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HUL Q2 profit up 8% amid challenging operating environment

The News International Team

FMCG major Hindustan Unilever (HUL) met street expectations with the second quarter net profit rising 8.1 percent year-on-year to Rs 988 crore supported by exceptional gain and higher revenue growth. Profit in the year-ago period was Rs 913.8 crore.

Adjusted profit after tax climbed 6.5 percent to Rs 939 crore in the quarter ended September 2014 compared to Rs 883 crore in corresponding quarter of last fiscal. In Q2FY14, profit included an exceptional credit of Rs 33 crore.

Total income from operations grew by 10.8 percent to Rs 7,639 crore from Rs 6,892.6 crore during the same period with volume growth at 5 percent in the quarter gone by (versus 6 percent in same quarter last year and 5 percent in previous quarter).

HUL said domestic consumer business (FMCG and water) jumped by 10.4 percent with a 10.7 percent growth in home and personal care and 9.4 percent in foods businesses, adding the operating environment remained challenging with low market growth across categories.

According to the average of estimates of analysts polled by CNBC-TV18, profit was expected at Rs 990 crore on revenue of Rs 7,650 crore for the quarter.

The FMCG major earned an exceptional gain of Rs 48.7 crore during the quarter (versus Rs 33 crore Q1FY14), which included profit on sale of surplus properties Rs 49.25 crore and restructuring expenses Rs 57 lakh. Other income surged 31 percent to Rs 197.8 crore in the quarter ended September 2014 compared to Rs 151 crore in same quarter last year.

Operating profit during the quarter rose by 14.5 percent on yearly basis to Rs 1,242 crore and margin expanded 50 basis points to 16.3 percent.

Advertising and promotion cost declined 3 percent to Rs 925 crore from Rs 954 crore while tax expenses shot up 46.2 percent year-on-year to Rs 417.64 crore in second quarter of current financial year.

Segments

Revenue from soaps & detergents (including brands like Vim, Lifebuoy, Surf, Lux etc) business grew by 11 percent Y-o-Y to Rs 3,755 crore with EBIT margin declining 40 basis points to 13.6 percent.

Personal products business reported a 9.9 percent growth at Rs 2,143 crore during the quarter with EBIT margin of 24.4 percent versus 22.8 percent. “Fair & Lovely and Pond’s delivered volume led double digit growth but oral care had a subdued quarter largely due to a strong comparator arising from the re-launch of Pepsodent in the base quarter,” HUL explained.

Beverages revenue increased 7.6 percent to Rs 899 crore (led by tea and coffee) with EBIT margin at 17.3 percent against 17 percent on year-on-year basis. Revenue from packaged foods segment jumped 13.4 percent Y-o-Y to Rs 451.31 crore with EBIT margin rising to 4.42 percent from 3.34 percent during the same period.

HUL said in packaged foods, Kissan registered strong growth on both Ketchups and Jams while ice creams delivered another strong quarter led by Magnum and through sharper in-market execution on Kwality Walls.

Meanwhile, the board of directors of the company today declared an interim dividend of Rs 6 per equity share for the financial year ending March 31, 2015. The dividend will be paid to the shareholders on or after November 14, 2014.

At 15:26 hours IST, the stock was quoting at Rs 721.00, down Rs 36.90, or 4.87 percent amid large volumes on the BSE.

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