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Hindustan Unilever: Fails to meet expectations - Views on News from Equitymaster
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Hindustan Unilever: Fails to meet expectations
Oct 16, 2015

HUL declared results for the quarter ended September 2015. The company reported a revenue growth of 4% YoY during the quarter while profits declined marginally by 2% YoY. Here is our analysis of the results.
Performance summary
  • Standalone revenues grow by 4% YoY during the quarter, led by the personal care products and packaged foods businesses. The soaps and detergents division (which forms nearly half of revenues) grew by 2% YoY.
  • Operating profits rise by 7% YoY as margins expand to 16.7% as compared to 16.2% in same period of last year. Benign input cost environment leads to margin expansion.
  • Net profits decline by 3% YoY, led by lower other income, higher tax outgo as well as the impact of onetime items. Core earnings (EBIT) were higher by 7.2% YoY during the quarter.
  • Company's board declares interim dividend of Rs 6.5 per share (yield of 0.82%).

Standalone financial performance

(Rs m) 2QFY15 2QFY16 Change 1HFY15 1HFY16 Change
Net sales 76,393 79,554 4.1% 153,557 160,605 4.6%
Expenditure 63,988 66,295 3.6% 127,971 132,282 3.4%
Operating profit (EBDITA) 12,406 13,259 6.9% 25,586 28,323 10.7%
EBDITA margin (%) 16.2% 16.7%   16.7% 17.6%  
Depreciation 749 761 1.6% 1,431 1,511 5.6%
Interest 63 0 -99.5% 126 1 -99.2%
Other income 1,978 1,702 -14.0% 3,999 2,788 -30.3%
Exceptional items 487 (121)   883 (24)  
Profit before tax 14,058 14,077 0.1% 28,911 29,575 2.3%
Tax 4,176 4,455 6.7% 8,461 9,361 10.6%
Effective tax rate 30% 32%   29% 32%  
Profit after tax/(loss) 9,882 9,622 -2.6% 20,450 20,214 -1.2%
Net profit margin (%) 12.9% 12.1%   13.3% 12.6%  
No. of shares (m)       2,163.1 2,163.8  
Diluted earnings per share (Rs)*         17.2  
Price to earnings ratio (x)         46.0  

*On a trailing 12 months basis

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