UPDATE: Hindustan Unilever 3Q Net Beats View, Sales Disappoint
06 Februar 2012 - 1:00PM
Dow Jones News
BANGALORE (Dow Jones)--Hindustan Unilever Ltd. (500696.BY),
India's largest consumer goods maker by sales, Monday beat market
estimates with an 18% jump in net profit for the quarter through
December but failed to impress investors as its sales didn't match
expectations.
The Unilever PLC (UL) unit's sales volume growth in the fiscal
third quarter slowed, albeit on top of last year's high base, as
sales of personal care products like Pond's skin cream and Pears
glycerine soap were muted despite the onset of winters.
HUL's quarterly net profit rose to INR7.54 billion from INR6.38
billion a year earlier, beating the INR7.06 billion average of
estimates in a Dow Jones Newswires poll of 16 analysts.
Sales grew 16% to INR58.53 billion, a tad slower than the
INR58.91 billion poll forecast.
The HUL stock, which has risen more than 20% in the past six
months, closed 3.5% lower at INR386.70 on the Bombay Stock Exchange
on profit-taking. The benchmark Sensex gained 0.6% in
comparison.
HUL, which gets more than 90% of its revenue locally, said sales
volume at its local consumer goods business grew about 9.1%. This
compares with 9.8% growth in the September quarter and 13% growth
in the same period last year.
"Global uncertainty and local factors have adversely impacted
consumer sentiment in the quarter," Chief Financial Officer R.
Sridhar told reporters during a post-earnings conference call.
A slowdown in the local economy and uncertainty stemming from
global problems such as the euro-zone debt crisis have led Indian
shoppers to postpone purchases of discretionary items.
Thus, personal products sales for the just-ended quarter
increased just 14% to INR18.86 billion compared with an 18% growth
in the September quarter and 19% in the June quarter.
But sales at its soaps and detergents segment--accounting for
45% of overall revenue--rose a robust 21% to INR26.46 billion.
HUL has been taking calibrated price hikes in this segment to
pass on high commodity prices, though sometimes it has sacrificed
profits to retain and grow market share in the face of cut-throat
competition.
The company raised prices by about 7.0% on average across
categories in the first nine months of this financial year, Sridhar
said, adding that it increased soap prices as recently as the
current quarter.
The price hikes and some cost savings helped HUL grow its profit
margin before interest and tax by 230 basis points from a year
earlier. The margin improved despite the cost of goods sold going
up by 140 basis points.
-By Rumman Ahmed, Dow Jones Newswires; 91-9845104173;
rumman.ahmed@dowjones.com
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