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Double digit growth in foods business: HUL’s Q2 result

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Hindustan Unilever Limited’s (HUL) quarterly result for the quarter ending on 30th September, 2009 registered eight percent growth in domestic consumer business, which includes water purifier business. Net sales for the quarter grew by five percent with planned reduction in exports and underlying volume growth was one percent.

Foods business grew at 13 percent driven by tea, coffee and ice-cream categories. Beverages grew by18 percent. During the quarter all the tea brands registered healthy growth with the launch of Lipton Green Tea, relaunch of tea bags. Instant coffee growth was driven by low unit packs. In processed foods, investment in market and category development continued, with successful relaunch of Knorr soups. Ice-cream continued its volume led growth.

Pure-It has been making excellent progress and rapidly building a strong franchise across the country, with nearly three million households now protected. The business has expanded its reach to smaller towns and is focusing on product innovation and channel development.

Operating margin improved by 140bps. Profit before interes and tax (PBIT) grew by 16.5 percent with operating margin improving to 14.3 percent, after absorbing 320 bps increase in brand investments. Advertising and promotion (A&P) expenditure grew by 38 percent, driven by relaunches, substantial step-up in media support and mix impact of higher personal products sales. Excluding the mark to market (MTM) charge on forex exposures, PAT (bei) grew by 14.4 percent. On a reported basis, PAT (bei) grew by 9.5 percent. Net Profit declined by 21.6 percent due to exceptional gains from property disposal in the prior year and exceptional charge, largely due to a provision related to the settlement signed with erstwhile workers of a closed unit, in the current period.

The Board declared an interim dividend of Rs 3 per share for the accounting year ending March 31, 2010.

Harish Manwani, chairman, HUL, commented, “We sustained good growth momentum in the domestic consumer business, driven by high quality innovations and sharp market execution. Personal products and foods business continued to deliver strong growth. In soaps and detergents, we are actively strengthening our entire portfolio and improving our competitiveness in the mass segment. We are determined to profitably grow volumes and further strengthen our market leadership across various categories.”

—IndiaRetailing Bureau

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