HINDUSTAN UNILEVER LTD - (HUL) - NET PROFIT UP 17%; NET SALES UP 12%

HINDUSTAN UNILEVER LTD

Harish Manwani, Chairman & Nitin Paranjpe, MD & CEO

September Quarter 2012

Financial Results

16% Domestic Consumer Sales Growth; PAT (bei) up 23% in  Sep. Quarter 2012.

Hindustan Unilever Limited announced its results for the quarter ending 30^th September 2012.

During the quarter, the Domestic Consumer business sustained its robust performance growing at 16% with underlying volume growth of 7%. Overall growth in the quarter was impacted by the budget rationalization in the Canteen Stores Department (CSD).

Soaps & Detergents grew 22%; double digit growth across all segments

Laundry delivered another quarter of strong performance with all brands and formats growing in double digits. The focus on driving upgradation saw both Surf and Rin register double digit volume growth. Comfort fabric conditioners continued to lead market development; the portfolio was expanded with the launch of the One Rinse variant. Household Care also registered double digit growth.

Skin Cleansing sustained its broad based growth momentum. While Dove and Pears are driving category premiumization, Lifebuoy recorded one of its highest growth rates. The liquids portfolio saw accelerated growth led by Lifebuoy Handwash and Lux Bodywash.

Personal Products grew 12%; growth stepped up in Hair & Oral

Hair delivered a strong quarter with broad based growth. During the quarter, the TRESemmé brand was launched in India with an exciting proposition of ‘salon style hair at home everyday’. The portfolio was further strengthened with the relaunch of Clinic Plus and a new Hair Fall Rescue range under Dove.

Oral Care registered volume led double digit growth with Close Up buoyed by its re-launch in the quarter and Pepsodent driven by the premium range.

In Skin Care, growth was led by Ponds, Vaseline and Dove. The re-launch of Fair & Lovely (FAL) in the previous quarter has been well received.

Beverages grew 10%; led by premium Tea & Coffee

Tea growth was led by the top end while growth in the mass end was revived with the re-launch of Taaza. In Coffee, Bru sustained its growth momentum across both Instant and Roast & Ground (R&G) formats and the premium range was expanded with a new offering – Bru Exotica Guatemala.

Packaged Foods grew 10%; driven by key brands

Knorr soups grew in double digits through focused in-market activation and actions are in place to step up growth in the rest of the portfolio. Kissan Ketchups sustained growth in non-CSD channels andKwality Walls maintained its double digit growth trajectory.

Volatile cost environment; competitive intensity heightens

The operating context remained challenging during the quarter with a volatile cost environment and heightened competitive intensity. Overall industry media spend was up significantly to its highest levels in over 15 quarters. A&P was stepped up and maintained at competitive levels, higher by 118 Crores (+70 bps) in the quarter.

Net Profit After Tax (bei) up 17%

Profit before interest and tax (PBIT) grew by 19% with PBIT margin improving 100 bps. Profit after tax but before exceptional items, PAT (bei), grew to Rs. 806 Crores during the quarter. Net Profit at Rs.807 Crores grew 17%.

The Board of Directors have declared an interim dividend of Rs 4.5 per equity share of face value Re. 1 each, for the year ending 31^st March 2013. In addition, an amount of Rs 8 per share has been declared as a Special Dividend to be paid out of the accumulated P&L balance and exceptional income generated in the first half of FY 2012-13 and will be funded from the current cash balances.

Harish Manwani, Chairman commented: “In a volatile and uncertain environment, we continue to sustain our growth momentum while steadily improving our margins. Our consistent performance is being driven by a relentless focus on brand building, bigger and better innovations and disciplined execution in the marketplace.

RESULTS TABLE

Q2FY13	%DIF YoY	Q2 FY12	%Dif QoQ	Q1 FY13	FY 12
615,541	12	551,600	(2)	625,015	2,173,560	1.a. Net Sales
481,313	18	409,267	(2)	492,564	1,697,483	i)  Domestic FMCG - HPC
106,264	9	97,347	(1)	106,997	391,897	ii) Domestic FMCG - Foods
587,577	16	506,614	(2)	599,561	2,089,380	Domestic FMCG - Total (i+ii)
27,964	(38)	44,986	10	25,454	84,180	iii) Others
15,540	65	9,412	21	12,862	38,077	1.b. Other Operating Income
631,081	12	561,012	(1)	637,877	2,211,637	1. Total Income (net) [1.a. + 1.b.]
539,176	11	484,054	(1)	546,995	1,904,328	2. Expenses [sum of (a) to (g)]
270,084	18	229,829	8	250,286	858,489	a) Cost of materials consumed
82,603	8	76,311	4	79,713	302,414	b) Purchases of stock-in-trade
(25,742)	389	(5,263)	(480)	6,775	12,873	c) Changes in inventories of FG, SIT, WIP
33,049	15	28,731	(1)	33,286	110,728	d) Employee benefits expense
5,769	1	5,710	0	5,763	21,825	e) Depreciation
76,898	18	65,137	(6)	81,961	263,478	f)  Advertising & Promotions
96,515	15	83,599	8	89,211	334,521	g) Other expenses
91,905	19	76,958	1	90,882	307,309	3. Profit from operations
14,875	83	8,111	(32)	21,861	27,831	4. Other Income
106,780	26	85,069	(5)	112,743	335,140	5. Profit Before finance costs(3+4)
633	1,073	54	20	528	124	6. Finance costs
106,147	25	85,015	(5)	112,215	335,016	7. Profit after finance costs (5-6)
158	(96)	4,442	(100)	60,469	11,887	8. Exceptional Items - credit (net)
106,305	19	89,457	(38)	172,684	346,903	9. Profit Before Tax (7+8)
(25,613)	25	(20,565)	(35)	(39,565)	(77,763)	10. Tax expense
80,692	17	68,892	(39)	133,119	269,140	11. Net Profit After Tax [9+10]
-		-		-	-	12. Extraordinary Items
80,692	17	68,892	(39)	133,119	269,140	13. Net Profit (11+12)

