Hindustan Unilever Ltd (HUL) on Friday reported a 13.84 per cent growth in net profit for the fourth quarter ended March 31, 2019, which was below analyst estimates as the softening of rural demand impacted its volumes.
The FMCG giant posted a net profit of Rs 1,538 crore compared with Rs 1,351 crore in the corresponding period of the previous fiscal.
Analysts were expecting the company to report a profit of around Rs 1,600 crore.
Volume growth in the quarter fell to 7 per cent from 11 per cent in the same period last year and 10 per cent in the preceding quarter.
The Street had already factored in the lower volume growth, which the company attributed to the weakening rural demand.
This was confirmed by the top management of HUL at a post-results meeting with the press.
“The areas where we are seeing the moderation happening is the general trade and in the wholesale channel. The general trade and the wholesale channel to a very large extent feeds into the rural markets and the rural growth rate,” said Sanjiv Mehta, chairman and managing director, HUL.
“We had expected to grow (rural demand) at a much higher pace, that has come down to more or less the urban levels. So, that is the primary reason why growth has slowed down,” he said.
“The macro-economy does have an impact. At the end of the day, it depends on the money at the hands of the consumer. There is evidence of two-wheelers slowing down and consumption going down. There is more than one evidence indicating that the markets have moderated. The markets don’t grow in a linear fashion continuously,” he added.
The comments by the HUL chief come only a day after the finance ministry said in a report that the domestic economy had slowed down in 2018-19 because of lower private consumption, tepid growth in fixed investment and muted exports. The slowdown in consumption has already been reflected in the sales of passenger vehicles and two-wheelers.
During the quarter, sales at HUL came in at Rs 9,809 crore compared with Rs 9,003 crore in the year-ago period.
Commenting on the performance of the various divisions, HUL said home care delivered another quarter of strong volume led growth with both fabric wash and household care growing in double-digits.
Revenue from the homecare segment during the quarter stood at Rs 3,502 crore, up 12.89 per cent against Rs 3,102 crore a year ago.
In personal wash, the premium brands delivered but the performance of the popular segment was below expectations.
Skincare saw double-digit growth following steady performance across the portfolio.
Revenue in the food and refreshment segment also rose 10.43 per cent to Rs 1,916 crore over Rs 1,735 crore in the fourth quarter of 2017-18.
Ahead of the numbers, shares of HUL fell over 2 per cent to Rs 1,692.80 on the BSE on Friday.
In a separate filing, HUL informed the BSE that its board in a meeting held on Friday recommended a final dividend of Rs 13 per share of Re 1 each, for the financial year ended March 31, 2019. Total divided paid by the company for the year is Rs 22 per share of Re 1 each.
