Personal Care sales disappoint; HUL readies to take on Patanjali with Ayush re-launch

HUL’s management expressed excitement over the re-launch of its herbal brand – Ayush, across the four southern states. Image Source: Company website

Hike in prices for Hindustan Unilever Ltd (HUL) seems to have backfired as the company reported muted results for the third quarter ended December 31, 2016.

HUL’s 3QFY17 net sales, EBITDA and adjusted net profit declined 1.2%, 5.2% and 10.2% to Rs 7,510 crore, Rs 1,360 crore and Rs 9,200 crore respectively.”

Amidst demonetisation and depressing queues in the third quarter, the company still held its own as its net profit increased 7% to Rs 1,038 crore in Q3FY17 as against Rs 971.6 crore during the same period last year.

The Indian consumer goods major’s personal care segment revenue, for nine months ended December 31, declined from Rs 12,241.18 crore in December 2015 to Rs 12,229.71 crore in Q3.

Total segment revenue from its nine months’ operations amounted to Rs 25,121.98 crore as against Rs 24,736.68 during the same period last year.

Due to demonetisation the company experienced a decline in volume of 4% as the company said consumers' purchase basket size shrunk but shop visits increased during the quarter.

The company said that its sales for December were better than November, but were still down YoY.

“Personal wash volumes impacted by calibrated price increases that were taken to manage steep rise in commodity costs,” HUL said.

Around the second quarter of FY16, HUL had hiked the price of its soaps category.

Ayush re-launch springs hope

During a conference call on Monday, HUL’s management expressed excitement over the re-launch of its herbal brand – Ayush, across the four southern states.

The mass market positioning of the company would have products like soaps, shampoos, toothpastes, hand wash conditioners and face wash, ranging from Rs 30 to Rs 130, an earlier report by Zeebiz said.

“HUL has again showcased its faith in Ayush brand by introducing a complete portfolio (27 SKUs across sub-segments) of personal care products in South India,” analysts from ICICI Securities said in a report dated January 24.

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