HUL Q1 Results: Profit Beats Estimates But Margin Remains Under Pressure

HUL’s profit increased 3% sequentially to Rs 2,381 crore in the quarter ended June.

<div class="paragraphs"><p>HUL products. (Source: BQ Prime)</p></div>
HUL products. (Source: BQ Prime)

Hindustan Unilever Ltd.’s profit rose, beating estimates, but input cost pressures continued to weigh on its margin.

Net profit of India’s largest consumer goods maker increased 3% sequentially to Rs 2,381 crore in the quarter ended June, according to its exchange filing. That compares with the Rs 2,206.8-crore consensus estimate of analysts tracked by Bloomberg.

HUL Q1 FY23 Highlights (QoQ)

  • Revenue up 6% to Rs 14,624 crore, against the Rs 13,401.3-crore forecast.

  • Operating profit rose 3% to Rs 3,402 crore, against the projected Rs 3,122.3 crore.

  • Margin stood at 23.3% against 24% in line with expectations.

The year-on-year performance was aided by a low base because of the disruptions caused by the Covid-19 pandemic.

Volume growth came in at 6% in the first quarter of FY23 compared with a flat growth in the preceding three month.

“Optically, the volume growth in June quarter looks better than March quarter but that’s because of a low base due to Covid-19,” said Ritesh Tiwari, chief financial officer at HUL, while briefing reporters after the results.

On a three-year basis, he said, volumes were “flat both in June and March quarter, while value growth is in mid-single digits.”

Other fast-moving consumer goods peers, too, are expected to see a sequential decline in volume or a feeble growth in the first quarter amid steep price increases.

Marico Ltd., in its Q1 update, hinted at “mid-single-digit” drop in volume growth as edible oil witnessed massive downtrading. Dabur India Ltd. said it expects revenue to grow in “single-digits” for the quarter ended June on a high base and weak consumption amid soaring prices.

Godrej Consumer Products Ltd. concurred. It expects operating margin to narrow amid continued input cost inflation. But the worst, it said, seems to be over due to the recent correction in commodity prices and the “encouraging” forecast of a good monsoon.

Shares of HUL closed 0.57% up before the results were announced compared with a 0.38% gain in the benchmark Nifty 50.