HUL Q1 FY23 Result Update: HUL beats estimates with Rs 2,381-cr net profit in Q1; revenue up 19.6%

HUL Q1 FY23 Result Update: HUL beats estimates with Rs 2,381-cr net profit in Q1; revenue up 19.6%

HUL reported a net income of Rs. 2,381 crores, up by 13.5% YoY from Rs. 2,097 crores. The net income increased by 3.4% QoQ from Rs. 30,640 crores. The company’s performance in the June quarter was led by market share gains in various categories and a jump in sales by volume even as reduced the weight of some packaged products.

The company’s revenue increased by 19.6% YoY to Rs. 14,357 crores in Q1 FY23 as against Rs 12,004 crores in Q1 FY22. The company reported 6.2% QoQ growth in revenue from Rs. 13,767 crores. The underlying volume growth was 6.0% YoY. The YoY revenue growth has been robust across segments. Home Care, Beauty & Personal Care (BPC), Foods & Refreshment (F&R) segments have seen YoY growth of 29.8%, 17.9%, 9.3%  respectively. BPC segment growth was ahead of market growth with premium segments seeing strong growth. Within the F&R segment, ice-creams had a strong quarter while coffee and foods performed well, and tea portfolio performance was stable.

EBITDA stood at Rs. 34,02 crores (+16.5% YoY/ +3.1% QoQ). EBITDA margins were at 23.3%, a decline of 69 bps YoY and 71 bps QoQ. The decline in gross margins was partly offset by pricing actions and optimizing all non-consumer costs.

Other income was higher in Q1FY23 due to higher commission from GSK and government grants. Employee costs declined on a YoY basis due to growth leverage and high base of Q1FY22 which had covid related expenses.

For the June quarter the EBIT stood at Rs. 3121 crores, up by 17.3% YoY and 3.2% QoQ. EBIT margins were flat YoY as the cost inflation was offset by cost savings, operating leverage from high growth and price increases. BPC EBIT margins declined 167 bps YoY impacted by the high inflation. F&R segment EBIT margins declined by 214 bps YoY due to adverse mix as ice-creams which is a lower margin category had a strong quarter.

HUL’s performance is a result of market outperformance, which in turn is a result of large players benefitting from inflation in commodity-sensitive categories and, continued work on category development (both formats and premiumisation). HUL gained market share in over 75%  of its portfolio during the quarter. Sales volumes jumped 6% YoY even as it reduced weights of of several of its packaged products to protect margins given the steep inflation in commodities.

During the quarter, the company took a 12 %  price increase across its portfolioThe company’s volume growth stood at 6% in the April-June quarter (on a high base of last year) as against a contraction of 5% for the industry. In the June quarter last year, the company’s volume growth was 9%.

HUL’s foods and refreshments category grew 9% in Q1, driven by performance in ice-cream, coffee and food solutions. The FMCG major logged a 6% volume growth for the quarter. The company’s Home Care segment delivered 30% growth driven by strong performance in Fabric Wash and Household Care and effective market development actions.  The Beauty & Personal Care segment reported growth of 17%. Hair Care increased in high double-digits, led by strong performance in the premium portfolio.

The EPS for the quarter is Rs. 10.1, up by 13.5% YoY and 3.4% QoQ.

The shares of the company are currently trading at Rs. 2,555, down by 68.6 points or by 2.61% as compared to the previous close of Rs. 2623.60. The shares opened at Rs. 2,625. The market cap of the company is Rs. 600,320 crores. The stock hit an intraday high and intraday low of Rs. 2,625 and Rs. 2,553 respectively.