Hindustan Unilever

Net up 23% on good operating show and lower tax

Oct 15, 2019 03:10 IST capital market

Hindustan Unilever has registered 6% growth in consolidated sales to Rs 10105 crore for the quarter ended Sep 2019. Higher sales together with 290 bps expansion in operating profit margin (OPM) to 24.8%, powered operating profit to increase by 21% to Rs 2508 crore. But with other income stand lower by 49% to Rs 118 crore, the growth at PBIDT was restricted at 14% to Rs 2626 crore. After accounting for higher interest cost and higher depreciation, the PBT was up by 8% to Rs 2338 crore. The EO expense was marginally higher by 2% to Rs 48 crore and thus the PBT after EO was up by 9% to Rs 2290 crore. However gained by lower taxation, which stood lower by 26% to Rs472 crore, the PAT was higher by 23% to Rs 1818 crore. Eventually the net profit (after MI) was higher by 23% to Rs 1814 crore with MI being share of profit of Rs 4 crore compared to a share of loss of Rs 5 crore.

Effective 1st April 2019 the Company has adopted Ind AS 116 Leases and applied to lease contracts existing on 1st April 2019 by electing modified retrospective approach. The company has applied the standard to its leases with the cumulative impact recognized on the date of initial application. Accordingly the previous period information has not been restated.

  • Mid single digit growth of 6% in sales was facilitated by 7% domestic consumer growth as well as 5% volume growth. Upside in revenue for the period was driven by growth in all segments except others (include exports, infant and feminine care). While the segment revenue of home care was up by 9% to Rs 3370 crore (or 33% of sales), the sale of beauty & personal care was up by 5% to Rs 4580 crore (or 45% of sales). The segment revenue of Foods and refreshment was up by 8% to Rs 1847 crore (18% of sales). However the segment sales of others were down by 14% to Rs 308 crore.
  • EBIT was up by 14% to Rs 2254 crore and strong upside in EBIT was largely due to strong growth in profits of all business verticals except foods & refreshment. The segment profit of home care was up by 20% to Rs 595 crore driven by higher sales as well as 150 bps expansion in segment margin. Similarly facilitated by 250 bps expansion in segment margin and higher sales, the segment profit of beauty and personal care was up by 15% to Rs 1315 crore. Despite higher sales, the segment profit of Foods & refreshment was flat at Rs 294 crore largely due to 130 bps contraction in segment margin. The segment profit of others was up by 14% to Rs 50 crore.
  • Expansion in OPM to the tune of 290 bps was largely due to combination of various factors such as improved mix, benign commodity price movement, improvement in efficiency, IND 116 benefits as well as economy of scale. Material cost as % of sales net of stocks was up by 350 bps to 64.6%. All cost heads to the exception of cost of traded goods have declined for the quarter. The material cost as % of sales net of stocks was down by 380 bps to 32%. Similarly the cost of staff, advertisement expenses and other expenses was down by 40 bps, 10 bps and 30 bps respectively. However the cost of traded goods was up by 190 bps to 14%.
  • Other income was down by 49% to Rs 118 crore. However the interest cost was up by 240% to Rs 34 crore and that of depreciation was up by 81% to Rs 254 crore. Thus the PBT was down by 8% to Rs 2338 crore.
  • EO was up by 2% to Rs 48 crore and thus the PBT after EO was up by 9% to Rs 2290 crore. With taxation down by 26% to Rs 472 crore and tax rate down by 960 bps the PAT was up by 23% to Rs 1818 crore. Lower taxation was largely due to cut in corporate tax during Q2FY20, the full impact for H1FY20 was done during the quarter ended Sep 2019.

Half year performance

Consolidated sales were higher by 6% to Rs 20469 crore. Spurred further by 280 bps expansion in OPM to 25.6%, the operating profit was up by 19% to Rs 5232 crore. After accounting for lower other income, higher interest and higher depreciation the PBT before EO was up by 11% to Rs 4951 crore. EO expense was lower by 61% to Rs 41 crore and thus gained the PBT after EO was up by 13% to Rs 4910 crore. The taxation was down by 1% to Rs 1297 crore and thus the PAT was up by 19% to Rs 3613 crore. Eventually net profit after minority interest was up by 19% to Rs 3606 crore.

Management comment

Sanjiv Mehta, Chairman and Managing Director commented: Amidst a challenging market environment, HUL has delivered another quarter of resilient performance and sustained margin improvement. Our focus on consumer value, excellence in execution and market development continues to serve us well. The near-term outlook for demand especially in rural India remains challenging. We welcome the various measures announced by the Government and the Reserve Bank of India to spur investment and improve liquidity and are confident that the government will take all necessary steps for higher income transference to rural India. HUL remains well positioned to unlock the structural FMCG India opportunity while navigating the short-term challenges. We continue to progress our purpose-led and future-fit agenda which is underpinned by our sustainability initiatives and Re-imagining HUL driven by leveraging data and technology in all aspects of our operations.

