HUL Q3 net profit up 22% at Rs1,063 cr

Consumer goods major Hindustan Unilever Ltd has reported a 22-per cent year-on-year increase in net profit for the quarter ended 31 December 2013.

HUL said its after-tax profit before exceptional items (PAT-bei), grew 9 per cent to Rs955 crore, while net profit at Rs1,062 crore was up 22 per cent, aided by exceptional items.

Profit before interest and tax (PBIT), however, grew 13 per cent and PBIT margin improved by 50 bps, HUL said.

Hindustan Unilever, India's largest consumer goods maker, expects the sluggish economic growth to affect sales growth over the next few quarters.

HUL, which depends on its nationwide distribution network to push sales, reported a slowdown in rural sales for the quarter ended 31 December 2013. Rural sales account for nearly half of the company's sales.

Demand in urban areas too was also low, the company said.

''Our growth has been competitive and profitable and the results are a reflection of how we dynamically managed the business despite the headwinds in the environment. Looking forward, we are conscious of the uncertain macro context but remain positive on the mid to long term opportunities in our sector. We are determined to stay the course on our strategy and will continue to invest in the business for the long term,'' Harish Manwani, chairman of the company said.

"Market growth continued to be slow and as we stand today, in the near term, we can expect to see a few more quarters of slow growth," chief financial officer R Sridhar added.

Overall sales volumes grew 4 per cent, lower than the 5 per cent growth logged a year ago and in line with the above 4 per cent GDP growth.

HUL, which is majority owned by Anglo-Dutch firm Unilever Plc, said net sales during the October-December 2013 quarter rose 9.5 per cent year-on-year to Rs7,040 crore.

HUL, which generates more than half of its sales in emerging and developing markets, said it would remain focused on emerging markets even though economic weakness in India and Indonesia last year had hurt its performance.

HUL faces the difficult choice of raising prices or retaining market share, as high promotional expenditure pinches margins and higher prices hurt volumes.

Higher promotional spending pushed up sales in the personal care segment by 12 per cent year-on-year, while the company's food business grew an annual 13 per cent.

HUL, which manufactures detergent brand Rin and Dove soap, said a sharp depreciation in the rupee between May and August last year impacted the company's December quarter earnings.

Shares of HUL, which has a market cap of $19.5 billion, remained flat with a 0.8 per cent drop so far this year.