Hindustan Unilever Beats Estimates On price Hikes & Low Base

Hindustan Unilever beat expectations on Tuesday, reporting an 11 percent year-on-year increase in standalone net profit to '2,289 crore due to price increases implemented during the April-June quarter. During the period, the company's revenues increased 19 percent to Rs 14,016 crore — 12 percent due to product price increases and 6 percent due to volume growth, according to the company's post-earnings conference call.

The 6% volume growth came from a low base, as demand was impacted by the second Covid-19 wave last year. The company's home care segment increased by 30% during the quarter, driven by fabric wash and household care. The beauty and personal care segment increased by 17%, while the foods and refreshment segment increased by 9%, owing to sales of ice cream, coffee, and food solutions.

While net profit and sales increased by double digits, operating margin fell 110 basis points to 23.2 percent during the quarter due to inflationary pressure on input costs. The company stated that if it had not implemented cost-cutting initiatives and calibrated pricing on products, margins could have fallen even further.

HUL expects to continue raising prices on its products during the July-September quarter in order to pass on the increase in commodity prices to customers.

“The net material price inflation during the June quarter has been 20%, but we have taken price increase of only 12%. Which means price increase has been lower than the impact of commodities,” Sanjiv Mehta, CEO and managing director said during the post-earnings conference call.