FMCG company Hindustan Unilever (HUL), the maker of Dove shampoo and Lux soap, on Monday posted a 3.68% increase in standalone net profit to R1,056.85 crore for the first quarter ended June 30, 2014 compared to R1,019.25 crore in the year-ago period.
The company’s net sales rose to R7,570.78 crore in Q1 FY15 from R6,687 crore in the corresponding quarter of the previous fiscal.
Announcing the results, PB Balaji, chief financial officer of HUL, said,” In a challenging environment, we have delivered profitable growth. Our domestic consumer business grew by 13.3% ahead of the FMCG markets both in value and volume.”
According to Balaji, the company’s rural growth overtook urban in the first quarter of FY14.
“During the quarter under review, we have increased our advertising and promotional spend by R55 crore, that is 12.5 % of our sales. There has been a further slowdown in value and volume across categories in our sector.Competitive activity remains high too,” he added.
As part of its strategy, HUL has pruned the number of stock keeping units (SKUs) in its portfolio by 20-25 % in the last six months, informed Sanjiv Mehta, CEO of HUL.”We have done it to make our portfolio agile and strong,” he added.
The company’s overall expenses in Q1 FY15 stood at R6,466.52 crore against R5,789.88 crore in the year-ago period.
Commenting on HUL’s performance in the June quarter, Abneesh Roy of Edelweiss Securities said the company's volume growth of 6% y-o-y is higher than his expectations of 4-5%.The company’s net sales increased 13.2% y-o-y to R7570.8 crore. HUL’s gross margin declined by 62 bps y-o-y,” he added.
During the quarter under review, HUL’s soaps and detergents sales grew 12.9% y-o-y and personal product sales grew by 14.7% y-o-y.
Harish Manwani, chairman of HUL, said,'' We continue to grow ahead of our markets and have delivered another quarter of strong top and bottom-line performance. While we are seeing headwinds on market growth, consumer spending and inflation, we remain focused on managing the business for long-term competitive and profitable growth and implementing our strategy with even greater rigour.”