HUL domestic consumer business remains flat in Q3 FY17
Hindustan Unilever has reported flat domestic consumer business owing to challenging market conditions in the third quarter ending December 31, 2016. EBITDA margin was down 70 bps, while Net Profit after Tax (PAT) at Rs 1,038 crore grew 7 per cent on higher exceptional income. Net sales growth was -1 per cent during the quarter.
During the quarter, the squeeze in liquidity resulted in reduced trade pipelines and lower consumer offtake. The impact was varied across segments, channels and geographies. HUL responded to these adverse market conditions by rejigging its supply chain, supporting channel partners by extending credit and enhancing its direct distribution coverage. We also sustained our brand building spends and our innovation initiatives. Despite the short term challenges of the quarter, the premium part of the portfolio continued to perform well.
EBITDA margins down 70 bps
Cost of Goods Sold was higher by 60 bps due to rising input costs. Brand investments were maintained at competitive levels across segments. Earnings before interest, tax, depreciation and amortisation (EBITDA) for Q3 FY17 at Rs 1,355.44 crore was down by 5 per cent. Profit after Tax before exceptional items, PAT (bei) at Rs 920 crore was down 10 per cent. Net credit of exceptional items in DQ’16 includes profit on sale of surplus properties of Rs 159 crore and restructuring expenses of Rs 5.95 crore.
Premium laundry performed well with sustained double digit growth in Surf. Home Care Liquids had another good quarter.
Premium Personal Care continued its growth momentum across formats. Personal Wash volumes were impacted due to calibrated price increases to manage steep inflation in commodity costs. Baby Dove range of products have been well received by consumers.
This quarter, HUL launched ‘Lever Ayush’, an exclusive Personal Care range of high performance products based on Ayurveda and supported by modern science. The Lever Ayush range comprises soaps, shampoos, toothpastes, hand washes and face washes and has been launched across South India.
Tea delivered broad based double-digit growth led by a differentiated region wise focus. Ice Cream & Frozen Desserts delivered robust activation-led growth.
Focus on market development continued. The recently launched premium range of Kissan Jams is progressing well in the market place.
Commenting on the quarterly results, HUL Chairman Harish Manwani said, “The gradual recovery of the market was temporarily impacted by adverse liquidity conditions. However, our performance demonstrated resilience and agility in this challenging environment. There are early signs of normalisation and our focus continues to remain on innovation-led volume growth and improvement in margins. Our strategic agenda of delivering Consistent, Competitive, Profitable and Responsible growth remains unchanged.”