Basic EPS on a Face Value of Rs.1 for Q2 FY 13 stands at Rs.3.73; compared to Rs.3.19 in Q2 FY 12; and Rs. 6.16 in Q1 FY 13. The EOS for FY 12 total was Rs.12.46.

The EPS for the Half Year ended sep,2012 is Rs.9.89 against Rs. 6.09 for the HY ended Sep,2011.

Overall, the performance of HUL for the second quarter ended Serp,2012 is good. While competition is quite intense in all product lines, HUL has been able to improve its sales in all product lines with mostly double digit growth in all of them.

Thus, future also is expected to be quite promising.

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Hindustan Unilever Limited = QTRLY REUSLTS = FOR Q3 fY 2012 = Q/E DEC,2011 = NET SALES UP 16.43%YoY; NPT UP 18.24% YoY

Hindustan Unilever Limited

NSE Symbol        HINDUNILVR

RESULTS TABLE ANALYSIS

Hindustan Unilever	31-Dec-11	30-Sep-11	%dif1	30-Jun-11	%dif2	31-Dec-10	%dif3
Net Sales	585273	552216	5.99	550389	6.34	502701	16.43
Other Operating Income	8490	8832	-3.87	7547	12.5	10070	-15.69
Increasein SIT/WIP	-2738	-5263	-47.98	19026	-114.4	-10299	-73.41
Raw Materials	234118	229054	2.21	211410	10.74	194151	20.59
Traded Goods	76128	76311	-0.24	76979	-1.11	73064	4.19
Employees Cost	27412	28731	-4.59	28623	-4.23	23104	18.65
Depreciation	5682	5710	-0.49	5620	1.1	5633	0.87
Other Expenditure	161794	149547	8.19	146471	10.46	160253	0.96
Total Expenditure	502396	484090	3.78	488129	2.92	445906	12.67
Profit from Operations	91367	76958	18.72	69807	30.89	66865	36.64
Other Income	8008	7767	3.1	5060	58.26	7702	3.97
Interest	45	54	-16.67	2	2150	6	650
Exceptional Items	1238	-4442	-127.9	-5875	-121.1	-6429	-119.26
Profit  before tax	98092	89113	10.08	80740	21.49	80990	21.12
Tax expense	22711	20221	12.31	18024	26	17239	31.74
Net Profit	75381	68892	9.42	62716	20.19	63751	18.24
Face Value (In Rs	1	1	0	1	0	1	0
Paid Up Equity	21610	21610	0	21607	0.01	21821	-0.97
Basic EPS	3.49	3.19	9.4	2.9	20.34	2.92	19.52
Public holding (%)	47.49	47.48	0.02	47.48	0.02	47.99	-1.04

Net Sales in Q3 FY12 stands at Rs.5852.73 cr – up by 5.99% from Q2 FY12; up by 6.34% from Q FY12; and up by   16.43% from Q3 FY11

Raw Materials in Q3 FY12 stands at Rs.2341.18 cr – up by 2.21 from Q2 FY 12; up by 10.74% from Q1 FY12; up by 20.59% from Q3 FY 11.

Other Expenditure in Q3 FY12 stands at Rs.1617.94 cr – up by 8.19% from Q2 FY 12; up by          10.46% from Q1 FY12; up by   0.96% from Q3 FY11

Total Expenditure      in Q3 FY12 stands at Rs.5023.96 cr – up by 3.78% from Q2 FY 12; up by      2.92% from Q1 FY12; up by     12.67% from Q3 FY11.

Profit from Operations in Q3 FY12 stands at Rs.913.67cr – up by 18.72% from Q2 FY 12; up by 30.89% from Q1 FY12; up by        36.64% from Q3 FY11.

Profit  before tax in Q3 FY12 stands at Rs.980.92cr – up by 10.08% from Q2 FY 12; up by          21.49 from Q1 FY12; up by 21.12% from Q3 FY11

Tax expense in Q3 FY12 stands at Rs.227.11 cr – up by 12.31% from Q2 FY 12; up by   26% from Q1 FY12; & up by 31.74% from Q3 FY11

Net Profit in Q3 FY12 stands at Rs.753.81cr – up by 9.42% from Q2 FY 12; up by 20.19%  from Q1 FY12; & up by   18.24% from Q3 FY11. The progress in the quarter is impressive. It has come down slightly because of Higher Taxation.

