Results for the Quarter ending 30th June 2020
Competitive performance in challenging context; Reported turnover up by 4%, PAT up by 7%
Hindustan Unilever Limited (HUL) announced its results for the quarter ending 30th June 2020.
JQ’20: Resilient performance with strong fundamentals
In a challenging context of COVID-19 disrupting markets and operations, HUL delivered a resilient performance with reported turnover growth of 4% and Profit after tax and before exceptional items growing by 7%. Domestic Consumer Growth (excluding impact of merger with GSK CH India) stood at -7%. Heath, Hygiene and Nutrition constituting c.80% of our portfolio delivered healthy mid-single digit domestic consumer growth. The integration of GSK-CH’s nutrition business with us was done seamlessly with good performance on both growth and margins.
Home Care: Competitive growth in Fabric Wash and Household Care with our portfolio addressing the ‘Clean living’ needs of consumers. Household Care grew strongly on back of penetration led gains. Domex’s credentials of destroying Coronavirus in just 60 seconds is resonating well with consumers. In Fabric Wash, our diversified portfolio straddling the price-benefit pyramid has yielded resilient performance. Surf excel ran a contextual campaign #DaagGharPeRahenge. Performance of Purifiers which are in the nature of ‘Consumer Durable’ was impacted severely by the lockdown.
Beauty & Personal Care: Skin Cleansing led by Lifebuoy delivered strong double-digit growth across formats. We have significantly stepped up capacities in both hand wash and hand sanitizers to meet the consumer needs. Lifebuoy is making the ‘good habit of handwashing’ viral with campaigns across platforms. Oral Care delivered good performance with accelerated momentum on CloseUp. In Hair Care, we saw pickup in consumer demand in the latter part of the quarter. Performance of Skin, Color Cosmetics and Deos being relatively discretionary in nature was impacted severely on account of supply led issues and closure of some of the channels that are extremely relevant for the categories.
Foods & Refreshment: Riding on the ‘In-home, wellness and immunity’ trends, Foods, Tea and Coffee delivered strong performance with double digit growths. Red Label extended its long-running ‘Taste of Togetherness’ campaign through a simple yet contemporary message of ‘We can be socially connected even while we are physically distant’. Ice Creams, foods solutions and our vending businesses which are driven primarily by out of home consumption were massively impacted by the lockdown and closure of restaurants / eateries. Domestic Nutrition business performed well; immunity boosting Horlicks with added Zinc was launched in the quarter.
Cost agility helps sustain healthy margins: The negative impact of adverse mix and higher COVID-19 related costs were deftly managed by dialing up savings and unlocking synergies of GSK-CH merger enabling us to sustain healthy EBITDA margins of 25%. We continued to remain competitive in our brand and marketing support spends in the quarter. Profit after tax (bei*) at Rs. 1,873 Crores was up 7%, and Profit after tax at Rs. 1,881 Crores increased by 7%.
The Hon’ble National Company Law Tribunal, Mumbai Bench, pursuant to its order dated 30th August 2018 had approved the Scheme of Arrangement for transfer of the balance of Rs. 2,187.33 crores standing to the credit of the General Reserves to the Profit and Loss Account. In accordance with the terms of the scheme, the Board of Directors at the meeting held on 21st July 2020 approved the distribution by means of a special dividend of Rs. 9.50 per share of face value of Re.1 each resulting in total dividend payout out Rs 2,232 crores.
Sanjiv Mehta, Chairman and Managing Director commented: Our performance in the quarter has been resilient and reflective of the intrinsic strength of our portfolio, agility in operations, excellence in execution, purpose-driven leadership and our strong balance sheet. I take this opportunity to acknowledge the superlative efforts of thousands of our people in our factories and sales organization who have worked with a higher purpose of ensuring availability of essential products to the citizens of our country in these extremely challenging times. While constraints continue due to restrictions in several parts of the country and the near-term demand outlook remains uncertain, we remain well positioned to drive competitive, profitable, and responsible growth. The long-term structural opportunity of FMCG in India also remains intact.