Other developments

On Dec 3, 2018, the BoD of HUL subject to obtaining requisite approvals from statutory and shareholders had approved a scheme of amalgamation between HUL and GlaxosmithKline Consumer Healthcare (GSKCH). The scheme of amalgamation was filed with the NCLT seeking directions to hold shareholders and creditors meetings. Pursuant to the order dated May 2, 2019 passed by NCLT the tribunal convened meeting of the equity shareholders and unsecured creditors of the company was held on June 29, 2019. The equity shareholders and unsecured creditors of the company in their respective meetings approved the resolution as set out in the National Tribunal convened meeting, approving the Scheme of Amalgamation with requisite majority. The company filed the requisite company scheme petition sanction of the NCLT and same is pending.

To pay interim dividend of Rs 11/equity share

The Board of Directors has declared an interim dividend of Rs 11 per share for the year ending 31st March 2020

Hindustan Unilever: Consolidated Results

 

1909 (3) 1809 (3) Var. (%) 1909 (6) 1809 (6) Var. (%) 1903 (12) 1803 (12) Var. (%)
Sales 10105 9490 6 20469 19268 6 39310 35545 11
OPM (%) 24.8 21.9 25.6 22.8 22.6 21.1
OP 2508 2074 21 5232 4393 19 8880 7499 18
Other inc. 118 233 -49 263 364 -28 550 384 43
PBIDT 2626 2307 14 5495 4757 16 9430 7883 20
Interest 34 10 240 61 17 259 33 26 27
PBDT 2592 2297 13 5434 4740 15 9397 7857 20
Dep. 254 140 81 483 278 74 565 520 9
PBT before EO 2338 2157 8 4951 4462 11 8832 7337 20
EO Exp 48 47 2 41 106 -61 228 33 591
PBT after EO 2290 2110 9 4910 4356 13 8604 7304 18
Taxation 472 637 -26 1297 1314 -1 2544 2079 22
PAT 1818 1473 23 3613 3042 19 6060 5225 16
P/L from Discontinued Operations 0 0 0 0 0 2 -100
Net profit 1818 1473 23 3613 3042 19 6060 5227 16
Minority Interest -4 5 -180 -7 1 -800 -6 -13 -54
Net profit after MI 1814 1478 23 3606 3043 19 6054 5214 16
EPS (Rs)* 34 28 34 29 29 24
* EPS is on current equity of Rs 216 crore, Face value of Rs 1
# EPS is not annualised due to seasonality of business
Figures in Rs crore
Source: Capitaline Corporate Database

Hindustan Unilever: Consolidated Segment Results

 

Particulars 1909 (3) 1809 (3) Var. (%) % to total 1909 (6) 1809 (6) Var. (%) % to total 1903 (12) 1803 (12) Var.(%) % to total
Sales
Home Care 3370 3079 9 33 6834 6225 10 33 12874 11626 11 33
Beauty & Personal Care 4580 4349 5 45 9206 8789 5 45 17800 16588 7 45
Foods & Refreshment 1847 1703 8 18 3797 3486 9 19 7131 6476 10 18
Others (include Export, Infant & Feminine Care etc) 308 359 -14 3 632 768 -18 3 1505 1533 -2 4
Total 10105 9490 6 100 20469 19268 6 100 39310 36223 9 100
PBIT
Home Care 595 497 20 26 1294 1089 19 27 2156 1702 27 26
Beauty & Personal Care 1315 1143 15 58 2679 2353 14 56 4751 4205 13 57
Foods & Refreshment 294 293 0 13 673 623 8 14 1230 988 24 15
Others (include Export, Infant & Feminine Care etc) 50 44 14 2 103 93 11 2 178 153 16 2
Total 2254 1977 14 100 4749 4158 14 100 8315 7048 18 100
Less: Interest (net) 34 10 240 61 17 259 33 26 27
Less: Others Un-allocable Exp/Income (net) -118 -190 -38 -263 -321 -18 -550 -317 74
Add: EO -48 -47 -41 -106 -228 -33 591
PBT 2290 2110 9 4910 4356 13 8604 7306 18
Sebment Assets
Home Care 2792 2058 36 14 2792 2058 36 14 2270 2100 8 12
Beauty & Personal Care 5603 5064 11 27 5603 5064 11 27 5152 5185 -1 28
Foods & Refreshment 2154 1908 13 10 2154 1908 13 10 2179 1936 13 12
Others (include Export, Infant & Feminine Care etc) 585 651 -10 3 585 651 -10 3 697 646 8 4
Unallocable Corporate 9522 8811 8 46 9522 8811 8 46 8331 7995 4 45
Total 20656 18492 12 51 20656 18492 12 51 18629 17862 4 52
Sebment Liabilities
Home Care 3392 2988 14 27 3392 2988 14 27 2752 2865 -4 26
Beauty & Personal Care 5757 5114 13 46 5757 5114 13 46 5102 4925 4 47
Foods & Refreshment 1581 1297 22 13 1581 1297 22 13 1311 1330 -1 12
Others (include Export, Infant & Feminine Care etc) 286 325 -12 2 286 325 -12 2 296 330 -10 3
Unallocable Corporate 1582 1562 1 13 1582 1562 1 13 1283 1111 15 12
Total 12598 11286 12 85 12598 11286 12 85 10744 10561 2 85
Note: Figures in Rs crore
Source: Capitaline 2000

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