HUL

HUL had disappointed the street with its Q1Fy14 performance. The company reported a 23% (YoY) drop in net profit at Rs.1020 crore. Though this was a decline, the market had expected net profit to tank around Rs.870 crore levels thus to that extent, some disappointment was contained. One has to also take into account the fact that in Q1FY13, there was a one-time exceptional gain of Rs.605 crore and in the current Q1, the exceptional gain is at Rs.106 crore. Thus that disparity in the net profit is bound to be accentuated. Total income rose 6% at Rs.6986 crore and this slower growth in sales is what drove down the stock price. EBITDA grew by 12% at Rs. 1,086 crore while EBITDA margins rose from 15.46% to 16.23%. Volumes fell to 4% from 9% (YoY) and 6% (QoQ).

Soaps and detergents which contributed 50% to its revenue in Q1, grew 8% (YoY), led by  Lifebuoy, Breeze, Dove and Lux. Its Personal Products includes skin care, hair care, oral care and colour cosmetics and this segment grew 2% indicating a slowdown.  Bevarages, which includes its tea brand Taaza and coffee brand Bru showed the best growth at 16%. Packages foods led by Knorr and Kissan grew 5% but the growth was impacted by slowdown in its Kwality Walls ice cream.  HUL’s advertising and promotions expenses during the quarter increased 8.56 %. Q2 will continue remain challenging but the second half for the company is always its best and with a bountiful harvest expected after the monsoon, the coming months hold a lot of promise.