One-off item powers HUL Q3 profit spurt

Hindustan Uni-lever, the Indian arm of the Anglo-Dutch giant Unilever, reported a 17.87 per cent increase in net profit for the third quarter ended December 31, at Rs 1252.17 crore compared with Rs 1,062.31 crore in the same quarter previous fiscal.

The profits were aided by an exceptional item of Rs 396.58 crore which included Rs 407.29 crore from profit on sale of surplus properties and Rs 10.71 crore on account of restructuring expenses, the company said. During the quarter, HUL had announced that it has signed an agreement with Housing Development Finance Corporation (HDFC) for assignment of its leasehold rights of the land and building at Backbay Reclamation Estate, Fort Division, Mumbai.

Volume growth for the company stood at a disappointing 3 per cent compared to 5 per cent in the previous quarter and 4 per cent in the same quarter previous fiscal. Analysts had expected a volume growth in the range of 5-6 per cent in the third quarter. HUL’s stock took a big hit on the disappointing performance and ended lower by over 5 per cent at Rs 892.80 on BSE.

Net sales for the company grew 7.69 per cent to Rs 7579.18 crore compared to Rs 7037.78 crore in the same quarter previous fiscal. “We have seen a pick up in rural growth but it is too early to say whether it will sustain. Volumes in urban, skincare and popular segments still remains negative,” HUL CEOSanjiv Mehta said. The company has seen good growth in personal products, much ahead of the market, Mehta added.

Analysts tracking the company were not happy with the performance of HUL during the quarter. “HUL’s results disappointed as volume growth missed our estimates. The company has reported that its volume and value growth remains ahead of the sector,” Ritwik Rai, FMCG analyst, Kotak Securities said.