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HUL’s ad spends grew 25.08 per cent in Q3 of FY 17-18

The company’s advertising spend has increased to Rs 1,107 crore, as compared to the previous year’s Rs 885 crore

HUL has announced its financial results for the quarter that ended on December 31, 2017. The company’s advertising and promotional expenses increased by 25.08 per cent to Rs 1,107 crore as compared to Rs 885 crore in the corresponding quarter of previous year. For the Quarter ending September 30, 2017, the company’s ad and promotional expenditure was at Rs 1,023 crore. Advertising and Promotion spends were stepped up to support innovations and market development activities.

Highlights for the quarter:

Net sales grew by 2 per cent during the quarter. Comparable Domestic Consumer sales grew by 17 per cent during the quarter.

Earnings before interest, tax, depreciation and amortization (EBITDA) for the quarter at Rs 1,680 crore (DQ 16: Rs 1,355 crore) grew by 24 per cent. Comparable EBITDA margin improvement is 110 bps vs DQ 16.

Profit after Tax before Exceptional Items for the quarter at Rs 1,198 crore (DQ 16: Rs 920 crore) grew by 30 per cent.

Exceptional items, net hit in DQ 17, includes restructuring expenses Rs 27 crore (DQ 16: Rs 6 crore), profit on sale of surplus properties Rs 6 crore (DQ 16: Rs 159 crore).

Profit after Tax for the quarter at Rs 1,326 crore (DQ 16: Rs 1,038 crore) grew by 28 per cent.

Commenting on the result, Harish Manwani, Chairman, HUL, said, “We have delivered another strong performance in the quarter, with broad based growth across categories and further improvement in margins. We remain positive about the mid-term outlook of the industry and will continue to invest strongly in our core brands and developing categories of the future. There are early signs of commodity cost inflation and we will further sharpen our focus on cost effectiveness programs and manage our business dynamically for competitiveness and sustained profitability.”

Home Care: Double-digit volume growth across categories

Laundry saw robust double-digit growth across key brands. Growth in Household Care was led by a strong performance in Vim. The Purifiers business saw the launch of air purifiers under the Pureit brand.

Personal Care: Broad-based growth across Personal Products and Personal Wash

Personal Wash witnessed robust growth across key brands led by Dove and Pears. Growth in Skin Care was driven by the strong performance of Fair & Lovely. Hair Care witnessed broad based volume-led growth. Indulekha brand has now been extended to include IndulekhaBringha shampoo, an ‘Ayurvedic Medicine for Hairfall’. Colour cosmetics delivered yet another quarter of strong growth.

Foods: Strong growth led by Kissan

Kissan delivered broad based growth across Ketchups and Jams. Knorr growth was led by a strong performance in Soups.

Refreshment: Sustained robust performance

Tea continues to deliver double-digit growth. Coffee witnessed a strong performance and the growth momentum continued in Ice Cream and Frozen Desserts.

GST rate reduction in November 2017

Effective November 15, 2017, GST rates were reduced for some of the categories from 28 per cent to 18 per cent. The press note stated that while the implementation of this change was initiated immediately, it was not possible to pass on the entire benefit of this rate reduction on some of the pipeline stocks during the transition.

An estimated value of Rs 119 crore was proactively disclosed to the CBEC on this count and has been offered to pay this amount suomotu to the Government. This amount is not recognised as revenue and is accounted as a liability as on December 31, 2017.

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