The Hindu Business Line : Cost management, price hikes take Hind Unilever net up 13%

Mumbai July 25 Despite inflationary pressure, FMCG major Hindustan Unilever Ltd (HUL) registered a 13-per cent growth in its net profit for the quarter ended June 30, 2008, mostly driven by higher volumes in personal care products and “judicious” price increases to offset rise in input costs.

The company clocked a net profit of Rs 558 crore during the quarter, as against Rs 493 crore in the same period last year. Net sales grew by about 21 per cent to Rs 4,215.67 crore, compared to Rs 3,481.40 crore in the year-ago period, which translates into an incremental turnover of Rs 735 crore. The board declared an interim dividend of Rs 3.50 per share for the extended 15 months accounting year ending March 31, 2009.

Steep increase in raw material costs, however, continued to challenge the company’s margins.

Mitigating inflation

“Focussed action on cost management, improved portfolio mix and judicious pricing helped mitigate the impact of steep cost inflation. We have been able to maintain our profit margins at 14.2 per cent,” Mr Harish Manwani, the company’s chairman, said at a media briefing to announce the results on Friday.

Mr D. Sundaram, Vice-Chairman of the company, said the increase in net sales during the quarter was mostly driven by growth of its FMCG sales, which was ahead of the aggregate market growth at 19 per cent. “The laundry category continued its momentum with good performance across Surf, Rin and Wheel brands. The personal wash category growth was driven both by volume and price with Lux and Lifebuoy leading this category growth,” he said.

Although its salt and atta brands registered a decline in growth, HUL’s overall foods business grew by 14 per cent. “While supply of salt was affected by unseasonal rains, we had some supply side issues as far as our Annapurna brand of atta was concerned,” Mr Nitin Paranjpe, Managing Director and CEO of the company said.

Asked whether inflationary trends had dampened consumer spending, Mr Manwani replied in the negative.

Related Stories:
HUL sales grow 19%; ‘inflation a worry’
Unilever sharpens focus on India, other emerging markets

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