HUL

The company posted Q3FY14 which beat most estimates. HUl, on a 9% (YoY) rise in net revenue at Rs.7038 crore posted a net profit at Rs.1062 crore, up 22%. EBITDA was up 13% at Rs.1227 crore and EBITDA margins were much better, rising 60 bps at 17%.  The rise in the margin was the most gratifying part of the numbers as most analysts, on an average had expected margins to be around 16%. Operating costs were up 8% while advertising and promotion costs were up 13%. The company stated that its cost inflation was managed through a combination of judicious pricing action, unwinding of promotions and substantial cost savings. Interest costs were up 157% at Rs.18 crore.  The point to be noted here is that the company had Rs.93 crore coming in during the quarter from profit on sale of property and write back of tax provisions of earlier years. But for this, net profit would have shown a growth of just 9% (YoY).

Its domestic consumer business grew 10% with 4% rise in underlying volume. A price rise of 6% during the quarter bettered the realizations. Revenue from soaps and detergents grew 7%, with EBIT margin rising 13%.  This segment included brands like Dove, Pears, Lifebuoy, Surf and Wheel. The other segment, personal products (brands like Fair & Lovely, Sunsilk, Pepsodent, Close Up, Lakme) showed a 12% growth in topline and its EBIT rose 29%. Both the segments interestingly, showed a 100 bps jump. Beverages (Taj Mahal, Red Label, 3 Roses and Taaza) showed a 7% jump in topline though its EBIT slipped 100 bps to 16%. Packaged goods (Kissan, Knorr and Kwality Walls) showed a 13% rise in revenue though it slipped into the red on EBIT level.   Demand from urban India is expected to remain low though it could be compensated to some extent by a better rural demand. In coming quarter too, one could expect performance to hover around the same levels, no firecracker numbers in immediate future.