Hindustan Unilever Ltd.'s quarterly profit missed estimates and volumes contracted more than anticipated as demand fell due to the Covid-19 lockdown.
Profit fell 1.2 percent year-on-year to Rs 1,519 crore in the quarter ended March, India's largest consumer goods maker said in an exchange filing. That compares with the Rs 1,821-crore consensus estimate of analysts tracked by Bloomberg.
The company's revenue fell 9.4 percent to Rs 9,011 crore, against the Rs 10,103-crore estimate. Its sales volumes fell 7 percent versus the consensus estimate of -4 to 4 percent.
This fall in sales was largely due to a disruption in supply in March, Chairman and Managing Director Sanjiv Mehta said after the earnings. The company's production, he said, fell to zero for seven days after March 25—implementation of phase 1 of the nationwide lockdown. It has now come up to 70 percent of capacity, Mehta said.
The bottom line was further hit by a contracting profit margin. Earnings before interest, tax, depreciation and amortisation ratio fell to 22.9 percent from 23.3 percent in the same quarter last year. Analysts expected a margin of 25.5 percent.
Unilever Plc., parent of the maker of Dove soaps and shampoos, had highlighted uncertainties in its key emerging markets, including India, as the consumer goods giant withdrew its financial guidance for the year after the new coronavirus pandemic clobbered sales.
That corroborates with the view of peer peer Godrej Consumer. While overall consumption trends revived in the January to March quarter, according to Godrej, social distancing through March followed by a lockdown in the last few days impacted production. To be sure, a larger part of the lockdown's impact on sales and production is likely to be felt in the first quarter.
Still, HUL maintains a positive outlook on the FMCG sector with a medium to long-term perspective.
While it cannot estimate the time of recovery from the pandemic-hit economy, the essential goods maker is ramping up capacity for hygiene products. “Many more product launches will be in health and hygiene space from HUL,” Chief Financial Officer Srinivas Phatak said.
On Thursday, HUL shares fell 1.20 percennt to Rs 2,205.00 apiece on the NSE while the benchmark Nifty 50 gained 3.21 percent to end the day at 9,859.90 points. The quarterly results were declared markets closed.
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