HUL second quarter results exceed street expectations
Ajita Shashidhar October 27, 2013"I will continue to do the good work of my predecessor. The idea is to grow ahead of the market," said Sanjiv Mehta, the new MD and CEO of Hindustan Unilever (HUL), at the announcement of the second quarter results of the Rs 26,000 crore FMCG major on Saturday (October 26). Formerly the Chairman of Unilever, North Africa and Middle East, Mehta took over the reins from Nitin Paranjpe earlier this month.
This is the first time Mehta will be working with the Indian arm of Unilever, in his 21-year long stint with the company, and the biggest challenge for him will surely be to quickly grasp the Indian business well.
The Anglo-Dutch company's second quarter results were marginally better than market expectations. HUL's sales in the September quarter grew by 9.6 per cent (year-on-year) to Rs 6,747 crore while profit after tax also grew by 9.6 per cent to Rs 883 crore. The company's domestic consumer business grew 10 per cent with a five per cent underlying volume growth.
The surprise however, was the personal products category which grew by 12 per cent vis-a-vis just two per cent in the earlier quarter. This was aided by good sales in advance of winter, said Sridhar Ramamurthy, Chief Financial Officer, HUL.
Packaged foods continued to remain a concern for the company, as it grew nine per cent, slightly lower than the overall company growth.
"We don't look at one quarter's results and come to a conclusion. Skincare wasn't good last quarter, now we are back at better growth. Similarly, packaged food is a new category, and by the time it achieves scale, we will be in a strong position," says Harish Manwani, Non-Executive Chairman, HUL.
The FMCG major also increased its advertising spend from Rs 769 crore to Rs 954 crore this quarter. The bulk of the spend was in the oral care category due to increased competition, with new players such as P&G entering the fray.
"Since the slowdown is beginning to grow across all emerging markets, we decided to go aggressive on promotion and marketing," said Manwani.