Face Value is Rs.1 per share

Basic EPS is Rs.3.49 in Q3 FY12; Rs.3.19 in 2 FY12; Rs.2.9 in Q1 FY12; and Rs.2.92 in Q3 FY11.

Annual EPS is likely to be around Rs.13.2 on FV of Rs.1

Current Market Price is Rs.379.30; while the  52 week high price is Rs.420.25 and the 52 week low price  is Rs.264.45.

The PE Ratio is 28.73.

HOW SEGMENTS PERFORMED

 During the quarter, Domestic Consumer business grew at 16.5% with strong underlying volume growth of 9.1%. All segments delivered double digit growth.

Soaps and Detergents grew by 21% with growth ahead of the market

Laundry registered a strong performance with double digit growth across all brands. Rin Bar and Surf Excel quickwash were re-launched during the quarter with an improved formulation. The business continued its focus on driving upgradation. Skin Cleansing delivered strong double digit growth across premium, popular and mass segments. Lux benefited from the re-launch in September quarter and Lifebuoy from its strong proposition of germ protection. Dove continues to drive category premiumization.

Personal Products delivered broad based volume led growth of 14% with strong performance in Skin and Hair

In Skin care, Fair and Lovely (FAL), Vaseline and Ponds grew in double digits. FAL core grew strongly while Vaseline and Ponds continue to lead market development and build segments of the future. During the quarter, Dove Body lotion was launched and Lakme portfolio expanded with the introduction of Lakme Absolute - a high performance long wear makeup range.

Hair grew ahead of the market with double digit growth in Dove, Clinic Plus and Clear. Dove growth momentum accelerated and the business doubled during the quarter. Oral Care registered modest growth in a competitive environment. Pepsodent G was re-launched during the quarter in the fast growing advance care segment.

Beverages delivered competitive growth of 11% with both Tea and Coffee growing in double digits

In Tea, growth was led by the premium portfolio. Taj Mahal registered strong growth in Modern Trade and 3 Roses strengthened its proposition of health and taste. Coffee delivered strong growth nationally with innovations leading premiumization of the category. Bru Gold (100% coffee) was successfully launched during the quarter.

Packaged Foods grew by 14% and continued to lead market development

Kissan delivered strong growth benefiting from the relaunch in September quarter. Knorr soups performance was muted on account of slowdown in market while Knorr soupy noodles were in line with plans. Soups range was expanded during the quarter with noodle variants and 'Cup-a-Soup'. Kwality Walls continued its strong growth momentum with exciting innovations and increased coverage.

Strategy on water business is on track with expansion of Pureit portfolio. The "Go to Market" transformation is expected to be completed by March 2012.

Inflationary pressures during the quarter were primarily on account of currency depreciation. Cost pressures were managed dynamically through aggressive savings programmes coupled with judicious pricing. Cost of Goods Sold was up by 140 bps. Brand investment continued to be competitive with A&P at 11.8% of turnover.

Profit before interest and tax (PBIT) grew by 37% with PBIT margin improving by 230 bps. Profit after tax but before exceptional items, PAT (bei), grew by 30% to Rs. 762 crores during the quarter. Net Profit at Rs.754 crores grew by 18%

Harish Manwani, Chairman commented: "We have delivered another strong quarter of competitive growth with improvement in margins. The results, delivered against a backdrop of an uncertain economic environment, are reflective of the strength of our brands, consistency in our strategy and relentless focus on execution. We will continue to manage our business dynamically to deliver competitive, profitable and sustainable growth."

SOME HIGH LIGHTS

1.  Domestic Consumer Business (FMCG + Water) grew by 16.5% with a 18.2% growth in HPC and 12.7% growth in Foods businesses.

2. The Scheme of Arrangement (the 'Scheme') for transfer of the FMCG Exports Business Division (the „demerged business undertaking‟) of the Company into its wholly owned subsidiary Unilever India Exports Limited ('UIEL'), has been sanctioned by the Hon'ble High Court of Bombay with the appointed date of 1st April, 2011 during the current quarter vide an order dated 18th November, 2011, certified copy of which was received on 5th December, 2011. The Scheme became effective from 1st January, 2012 (the 'effective date') upon filing of the said order with the Registrar of Companies of Mumbai. In accordance with the Scheme, the above transfer of demerged business undertaking will be accounted by the company as of the effective date by recording the transfer of the relevant assets and liabilities of the demerged business undertaking at their book values and the corresponding consideration received in the form of investment in the shares issued by UIEL. Accordingly, the financial results of the FMCG Exports Business Division continue to be reported as part of the Company's results for the current quarter.

3. The Board of Directors at their meeting held on 31st October, 2011 had declared an Interim Dividend of Rs 3.50 per share of Re.1/- each, for the current financial year . The dividend was paid on 22nd November, 2011.

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