HUL Q3 earnings update
Last updated: 27 Jan, 2021 | 01:41 pm
- Profit below estimates: HUL's net profit rose 18.8% on-year to Rs 1,921 crore, marginally below street expectations. Analysts had earlier estimated a net profit or around Rs 2,052 crore.
- Revenues rise: Consolidated revenue from operations grew by 21% to Rs 11,862 crore in Q3FY21 compared to Rs 9,808 crore reported in the same period last year, with domestic volume growth of 4%.
- Segment-wise growth: Foods & Refreshment sustained the high growth momentum growing at 19%. In Tea, all brands continued to grow in high double-digits and well ahead of the market. The Beauty & Personal Care segment grew 9% with robust performance across categories and strong double-digit growths in Skin Cleansing, Hair Care and Oral Care. Health, hygiene and nutrition which forms 80% of the portfolio continues to grow in double digits. Further, there has been a significant improvement in discretionary categories.
- Margins contract: Margin contracted 80 bps YoY to 24.1% in the quarter ended December 2020, impacted by an increase in input costs. Commodity costs, especially tea and palm oil, saw inflation. HUL announced a double-digit price hike in tea, and a 2.5% increase in skin cleansing portfolio during the period. "If you look at skin cleansing, one would have to actually (increase) price somewhere between 7% and 9% to just recover the cost," the company's CFO said.
- Rural growth outpaces urban growth: Rural growth continued to outpace urban during the quarter, and is growing in double digits. Out-of-home consumption has also improved. HUL's premium segment grew at high single digits.
- New CFO: Hindustan Unilever has appointed Ritesh Tiwari as Executive Director, Finance & Chief Financial Officer and a member of the board, which will be effective from May 1, 2021.
While HUL has missed estimates on bottom line, it has met expectations in top line growth, indicating the recovery in the economy. Higher mobility, consumer-relevant innovations and investments behind market development are driving business momentum for the company.
Going forward, the company expects the rapid rollout of vaccines to give further impetus to economic growth. The near-term demand outlook is improving, and the urban growth is also forecasted to improve.