HUL Q4 net profit up 21%, beats forecast

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Hindustan Unilever, India's largest consumer goods maker, said it continues to see strong consumer demand, after beating estimates on Tuesday with a 21 per cent rise in quarterly profit, helped by higher volumes and prices.

The Indian unit of Anglo-Dutch conglomerate Unilever Plc said even though input cost pressures and currency fluctuations remain a risk, it has a clear strategy in place to boost its portfolio.

HUL said its net profit rose to Rs 6.87 billion for the fiscal fourth quarter ended March 31, from Rs 5.69 billion a year earlier.

Net sales for the quarter rose 16 per cent to Rs 56.60 billion, with a 10 per cent underlying volume growth.

Analysts on average had estimated a profit of Rs 6.63 billion on sales of Rs 56.8 billion, Thomson Reuters Starmine Estimates showed.

Indian consumer goods makers are facing a difficult choice between raising prices and retaining market share as high inflation in home, personal care and food categories compress margins and price increases hurt volume growth.

"As we look ahead, the market will be volatile, there will be commodity cost pressures. But the demand drivers remain in place," managing director Nitin Paranjpe told reporters after the earnings announcement.

HUL's operating margins in the quarter rose 170 basis points from a year ago, with its profit before interest and tax rising 32 per cent. Its cost of goods rose 80 basis points during the quarter.

Sales at the home and personal care segment grew 24 per cent, while its foods business grew nearly 8 percent.

Its advertising and promotional spends, which dipped 7 per cent in the previous quarter and unsettled investors, saw a nearly 9 percent increase in the March quarter.

"We continue to invest strongly in our brands, but we are also being more efficient in our spends. We remain competitive in the market place," chief financial officer R. Sridhar said in an earnings conference call.

HUL, which the market values at $17.1 billion, makes popular brands such as skin fairness cream Fair and Lovely, Clinic Plus shampoo, and soap brands such as Dove.

Shares in Hindustan Lever, which have risen just 2.5 per cent since the start of 2012 compared with an 18.3 per cent rise in the BSE FMCG index, ended flat at Rs 417.60 on Monday, in a firm Mumbai market.

Indian markets were closed on Tuesday for a local holiday.

The company trades at 30 times its 12-month forward earnings, compared with 16.1 times for ITC, 32.5 times for Nestle, 23.7 times for Godrej Consumer, Thomson Reuters Starmine Smart Estimate showed.