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Hindustan Unilever
1QF12: Overall In-line; 8.3%
Volume growth Dissapointing
Quick Comment – Stay UW: HUL's Q1 performance
demonstrates the twin impact of continuing high
intensity of competitive activity and severe input
pressures eventually on volumes in the HPC space in
India. We expect the stock to trade weakly on the back
of these results. The key disappointment for the market
will likely be reported 8.3% domestic volume growth for
the quarter – below our expectation of 11% growth.
However, price rise of ~6.7% is above our 5% estimate.
1QF12 – In-line Results: HUL’s revenues, EBITDA and
adjusted PAT grew by 14.8%, 10.9% and 12.4%,
respectively, compared to our expectations of 16%,
12.7% and 12.4% and consensus expectation for net
profit growth of 13.6%. EBIT margins across business
segments (excluding PP and water) were 50-150bps
lower than our expectations. However, overall margins
are largely in-line with estimates given the large swing in
profitability of the water business. Sharp price increases
notwithstanding, margins in the soaps and detergent
segment (9.2%) continue to be depressed. Interestingly,
excluding ad-spend, operating margins fell 470bps YoY.
Key Highlights of the Results: (1) Domestic FMCG
revenue growth of 14.8% driven by a combination of
15.4% growth in HPC and 14.9% growth in foods. Net
revenues for HUL grew by 14.8% driven by volume
growth of 8.3% in domestic consumer business.
(2) Overall gross margins are declined by 480bps YoY,
however, operating profit margin declined by 50bps
cushioned by nearly 420bps decrease in advertisement
and promotion expenses.
(3) Foods business reported a revenue growth of 14.9%
driven by beverage growth of 13.1% and processed food
growth of 17.8% (versus our expectation of 20%).
(4) PP revenues grew by 19.4% (albeit off a low base).
Margins at 25.3% were inline with our expectation.
(6) Total business capital employed has reduced from
Rs4.1bn in Q4F11 to Rs2.5bn, in 1QF12.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindustan Unilever
1QF12: Overall In-line; 8.3%
Volume growth Dissapointing
Quick Comment – Stay UW: HUL's Q1 performance
demonstrates the twin impact of continuing high
intensity of competitive activity and severe input
pressures eventually on volumes in the HPC space in
India. We expect the stock to trade weakly on the back
of these results. The key disappointment for the market
will likely be reported 8.3% domestic volume growth for
the quarter – below our expectation of 11% growth.
However, price rise of ~6.7% is above our 5% estimate.
1QF12 – In-line Results: HUL’s revenues, EBITDA and
adjusted PAT grew by 14.8%, 10.9% and 12.4%,
respectively, compared to our expectations of 16%,
12.7% and 12.4% and consensus expectation for net
profit growth of 13.6%. EBIT margins across business
segments (excluding PP and water) were 50-150bps
lower than our expectations. However, overall margins
are largely in-line with estimates given the large swing in
profitability of the water business. Sharp price increases
notwithstanding, margins in the soaps and detergent
segment (9.2%) continue to be depressed. Interestingly,
excluding ad-spend, operating margins fell 470bps YoY.
Key Highlights of the Results: (1) Domestic FMCG
revenue growth of 14.8% driven by a combination of
15.4% growth in HPC and 14.9% growth in foods. Net
revenues for HUL grew by 14.8% driven by volume
growth of 8.3% in domestic consumer business.
(2) Overall gross margins are declined by 480bps YoY,
however, operating profit margin declined by 50bps
cushioned by nearly 420bps decrease in advertisement
and promotion expenses.
(3) Foods business reported a revenue growth of 14.9%
driven by beverage growth of 13.1% and processed food
growth of 17.8% (versus our expectation of 20%).
(4) PP revenues grew by 19.4% (albeit off a low base).
Margins at 25.3% were inline with our expectation.
(6) Total business capital employed has reduced from
Rs4.1bn in Q4F11 to Rs2.5bn, in 1QF12.
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