HUL increases ad spends by 27.4% in Q1FYI9 (YoY)

HUL has announced its financial results for the quarter that ended on June 30, 2018. The company’s advertising and promotional expenses increased by 27.4% to Rs 1,153 crore as compared to Rs 905 crore in the corresponding quarter of previous year. The advertising spend in Q1 witnessed a rise of 7.8% from Rs 1,070 crore in the quarter ending March 31, 2018. Advertising and promotions were stepped up to support innovations, activations and respond to competitive actions in the marketplace.

Highlights for the quarter:

Net sales grew by 3% during the quarter and Comparable Domestic Consumer sales grew by 16%.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter at Rs 2,251 crore (JQ 17: Rs. 1,866 crore) grew by 21%. Comparable EBITDA margin improvement is 100 bps vs JQ 17.

Profit After Tax before Exceptional Items for the quarter at Rs 1,567 crore (JQ 17: Rs 1,292 crore) grew by 21%.

Exceptional items, net cost in JQ 18 includes profit from sale of surplus properties Rs Nil (JQ 17: Rs 4 crore) and provision towards restructuring and few contested matters Rs 59 crore (JQ 17: Rs 17 crore).

Profit After Tax for the quarter at Rs 1,529 crore (JQ 17: Rs 1,283 crore) grew by 19 %.

The company has integrated its Foods and Refreshments segments into one “Foods & Refreshment” and also regrouped its Food Solutions business into this segment (earlier reported under “Others”). Consequently, the business has been re-organised into three divisions viz. Home Care, Beauty & Personal Care, Foods and Refreshment and residual segment for ‘Others’.

Goods and Services Tax (GST) has been implemented with effect from July 1, 2017, replacing Excise Duty and other input taxes. As per India Accounting System (Ind AS) 115, the revenue for the quarter ended June 30, 2018 is reported net of GST.

Commenting on the results, Sanjiv Mehta, Chairman and Managing Director, said, “We have delivered another strong performance in the quarter, with double-digit volume growth across all three divisions and further improvement in margins. This quarter also saw the integration of Foods and Refreshment divisions, which will help us increase organisational agility and better serve local consumers while harnessing the advantages of global scale.”

He said, “In the near term, we see gradual improvement in demand and our focus will continue to be on innovations and market development. Crude volatility and currency-led inflation are key risks going ahead and we will continue to manage our business dynamically while driving operational efficiencies. Our strategic agenda remains one of delivering consistent, competitive, profitable and responsible growth.”

Home Care: Robust growth sustained

Growth momentum in Home Care continues with key brands delivering double-digit growth. During the quarter, Domex liquids was relaunched in South India and Domex powders extended to new geographies.

Beauty and Personal Care: Broad-based growth across Personal products and Personal wash

Skin Care registered strong double-digit growth on the back of Fair & Lovely and Pond’s performance. Hair Care witnessed another double digit growth quarter led by the premium portfolio and continued robust performance of Indulekha. Colour cosmetics delivered yet another quarter of strong double-digit growth with continued rollout of successful innovations. The Lakmé 9 to 5 Naturale range of makeup and skincare products infused with aloe vera were launched during the quarter. Deodorants delivered impressive growth with Axe Ticket gaining traction. In Personal Wash, Dove and Pears sustained their high growth trajectory.

Foods and Refreshment: Strong growth led by Tea and Ice Cream and Frozen Desserts

Tea delivered broad-based double-digit growth across key brands. In Coffee, Bru Kannadigara was introduced in select geographies to cater to local taste preferences. Ice Cream and Frozen Desserts grew in double-digits during the season, on the back of innovations and geography expansion. Foods registered double-digit growth led by Kissan and Knorr. It launched the Lever Ayush breakfast range in Tamil Nadu.

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