HUL Q3 Results: Standalone net profit up 0.56% YoY, misses analysts' estimates

HUL Q3 Results: Hindustan Unilever (HUL) reported on Friday, January 19, a standalone net profit of Rs 2,519 crore for the quarter ended December 2023 (Q3 FY24). The figure grew by 0.56 per cent on a year-on-year (YoY) basis as the company had posted a profit of Rs 2,505 crore in the year-ago period.

Revenue from operations for the quarter under review came in at Rs 14,928 crore, down 0.38 per cent on a YoY basis. The company had posted revenue of Rs 14,986 crore in the corresponding quarter of the previous fiscal.

Both bottom line and topline figures missed analysts' estimates. Zee Business Research desk had projected the FMCG giant to report a net profit of Rs 2,669 crore, up 7 per cent YoY, while revenue was estimated to come in at Rs 15,324 crore.

Total income for the quarter under review came in at Rs 15,473 crore, up 0.1 per cent against Rs 15,456 crore logged in the year-ago period.

Basic earnings per share (EPS) of the company stood at Rs 10.72 against Rs 10.67 in the Q3 FY23.

Earnings before interest, tax, depreciation, and amortisation (EBITDA) for the quarter came in at Rs 3,540 crore against Rs 3,537 crore logged in the year-ago period. EBITDA margin at 23.7 per cent increased by 10 basis points against the December 2022 quarter.

Underlying volume during the quarter grew 2 per cent during the October-December period. 

What management says

The company said in its investor presentation that the operating environment remains challenging given the uneven monsoon and delayed winter. Besides, a subdued festive season due to weak consumer sentiment and an uneven economic recovery also contributes to the challenging environment.

Segment-wise performance

Home Care: Robust volume-led performance on a very high base

Home Care saw a marginal decline in revenue with mid-single-digit UVG in the quarter. However, on a 2-year CAGR basis, the business delivered strong double-digit growth of 14 per cent with high single-digit UVG. Fabric Wash volumes grew in the mid-single digit YoY driven by outperformance in the premium portfolio. Household care volumes grew in low single digits led by Dishwash.

Beauty & Personal Care: Mid-single-digit volume growth led by hair and premium skin

Beauty & Personal Care revenue remained flat with mid-single-digit UVG. Skin Cleansing's revenue declined due to the impact of price reductions taken to pass on the benefits of lower commodity costs to consumers. Market development actions in body wash continue to yield good results.

While delayed winter impacted Skin Care performance in the quarter, the premium non-winter portfolio continued to do well. Hair Care delivered volume, led to double-digit growth with broad-based performance across brands and future formats continuing to gain traction. Oral Care grew mid-single digit led by Closeup. Key launches in this quarter include Glow & Lovely Powder finish crème, the New active skin barrier care range by Simple, Sunsilk hair serums, Close-up Naturals range and Lakme’s range of make-up products.

Foods & Refreshment: Price-led growth driven by Market Development portfolio

Foods & Refreshment revenue grew by 1 per cent. Tea further strengthened value and volume market leadership. Green Tea and flavoured tea performed well. Coffee grew in double-digits driven by pricing. Health Food Drinks delivered competitive modest price-led growth driven by the Plus range. Foods Solutions, Mayonnaise and Peanut Butter continue to clock strong growths. Ice
Cream grew in the mid-single digits on a high base. During the quarter, Knorr Korean K-Pot noodles and Bru Gold in Vanilla, Caramel and Hazelnut flavours were launched.

Rohit Jawa, CEO and Managing Director, commented, "HUL has delivered another quarter of resilient performance with strong operating fundamentals amidst a challenging operating environment. Our focus on providing the right consumer value, excellence in execution, increased investments behind brands and capabilities, premiumisation, and market development continues to serve us well."

Looking forward, the company expects a gradual recovery in market demand to continue, aided by increased government spending, recovery in winter crop sowing, and better crop realisation. Rural income growth and winter crop yields are key factors that will determine the pace of recovery.

In this context, "our focus remains on driving competitive volume growth whilst stepping up investment behind our brands and long-term strategic priorities. We remain confident of the mid-to the long-term potential of the Indian FMCG sector, and HUL remains well positioned to unlock this opportunity while navigating the short-term challenges," the CEO added.