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HUL Q3 profit in line with Street estimates: 5 key takeaways

Sales increased by 12.42 per cent YoY to Rs 9,357 crore in Q3FY19 over Rs 8,323 crore in Q3FY18.|
Last Updated: Jan 17, 2019, 05.48 PM IST|Original: Jan 17, 2019, 05.42 PM IST
FILE PHOTO - A pedestrian walks past the Hindustan Unilever Limited (HUL) headquarters in Mumbai
The stock settled 1.12 per cent down at Rs 1,750.10.
Hindustan Unilever's (HUL) December quarterly results largely came in line with market expectations.

The FMCG major reported a 9 per cent year-on-year rise in its net profit at Rs 1,444 crore for the quarter under review, aided by strong volume growth. It had posted a net profit of Rs 1,326 crore in the same quarter last year.

Sales increased by 12.42 per cent YoY to Rs 9,357 crore in Q3FY19 over Rs 8,323 crore in Q3FY18.

An analyst poll by ETNow had predicted a PAT of Rs 1,452 crore and revenue of Rs 9,518 crore for the three months to December 2018.

“HUL were largely in-line with expectation with revenues growing in double digits and PAT growing in high teens. The quarter was fifth consecutive quarter of double-digit volume growth on back of stable demand in the domestic market. We expect the earning growth momentum to sustain in the coming quarters with domestic volume growth at 8-10%. The acquisition of GSK Consumers’ HFD business will add value to HUL foods business in long run. HUL remains one of the our top picks in the FMCG space,” said Kaustubh Pawaskar, Research Analyst, Sharekhan by BNP Paribas.

The stock settled 1.12 per cent down at Rs 1,750.10.

Below are five key takeaways of HUL's December quarter results:

Consumer growth: Domestic consumer growth was 13 per cent with underlying volume growth at 10 per cent. EBITDA margin was up 170 basis points and profit after tax (before exceptional items) grew by 17 per cent, HUL said in a release.

Update on HUL and GSK Consumer Healthcare: As announced earlier, the board of directors had approved a scheme of amalgamation between HUL and GSK Consumer Healthcare subject to shareholders and statutory approvals. The transaction is an all equity merger with 4.39 shares of HUL being allotted for every share in GSK Consumer Healthcare. This transaction values the total business being acquired at Rs 31,700 crore.

From the desk of CMD: HUL Chairman and Managing Director Sanjiv Mehta said: "We have delivered another strong performance in the quarter, with double digit volume growth and improvement in margins. Our focus on strengthening the core and leading market development by tapping into emerging trends has been yielding results across categories. In the near term, demand is likely to be stable.

Expenditure: Expenditure of the company increased to Rs 7,652 crore against Rs 7,036 crore during the same period.

Margin improves: HUL in a release said prudent management of volatility in cost (crude and currency led) along with improved mix and operating leverage has driven margin improvement. Ebitda at Rs 2,046 crore was up 22 per cent YoY.

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