HUL Q2 down 2.62% to Rs 962.24 cr, price cuts hit margins

New Delhi: FMCG major Hindustan Unilever Ltd today reported a decline of 2.62 percent in standalone net profit to Rs 962.24 crore for the second quarter ended 30 September 2015-16, on account of phasing out of excise duty incentives and price reductions. The company had posted net profit of Rs 988.16 crore in the July-September quarter of the 2014-15.[caption id=“attachment_2290096” align=“alignleft” width=“380”]  Flat profits. Reuters[/caption] HUL’s net sales however climbed 4.74 percent to Rs 7,819.64 crore during the quarter under review as against Rs 7,465.54 crore a year ago, the company said in a statement. “The growth in the quarter continued to be impacted by the phasing out of excise duty incentives and price de-growth, as the benefit of lower commodity costs was passed on to consumers,” HUL said. On the outlook, HUL chairman Harish Manwani said: “The deflationary commodity cost environment is likely to continue in the near term and our strategy of delivering consistent and competitive growth with sustainable improvement in operating margin remains unchanged.” In a conference call, HUL chief financial officer PB Balaji said the impact of phasing out of excise incentives would continue in the next two quarters till it cools down by around March. Over the impact of deficient monsoon and slowdown in rural markets, Balaji said: “It would be too early to say about that… However, we also do not see any substantial growth in the rural areas.” HUL’s expenses in the second quarter were up 3.58 percent to Rs 6,705.67 crore, as against Rs 6,473.68 crore a year ago. Tax expense was up 6.66 percent to Rs 445.47 crore, compared to 417.64 crore. The company’s revenue from soaps and detergents segment was up 1.63 percent in the second quarter at Rs 3,816.57 crore, as against Rs 3,755.10 crore of the same quarter last fiscal. Revenue from personal products was up 9.46 percent to Rs 2,345.57 crore during the second quarter, as against Rs 2,142.74 crore in the same period of FY 2014-15. The beverage segment was up 5.94 percent to Rs 952.55 crore, as against Rs 899.13 crore. Similarly, packed foods were also up 12.35 percent to Rs 507.09 crore during July-September period as against Rs 451.31 crore of the same quarter of FY 2014-15. However, other segments which include exports, water, infant care business were down 10.37 percent to Rs 324.27 crore in Q2 as against Rs 361.80 of the July-September period of the last fiscal. HUL’s standalone net profit for the first half of the 2015-16 was also down 1.15 per cent to Rs 2,021.38 crore as against Rs 2,045.01 crore of the same period of last fiscal. However, net sales during the six month period of the current fiscal were up 5.03 percent to Rs 15,793.01 crore as against Rs 15,036.32 crore a year ago. In a separate filing HUL informed that its board in a meeting held today declared an interim dividend of Rs 6.5 per equity share of face value Re. 1 each, for the year ending 31 March 2016. HUL stock closed at Rs 797.40, down 1.85 percent, on the BSE. PTI