HUL says growth in March 2016 quarter affected by phasing out of excise duty incentives

The company said its Domestic Consumer business grew by 4% with 6% underlying volume growth.

Reported growth was impacted by -110ps arising from the phase out of excise duty incentives.

Profit before interest and tax (PBIT) grew by 10% with PBIT margin improving +90 bps, despite the net excise duty impact of -50bps on PBIT.

The consistency in margin improvement, according to the company, was delivered even as the company continued to make significant investments behind its brands (A&P was up 160bps).

Profit after tax but before exceptional items, PAT (bei), grew by 6% to Rs.4078 crores.

Net profit was at Rs.4082 crores, with the growth rate impacted by the higher exceptional income arising from subsidiary and property related sales in the previous year, the company said.

Harish Manwani, Chairman, said, "In challenging markets and a deflationary cost environment, we have delivered another year of competitive and profitable growth. The consistency of our performance is a result of managing our business dynamically, and executing our strategy with even greater rigour and discipline. Our sustained focus on investing behind brands, sharpening our executional capabilities and driving market development has enabled us to keep winning with consumers in a rapidly changing market."

According to Ritwik Rai, Analyst, Kotak Securities, HUL’s 4QFY16 revenues missed estimates, as volume growth for the quarter disappointed.

In his analysis, Rai also said, "We believe that in the coming quarter/s, gross margin gains shall have relatively lower visibility (certain raw material prices rising), and advertising and promotion expenses shall be dependent on competitive intensity. As such, we believe that revenue growth shall be the primary (and reliable) factor driving earnings growth. In this context, HUL’s weak revenue growth – particularly growth in Personal Products – is worth pointing as a negative."