Stock Fundamentals

Hindustan Unilever: Weak show

Parvatha Vardhini C | Updated on January 20, 2018 Published on May 15, 2016

Hindustan Unilever put up a weak show in the March 2016 quarter, with net sales growing just 3.4 per cent year-on-year to ₹7,809 crore and adjusted net profit inching up 7.1 per cent to ₹1,090 crore.

At 4 per cent, the overall volume growth was the slowest in five quarters. Price cuts to boost demand, especially in its soaps and detergents segment (47 per cent of revenue), also pulled down the top-line growth.

What helped profit look up a bit was lower input costs. Thanks to this, operating margin came in at 18.5 per cent compared with 17.1 per cent a year ago. It also helped push up ad spends to 14 per cent of sales compared with 13.5 per cent a year ago.

With input prices beginning to firm up, the leeway on this front may reduce in the coming quarters.

At this juncture, a pick up in rural demand could be the best thing that can happen to the company.

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