Hindustan Unilever Q3 net profit rises 7.9 pc to Rs 2,481 crore

FMCG major Hindustan Unilever Ltd on Thursday reported a 7.9 per cent increase in its consolidated net profit at Rs 2,481 crore for the third quarter ended December 31, 2022.

The company, which had posted a net profit of Rs 2,300 crore in the October-December quarter of the previous fiscal, said its board has approved a new royalty and central services arrangement with Unilever Group that will see an increase in the fees for the same to 3.45 per cent of turnover from 2.65 per cent in FY22.

Its consolidated total income during the quarter under review rose 16.35 per cent to Rs 15,707 crore against Rs 13,499 crore a year ago, Hindustan Unilever Ltd (HUL) said in a regulatory filing.

The total expenses stood at Rs 12,225 crore in Q3 against Rs 10,329 crore in the year-ago period, it added.

HUL CEO and Managing Director Sanjiv Mehta said the company has sustained its strong momentum and had yet another quarter of solid all-round performance. ''Our consistent performance is reflective of our strategic clarity, the strength of our brands, excellence in execution, and dynamic financial management,'' he added.

During the third quarter, HUL said the home care category delivered 32 per cent revenue growth and double-digit volume growth, while beauty and personal care grew 10 per cent.

''Delayed winter impacted growth in skin care, however, the non-winter portfolio delivered double-digit growth driven by continued focus on innovations and market development actions in emerging and on-trend demand spaces,'' the company added.

The foods and refreshment segment delivered 7 per cent growth led by robust performance in foods, coffee and ice cream. On the new royalty and central services arrangement with Unilever group, HUL said this increase will be effected in a staggered manner over a period of 3 years. This arrangement is subject to appropriate regulatory approvals.

''The new arrangement envisages a staggered increase of 80 bps over a period of 3 years from 2.65 per cent to 3.45 per cent of turnover,'' it said.

Initially, there will be a ''45 bps increase in effective cost for February to December 2023; 25 bps further increase in effective cost for January to December 2024; 10 bps further increase in effective cost from January 2025''.

The current technology, trademark license and central services agreement with Unilever group were entered into in January 2013 for 10 years. This granted HUL the right to use Unilever-owned trademarks, technology, and corporate logo and gave access to central services provided by Unilever group, it said.

''On the imminent expiry of the current agreement, Unilever had requested a review of the same. HUL has been receiving a steady stream of benefits from Unilever in terms of faster innovations, superior products and technology, greater expertise, and enhanced services,'' it said, adding this helps HUL to continue to meet emerging consumer needs with agility and create value for all stakeholders.

On the outlook, Mehta said, ''We are cautiously optimistic in the near term and believe that the worst of inflation is behind us. This should aid in a gradual recovery of consumer demand''.

''We remain focused on managing our business with agility and continue growing our consumer franchise whilst maintaining margins in a healthy range. We stay confident of the medium to the long-term potential of the Indian FMCG sector and HUL's ability to deliver consistent, competitive, profitable and responsible growth,'' he added.

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