May 17, 2017 10:13 pm JST

Hindustan Unilever profit exceeds expectations as sales rebound

MUMBAI (NewsRise) -- Hindustan Unilever, India's largest consumer goods maker, Wednesday reported a better-than-expected 6.2% increase in fourth-quarter profit, aided by a rebound in sales and stable raw material costs.

For the three-months ended March 31, the Indian unit of the Anglo-Dutch consumer giant Unilever reported a net income of 11.83 billion rupees ($185 million), compared with 11.14 billion rupees a year earlier. Sales grew 6.4% to 89.69 billion rupees.

Analysts were expecting HUL to report a profit of 10.95 billion rupees on sales of 80.53 billion rupees.

"This has been a strong quarter with profitable, volume driven growth," Chairman Harish Manwani said in a statement. "With gradual improvement in market conditions, we remain optimistic about the medium-term outlook for the sector."

HUL, whose brands such as Lux soaps, Lipton Tea and Dove shampoo are sold through thousands of mom-and-pop stores across the country, said "moderating" input costs and reduced promotional expenses also helped profit growth.

The company's sales volume, one of the most important metrics tracked by analysts, grew 4% from the previous quarter, compared with a 4% sequential decline in October-December. Analysts were expecting the sales volume to decline due to the lingering effects of the surprise demonetization of November.

Indian Prime Minister Narendra Modi abruptly banned 500- and 1,000-rupee notes, which formed 86% of the total money in circulation, in a bid to crack down on corruption and unaccounted wealth. The move resulted in a temporary cash shortage, crimping consumer spending in Asia's third-largest economy.

HUL has been barely recovering from weak demand in rural parts of India, where poor rainfalls for more than two years squeezed consumer spending. Rural consumers account for nearly 45% of the company's sales.

Part of the volume growth in the domestic market has been driven by the pent-up demand after the currency-ban, Manwani said. However, demand from rural consumers continue to remain under pressure, he said.

HUL's rival Colgate-Palmolive India last week reported a marginal decline in profit as it grappled with challenges in the distribution network after the note ban.

HUL shares touched their 52-week high of 1,010.00 rupees in Mumbai trading ahead of the earnings. The shares pared the gains to close up 0.82%, while the benchmark S&P BSE Sensex ended 0.3% higher.

--Dhanya Ann Thoppil

Asia300

Hindustan Unilever Ltd.

India

Market(Ticker): BOM(500696)
Sector:
Industry:
Consumer Non-Durables
Household/Personal Care
Market cap(USD): 34,940.41M
Shares: 2,164.34M

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