- 28 Apr 2022
- ICICIdirect Research
HUL REPORTS Q4FY22 RESULTS
HINDUNILVR - 2465 Change: -18.35 (-0.74 %)News: HUL’s Q4FY22 results were in line with our estimates on revenue & operating profit front & better than our estimates on volume growth & earnings front. Net sales grew 10.4% to Rs 13190 crore led by aggressive price hikes in home care segment. Home care segment witnessed a growth of 23.7% on the back of price hikes taken in last one years. BPC (beauty & personal care) segment witnessed 3.6% sales growth led by prices. Foods & Refreshment grew by 5% mainly on account of high base (strong price led growth in tea in base quarter). With extremely high inflation in crude based derivatives, palm oil & other agri commodities, gross margins contracted by 301 bps. However, the company continued to save costs through 200 bps dip in advertisement spends & 15 bps lower overhead spends in Q4. Operating profit grew by 9.7% to Rs3245 crore with 27 bps operating margin contraction. Net profit grew by 8.6% to Rs2327 crore
Views: Despite very high commodity inflation and pressure on rural volumes, the company was able to sustain volumes & operating margins through lower ad-spends & calibrated price hikes. However, we believe incessant crude & palm oil prices would continue to keep margins under check & the company would still require price hikes to protect its margins in near term. Further, rural volumes have taken a hit due to down trading in such inflationary scenario. Moreover, FMCG companies would require to increase ad-spends to previous levels to support new products & categories. Though, we believe HUL is best placed within FMCG industry to face these challenging scenario, next few quarters would see continued volume as well as margin pressure
Impact: Neutral