Hindustan Unilever reports moderate rise in Net profit and sales

Hindustan-UnileverHindustan Unilever has reported a moderate rise of 4% in net profit to Rs 649.11 crore in the third quarter of the current financial year. The sales for the FMCG major grew 4.6% year on year to Rs 4,504.26 crore. The company is India's biggest maker of household products.

The lower than expected results were released on Tuesday by the company. Despite the lower costs of input, the profit margin in the products for the company was at 16% due to weaker performance by its top line products.

The volume grew 5% year on year in the December 2009 quarter while that in September 2009 was only 1%. The company has said that the growth was reported in 75% of the company's portfolio. Analysts say that though the volumes are good, the growth in top line was moderate.

Due to increased competition and in a bid to regain the market share the company decided to spend more on advertising and promotions and raised its expenditure by 530 basis points during the December 2009.

A statement released by the company said, "Actions to restore competitiveness in soap and mass laundry yielded positive results with the soaps and detergents segment returning to volume growth."

Analysts believe that the long and severe winters pushed the demand for skin care products and HUL sales rose in the quarter. HUL's foods business grew at 9 per cent and recorded a revenue of 769 crore. All three, beverages, processed foods and ice cream recorded higher sales.

The company lost market share in various segments in the last year and a half; however the company said that it increased market share in products, laundry powders, haircare, tea and personal wash during the December 2009 quarter, over the September 2009 quarter.