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HUL: Slowdown woes aggravate - Views on News from Equitymaster

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HUL: Slowdown woes aggravate

Jul 26, 2013

Hindustan Unilever Limited has announced its first quarter financial results of 2013-2014 (1QFY14). The company has reported 7% YoY increase in sales and 23% YoY fall in net profits. Here is our analysis of the results.

Performance summary
  • HUL saw a 7% rise in revenues due to a mere 6% growth in its core Home & Personal Care business. Even its underlying volume growth remained tepid at 4%.
  • However, the company has been able to improve operating margin by 0.7% as savings in input costs offset higher ad-spends and other expenses (all as a proportion of sales).
  • Net profit fell by 23% due to high exceptional income generated in the year-ago quarter from the sale of properties. Profit after tax but before exceptional items grew by 4% to Rs 8.9 bn during the quarter
Standalone financial performance snapshot
Rs(m) 1QFY13 1QFY14 Change
Revenues 63,788 68,090 6.7%
Expenditure 54,123 57,234 5.7%
Operating profit (EBDITA) 9,665 10,856 12.3%
EBDITA margin (%) 15.2% 15.9%  
Other income 2,186  1,768 -19.1%
Interest 53 62 17.8%
Depreciation 576 664 15.3%
Profit before tax 11,222 11,897 6.0%
Extraordinary inc/(exp) 6,047  1,063  
Tax 3,957  2,767 -30.1%
Profit after tax/(loss) 13,312 10,193 -23.4%
Net profit margin (%) 20.9% 15.0%  
No. of shares (m)   2162.5  
Diluted earnings per share (Rs)*   16.1  
Price to earnings ratio (x)*   38.7  

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