HUL's ad spend grows by 2.84% in Q1 of FY 17-18

HUL has announced financial results for the quarter that ended on June 30, 2017. The company’s advertising and promotional expenses increased by 2.84 per cent to Rs 905 crore as compared to Rs 880 crore in the corresponding quarter of previous year. For the quarter that ended on March 31, 2017, the company’s ad and promotional expenditure was at Rs 853 crore. The company spent Rs 3,470 in the last financial year.

Highlights for the quarter:

• Net Sales grew by 5% during the quarter. Domestic Consumer Business (FMCG) growth was 6% for the quarter.
• Earnings before Interest, tax, depreciation and amortization (EBITDA) for the quarter is at Rs 1,866 crore (JQ’16: Rs 1,636 crore) grew by 14%.
• Profit After Tax (PAT) before Exceptional Items for the quarter is at Rs 1,292 crore (JQ’16: Rs 1,128 crore grew by 15%)
• Exceptional items, net charge in JQ’17 includes profit on sale of surplus properties Rs 4 crore (JQ’16: Rs 0 crore), restructuring expenses Rs 17 crore (JQ’16: Rs 32 crore). JQ’16 exceptional items also includes acquisition related cost Rs 12 crore and one time write back of provision for employee benefits on account of plan amendments basis actuarial valuation Rs 115 crore.
• Profit After Tax for the quarter is at Rs 1,283 crore (JQ’16:Rs 1,174 crore) grew by 9 %. 

During the quarter, trade sentiment remained cautious, particularly in the run up to GST implementation. Despite high promotional intensity, stock pipelines remained low and varied across categories, channels and geographies. In these challenging circumstances, the company managed to deliver yet another quarter of resilient and profitable growth.

Harish Manwani, Chairman, HUL, said, “This quarter saw the announcement of the launch of GST, a ground-breaking tax reform for India. I am pleased with the manner in which our business worked closely with all key stakeholders including industry associations, the government and our trade partners to prepare the ground for a smooth transition. Despite the short-term challenges of this transition, our company delivered yet another resilient performance.”

He further said, “Both growth and margin improvement were delivered through a combination of sustained innovations, a comprehensive savings programme and a relentless focus on execution in the market place. We remain positive on the medium term outlook for the industry and will continue to drive consumer value, which also delivers profitable volume driven growth for the company.”

Business performance:

Home Care:

This quarter saw strong growth across mass and premium laundry. Surf, the largest brand, maintained its robust volume-led growth momentum. However, the water business witnessed a muted quarter due to lower trade purchases and destocking before GST implementation.

Personal Care:

Personal wash witnessed broad-based growth across all brands. Colour cosmetics delivered yet another quarter of robust growth. Fair & Lovely re-launch was well received.

This quarter, HUL launched ‘Citra’– an iconic naturals brand from Asia in the Face Care segment. After a successful test market, HUL is also rolling out Lever Ayush, nationally. Lever Ayush is an ayurvedic range of personal care products spanning across six categories of skin care, soaps, hair care, hand wash, body lotions and oral care.

Foods & Refreshment:

Refreshments witnessed broad-based, volume-led growth. In tea, double-digit growth was sustained by continuing to leverage our differentiated portfolio across different parts of India. Coffee and ice cream and frozen desserts also delivered a robust quarter. In foods, the focus continued to be on market development for the category with soups & jams driving the category growth.

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