Worst may be over for HUL, posts 9% growth in Q2 net

Mumbai: In a clear indication that the worst may now be over, Hindustan Unilever (HUL) has reported a 9% growth in standalone net profit at Rs 2,009 crore for the second quarter (Q2) ended September, as compared to Rs 1,848 crore in the corresponding quarter of previous year. As lockdowns eased and people came out to socialise, the FMCG bellwether’s Q2 total income rose 16% to Rs 11,593 crore compared to Rs 10,032 crore in the year-ago period.
Sequentially, but excluding the financials from the GSK consumer business acquisition, the pendulum of growth has swayed from a minus 7% in the preceding June quarter to 3% in the September quarter. In the March quarter, the growth was at a negative 9%. HUL CMD Sanjiv Mehta said rural consumption has remained resilient, while urban consumption is still muted due to confined living.
Home care declined 1% as people, confined to their homes, consumed less of premium laundry powders. “We believe that the worst is behind us and we are cautiously optimistic on demand recovery. When people get the confidence and step out — done in a calibrated manner — discretionary categories will get a boost,” said Mehta.
Helped by the GSK consumer health care portfolio, which includes Horlicks, food and refreshments grew by 83%. Beauty and personal care category, which de-grew by 45% in the June quarter, improved to a zero in the September quarter. While discretionary categories continued to remain in the negative territory (a 25% decline year-on-year), they witnessed a marked improvement over June quarter’s 45% decline. The out-of-home business, which consists of ice-creams, vending and water filter, which fell by a steep 69% in the June quarter, improved to -25% in the September quarter.
The volume growth, to which major contributors are the discretionary categories, was 1% during the September quarter. Health, hygiene and nutrition, which forms 80% of HUL’s portfolio, grew in double digits. This portfolio had posted 6% growth in the June quarter. A key reason behind better financials is that pipeline issues, which were witnessed in the June quarter, normalised in the September quarter. HUL CFO Srinivas Phatak said, “We have seen a progressive improvement with urban lockdowns easing and rural performing better. Today, the operations are humming and back to pre-Covid levels.”

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