Hindustan Unilever’s net profit rises 13.6%, beats analysts’ expectations

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  • HUL recorded a 13.6% increase in its consolidated net profit to ₹2,381 crore in the first quarter of 2022-2023.
  • Its revenue increased by 19.5% to ₹14,331 crore from ₹11,996 crore in the comparative period.
  • Volumes jumped 6% against analysts’ expectations of 4%, but its margins remained tight.
  • The home care segment recorded much higher growth on a sequential basis compared to personal care.

Hindustan Unilever today beat analysts’ expectations by reporting a 13.6% increase in net profit to ₹2,381 crore in the first quarter of 2022-23 from ₹2,097 crore in the same quarter last year.

The company’s revenue also grew by 19.5% to ₹14,331 crore from ₹11,996 crore in the comparative period, even as most analysts expected a 14% growth.

“In an environment that remains difficult, marked by unprecedented inflation and a consequent impact on consumption, we delivered another quarter of solid performance in terms of turnover and results,” said Sanjiv Mehta, president and CEO of HUL.

Volumes also jumped 6% versus expectations of 4%, possibly on a low base effect. However, its EBITDA margins decreased by 1.1% compared to last year. The company said that despite unprecedented input cost inflation, it is still at 23.2%.

HUL’s home care segment remained the top performer with 30% growth driven by fabric washing and housekeeping. “Calibrated price increases were taken in the fabric washing and housekeeping portfolios as input costs continue to inflate at significantly high levels,” the company said.

Its food and refreshments business grew by 9% over the quarter thanks to solid performances in ice cream, coffee, jams and food solutions.

“Ice Cream had a very strong quarter, based on all brands and formats, which significantly outperformed pre-Covid levels,” the company said. This segment took a beating during the pandemic years – making Q1FY23 the first uninterrupted quarter they’ve had in two years.

However, the food segment was the only one to experience declining profits on a year-on-year and sequential basis, dropping 4% and 19%, respectively.

“Skin Care and Color Cosmetics saw strong year-over-year growth on a soft basis. The premium portfolio in skincare performed well and is significantly above pre-Covid levels. Calibrated pricing actions have been taken across the portfolio to offset the impact of record high input cost inflation,” HUL said in a press release.

Details Q1 FY23 Q4 FY22 Q1 FY22
Revenue ₹14,331 crore ₹13,468 crore ₹11,996,000
net profit ₹2,381 crore ₹2,304 crore ₹2,097,000
The net margin 16.61% 17.1% 17.5%

Source: Company Reports

“In Q1FY23, we expect HUL to post 3% year-on-year volume growth, largely on a favorable base (Q1FY22 was up 9%, Q1FY21 was down 8%). We therefore expect 15% year-on-year revenue growth in Q1FY23. We do, however, expect margins to compress both QoQ and YoY,” Edelweiss had said in an earnings preview.

ICICI Direct had estimated revenue growth of 14.2% and volume growth of 4%.

Here’s how HUL’s segments fared in the first quarter of 2022-23.

Segment Q1 FY23 Q4 FY22 Q1 FY22 Perf QoQ Annual by
Home Care ₹885,000,000 ₹932,000 ₹662crore -5% 34%
Beauty and personal care ₹1,427,000,000 ₹1,252 crore ₹1,287 crore 14% 11%
Food and refreshments ₹578crore ₹713,000,000 ₹600crore -19% -4%
Others ₹251,000,000 ₹126,000,000 ₹112,000,000 99% 124%

Source: Company ReportsThe company also discussed how high raw input and derivative prices could lead to increased spending in the next quarter, but also said margins could recover by the end of 2022.

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