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FMCG giant Hindustan Unilever reported a 9% YoY increase in its net profit in its second-quarter results. The company’s standalone PAT (net profit) increased to Rs 2,187 crore in the September 2021 quarter from Rs 2,009 crore in the year-ago period. The company also reported a 7% increase in its profit on a sequential basis. 

The growth is mainly attributed to a steady performance from all 3 verticals (home care, personal & beauty, food & refreshments). It saw its EBITDA rise a 9% QoQ from Rs 2,869 crore in the June 2021 quarter to Rs 3,312 crore in September 2021. However, the high input costs and inflation continue to remain a concern.

HUL’s domestic consumer business, nonetheless, grew by 11% YoY due to strong consumer demand and an expansion in the market share. The company also recorded a hike in its Earnings per Equity share (EPS) from Rs 8.5 to Rs 9.3 YoY. 

HUL’s stock closed in the red after taking a 4.04% hit at Rs 2,546 at the end of the trading session. (19 October 2021).

Hits

  • Net profit up 9% YoY and 7% QoQ at Rs 2,187 crore in Q2 FY22.
  • Revenue from operations rose by 11% from Rs 11,442 crore in Q2 FY21 to Rs 12,724 crore in Q2 FY22.
  • Healthy revenue growth is shown by the Homecare, beauty & personal care segments.
  • The company declared an interim dividend of Rs 15 per share for FY22.

Misses

  • The operating margin saw a decrease of 50 base points YoY at 24.6%.
  • Hand hygiene sales were down due to a slowdown in COVID-19 cases.
  • Net profit slightly below market expectations.
  • Total liabilities increased from Rs 20,264 crore to Rs 20,859 crore YoY.

Segment-wise revenue growth

  • Home care: 15% YoY increase to Rs 3,839 crore
  • Beauty & personal care: 10% YoY increase to Rs 5,000 crore
  • Food & refreshment: 7% YoY increase to Rs 3,622 crore
  • Others: 20.4% increase to Rs 264 crore

Management commentary

As per HUL’s  Managing Director Sanjiv Mehta the company’s performance in the September quarter witnessed a strong recovery amid COVID-induced lull in sales. He added “Large parts of our business continue to gain market shares and penetration. Calibrated price increases and laser-sharp focus on savings has helped us protect our business model while ensuring the right price-value equation for our consumers”.

The company was able to launch innovative, new products in the market across all three divisions. However, Mehta also underlined that inflation and rising raw material costs remain a challenge for the company. The company also plans to focus on digitization since many sales now come via digital platforms.

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