been a challenging market environment for some quarters now,is a reflection of the discipline with which we are managing our business and executing our strategy.

“We continue to strengthen our business for the long term by driving innovation,investing behind our brands and further building organisational capabilities,” he said.