India's largest fast moving consumer goods maker Hindustan
Unilever beat street expectations with a net profit of Rs 807 crore, up 17%
year-on-year in the second quarter. However, shares fell 2% as total income
grew lower-than-expected 12% at Rs 6,311 crore.
Analysts on average had expected HUL to report a net profit
of Rs 785 crore on revenue of Rs 6,450 crore.
The company disappointed largely on slower volume growth of
7% in the quarter, compared with 9% in Q1 and analysts' expectations of 8-8.5%.
HUL admitted that current environment remained uncertain and
there were some signs of slowdown in discretionary spends by consumers.
"We live in a very volatile, very uncertain
market...Over the last few months, we have begun to see some slowdown in
discretionary categories, where there is an opportunity for the consumer to
defer the choice between today and tomorrow," Nitin Paranjape, MD said.
HUL's profit growth was helped by 83% jump in other income
at Rs 149 crore.
HUL had an exceptional gain of Rs 2 crore in the last
quarter, compared with a gain of Rs 44 crore a year ago.
Its profit before exceptional items rose 23% at Rs 806 crore
and PBIT (profit before interest, taxes) margins improved 100 bps, the company
said.
HUL's raw material costs during the second quarter rose 18%
year-on-year to Rs 2,701 crore, while advertising and promotional spends were
also up 18% at Rs 769 crore.
"The operating context remained challenging during the
quarter with a volatile cost environment and heightened competitive intensity.
Overall industry media spend was up significantly to its highest levels in over
15 quarters. A&P was stepped up and maintained at competitive levels,"
the Mumbai-headquartered unit of Anglo-Dutch Unilever Plc said.
Analysts say that companies will spend more on A&P
spends in the near-term to beat the slowdown in discretionary categories.
Among HUL's key segments, soaps and detergents sales were up
22% at Rs 3,176 crore, while personal products sales grew 12% at Rs 1,745
crore.
Its beverages segment and packaged foods segment saw 10%
growth at Rs 720 crore and Rs 3,663 crore respectively.
Sales from others, which includes exports, chemicals, water
etc. declined 38% at Rs 288 crore.
Meanwhile, HUL's board has declared a special dividend of Rs
8/share to be paid to its shareholders on record date as of Nov 2. The special
dividend will be in addition to the interim dividend of Rs 4.5/share for year
ending March 31, 2013, it said.
HUL shares closed down 2% at Rs 552.20 on NSE.
Source: www.moneycontrol.com
Thanks,
Gaurav Agarwal
Head Dealer
DENIP Consultants Pvt Ltd
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