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Hindustan Unilever quarterly profit jumps 14% on surging home-care business

Price reduction due to GST rate cut also helped spur demand

Hindustan Unilever has offered to pay an estimated 1.24 billion rupees to the government's consumer protection fund and has parked that amount as a liability on its balance sheet as on March 31.   © Reuters

MUMBAI (NewsRise) -- Hindustan Unilever, India's biggest consumer goods maker, reported a more than 14% jump in fourth-quarter net profit, aided by a surge in sales volumes at its home-care business.

For the three months ended in March, the Indian unit of the Anglo-Dutch Unilever reported a net income of 13.5 billion rupees ($200 million), compared with 11.8 billion rupees a year earlier.

The latest quarter had 640 million rupees of one-time loss related to restructuring expenses and a one-time charge on a past acquisition.

Sales grew 2.5% to 91.97 billion rupees on the back of double-digit volume expansion in home-care business, which includes brands like Vim, the company said in a statement.

The company's sales volume, one of the most important metrics tracked by analysts, grew 11%, exceeding market expectations for an expansion of between 6% and 8%.

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 the volume expansion was led by an improvement in rural demand and the government move to reduce the Goods and Services Tax in some products.

In November, the government had reduced GST rates on several consumer goods to 18% from 28% in a bid to spur demand and boost economic growth.

The company said it hasn't been able to pass on all the benefits of the GST rate cut to the consumers. Hence, HUL has offered to pay an estimated 1.24 billion rupees to the government's consumer protection fund and has parked that amount as a liability on its balance sheet as on March 31.

"In the near term, we are seeing a gradual improvement in demand," even as "competitive intensity" increased, Harish Manwani, chairman of HUL, said in the statement.

To be sure, the sector is facing inflationary pressures due to rising cost of inputs such as crude oil. The company also warned that rising crude prices may cast a shadow over the demand environment.

HUL continues to see strong improvement in demand from rural markets, which account for about 45% of HUL sales.

Ahead of the results, HUL shares rose as much as 1% to touch their 52-week high, before paring the gains to close down 0.1% in Mumbai trading. The benchmark S&P BSE Sensex gained 0.1%.

--Dhanya Ann Thoppil.

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