The consumer goods giant HUL disappointed investors and analysts with a higher-than-forecast dip in earnings and a negative guidance. Amid a tough market, Hindustan Unilever yesterday reported a high 23.43 percent slip in its standalone net profit at Rs 1,019.25 crore for the first quarter ended June, compounded by exceptional income generated a year earlier from the sale of properties.

 

The company, which reported standalone net profit of Rs 1,331.19 crore in the corresponding quarter a year ago, said there will be challenges in sales in terms of both volume and value in the next the two to three quarters.Net sales rose 6.99 percent to Rs 6,687.49 crore as against Rs 6,250.15 crore a year ago, the company said. "We continue to see the market slowing down, both in terms of volume and value. Competitive intensity remained high in the quarter. Over the next two to three quarters, these challenges will continue," chief financial officer R Sridhar said, adding discretionary products are under pressure.

 

"Over the last three quarters, there is a trend of slowing market growth driven by discretionary categories." Explaining the decline in net profit, HUL said it had an income of Rs 607.24 crore from exceptional items, which included the sale of properties, in the year-ago quarter. For the same quarter this year, the credit from exceptional items was Rs 106.25 crore.

 

Commenting on the company's performance, HUL chairman Harish Manwani said, "in a difficult market environment, we have again delivered competitive growth and strong margin expansion through a sustained focus on innovation, in-market execution and robust cost management." He, however, said there are near-term concerns due to a slowing market. "While there are near-term concerns, particularly around slowing market growth, we are confident of the medium to long term growth prospects of the FMCG sector," he added.

 

Revenue from soap and detergents increased 7.33 per cent to Rs 3,407.66 crore, while personal products increased 1.96 per cent to Rs 1,883.38 crore. Beverage sales grew 15.79 per cent to Rs 757.37 crore and packaged food increased 4.78 per cent to Rs 457.88 crore. Total expenses were Rs 5,789.88 crore, an increase of 5.84 per cent from Rs 5,469.95 crore last year. HUL's advertising and promotion expenses in the quarter increased 8.56 per cent to Rs 889.78 crore.Shares of the company closed at Rs 663.30 apiece on the BSE Friday, down 3.38 per cent from the previous close.