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Hindustan Unilever’s net profit up 13.6%, better than analysts’ expectations

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  • HUL reported a 13.6% increase in consolidated net profit to ₹2,381 crore in the first quarter of 2022-23.
  • Revenues increased 19.5% to 14,331 crore from ₹11,996 crore in the comparable period.
  • Volumes were up 6% against analyst expectations of 4%, but margins remained under pressure.
  • The home care segment reported much higher growth on a sequential basis compared to personal care.

Hindustan Unilever today exceeded analyst expectations, reporting a 13.6% increase in net profit to 2,381 crore in the first quarter of 2022-2023, compared to ₹2,097 crore in the same quarter last year.

The company’s revenues also increased 19.5% to 14,331 crore from ₹11,996 crore in the comparable period, although most analysts were forecasting 14% growth.

“In an environment that remains challenging, characterized by unprecedented inflation and the consequent impact on consumption, we delivered another quarter of robust top-line and bottom-line performance,” said Sanjiv Mehta, chairman and chief executive officer of HUL.

Volumes also increased by 6% against expectations of 4%, possibly due to a low-base effect. However, EBITDA margins decreased by 1.1% compared to last year. The company said that despite unprecedented input cost inflation, it still stands at 23.2%.

HUL’s home care segment continued to be the best performer with a 30% growth driven by textile laundering and home care. “Calibrated price increases were reflected in the laundry and home care portfolios as input costs continue to rise at significantly high levels,” the company said.

The food and refreshment business grew 9% during the quarter, driven by a solid performance in ice cream, coffee, jam and food solutions.

“Ice cream had a very strong quarter, spread across brands and formulas, putting it significantly ahead of pre-Covid levels,” the company said. This segment has taken a beating during the pandemic years – making Q1FY23 the first disruption-free quarter in two years.

However, the food segment was the only one to see a year-over-year and sequential earnings decline, by 4% and 19% respectively.

“Skin Care and Color Cosmetics delivered strong YoY growth on a soft basis. Premium portfolio in skin care performed well and is significantly above pre-Covid levels. Calibrated price actions were taken across the portfolio to offset the impact of record inflation on input costs,” HUL said in a press release.

Particularities Q1 FY23 Q4 FY22 Q1 FY22
Revenue ₹14,331 crore ₹13,468 crore ₹11,996 crore
Net profit ₹2,381 crore ₹2,304 crores ₹2,097 crore
Net margin 16.61% 17.1% 17.5%

Source: Company Reports

“In Q1FY23, we expect HUL to clock 3% year-over-year volume growth, largely driven by a favorable base (Q1FY22 grew 9%, Q1FY21 fell 8%). So we expect a 15% year-over-year revenue growth in Q1FY23. However, we expect margins to compress both QoQ and YoY,” Edelweiss said in an earnings outlook.

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

Here’s how HUL’s segments fared in Q1 2022-23.

Segment Q1 FY23 Q4 FY22 Q1 FY22 QoQ performance YoY per
home care ₹885 crore ₹932 crore ₹662 crore -5% 34%
Beauty and personal care ₹1,427 crores ₹1,252 crores ₹1,287 crore 14% 11%
Food and drink ₹578 crore ₹713 crore ₹600 crore -19% -4%
others ₹251 crore ₹126 crore 112 crore 99% 124%

Source: Company ReportsThe company also discussed how high prices of inputs and crude derivatives could lead to a rise in costs in the next quarter, but also said margins could recover by the end of 2022.

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