Hindustan Unilever (HUL), India’s leading FMCG company, has announced a decline of 22.42 per cent in stand-alone net profit at Rs 971.40 crore for the third quarter Rs 1,252.17 crore in the year-ago period on account of phasing out of excise duty incentives and “price de-growth”.
The company said its board has approved transfer of Rs 2,187.33 crore from its general reserves to the profit and loss account to be paid out to shareholders. A major chunk of this amount will go to Unilever of the UK as it holds 67.21 per cent equity stake in the company.
Shares of the company tanked as much as 6.03 per cent to hit an intra-day low of Rs 776.60 on the Bombay Stock Exchange.
At the end of Friday’s trading session, the stock was quoted at Rs 804.15, down 2.70 per cent on the BSE.
Its net sales were up 3.21 per cent to Rs 7,822.86 crore during the third quarter ended December 31, 2015-16, as against Rs 7,579.18 crore in the year-ago period. “The growth in the quarter continued to be impacted by the phasing out of excise duty incentives and price de-growth, as the benefit of lower commodity costs was passed on to consumers,” Hindustan Unilever Ltd said.
HUL chief financial officer PB Balaji said the impact would continue to be felt in the next quarter as well. “Besides, some of the products in the personal care segment were impacted by delayed winter this season,” he said.
On the outlook, HUL chairman Harish Manwani said: “In an environment of moderating growth and benign input costs, we remain focused on innovation and market development to drive volumes competitively whilst improving operating margins.” Hindustan Unilever’s expenses in the third quarter were up 1.78 per cent at Rs 6,632.34 crore as against Rs 6,515.90 crore a year ago.
On the payout to shareholders, HUL said, “given HUL’s strong financial position and track record of cash generation, the funds represented by such accumulated general reserves is seen to be in excess of the company’s current and anticipated needs.
Hindustan Unilever has proposed a scheme between the company and its shareholders to give effect to the proposed transfer and its subsequent payout.”
During the quarter, HUL said, revenue from soaps and detergents segment was up 0.82 per cent at Rs 3,629.82 crore as against Rs 3,600.22 crore a year ago. The robust volume growth in soaps and detergents segment was offset by price deflation and it witnessed continued price deflation in the quarter given the benign input costs, Hindustan Unilever said.