Hindustan Unilever Q3 Results: Profit Rises 18.9%, Beats Estimates

• Revenue up 1.6% to Rs 15,818 crore versus Rs 15,567 crore (Bloomberg estimate: Rs 15,791 crore).

• Ebitda up 0.8% to Rs 3,695 crore versus Rs 3,666 crore (Bloomberg estimate: Rs 3,651 crore).

• Margin contracted to 23.4% versus 23.5% (Bloomberg estimate: 23.1%).

• Net profit up 18.9% at Rs 2,984 crore versus Rs 2,509 crore (Bloomberg estimate: Rs 2,659 crore).

The company posted flat underlying volume growth versus 3% in the preceding three months, according to the company. Volumes were impacted mainly due to negative mix, with small packs growing ahead of large packs, partially offset by the secular trend of premiumisation.

"Demand trends remained subdued with continued moderation in urban growth while rural sustained its gradual recovery," said HUL MD and CEO Rohit Jawa. In this operating context, Jawa said that the company delivered "competitive growth by driving unmissable brand superiority, investing behind brands and capabilities whilst maintaining healthy margins."

During the quarter, the company has taken price hikes of 4-5%. While raw materials like crude oil moderated, other key inputs like tea and palm oil shot up 24% and 40%, respectively, putting pressure on margins.

However, in a post-earnings briefing, the HUL management indicated that it aims to maintain margins at 23-24% in the near term.

• Home care grew 5.4% to Rs 5,739 crore.

• Beauty and wellbeing grew 2.6% to Rs 3,556 crore.

• Personal care fell 3.1% to Rs 2,243 crore.

• Growth in food remained flat at Rs 3,745 crore, with mid-single-digit price growth offset by a decline in volume.

Within categories, the company registered high single-digit volume growth in dishwash and fabric wash and mid-single-digit volume growth in hair care. Skin care was impacted by delayed winter and colour cosmetics had a muted quarter. Tea delivered low-single-digit growth led by premium brands such as 3 Roses and Taj Mahal. Ice cream revenue remained flat year-on-year. Nutrition drinks further strengthened their value and volume market leadership while the category declined due to subdued consumption.

As part of HUL's palm localisation strategy, HUL's Board approved the acquisition of the palm undertaking of Telangana-based Vishwatej Oil Industries Pvt. "Palm and its derivatives are a key feedstock to manufacture a variety of HUL’s personal care, beauty and home care products and are largely imported from Indonesia and Malaysia," the company said in a statement. As part of this strategy, HUL aims to build supply chain resilience for palm derivatives through backward integration.

Shares of HUL closed 0.11% higher ahead of the announcement, as compared with a flat benchmark S&P BSE Sensex.