FMCG show
FMCG companies have reported good numbers for the quarter ended September, although Hindustan Unilever (HUL), the largest player in the space, missed street estimates.
HUL's revenues were below street expectations and fell 5% year on year, driven by subdued performance in the core home and personal care segment and a 23.3% drop in export revenues due to planned reduction in non-core exports. Sales volume in its core FMCG business rose just 1%. Operating profit margins expanded by 262 basis points (100 basis points make one percentage point) to 14.4%, led by a decline in raw material and overhead costs. Price of key raw materials such as palm oil and HDPE (packing material) were soft in September. Net profit increased 28.7%, adjusting for exceptional items.
Nestle India's numbers were above street expectations, with revenues rising 17.6%. Domestic revenues, which accounted for 93.4% of the pie, increased 18%. Export revenues grew at a slower 11.2%. Operating margins increased 158 basis points to 20.3%. Operating performance was helped by a favourable sales mix, lower commodity prices (except for milk solids, green coffee, vegetable fats and sugar) and better net realisations. Profit increased 38.7%, helped by strong operating performance and tax benefits.
ITC saw revenue increase 14.1%, above estimates, driven by an increase of 15% in cigarettes business and 19% in agri-business. Cigarettes business volumes were up 7% on good performance of the premium portfolio. Operating performance was strong, with margins expanding by 616 basis points to 35.8%, helped by a decline in raw material and overhead costs. The paperboards business also performed well, while hotels and FMCG business reported a muted performance at the earnings before interest and tax level. Net profit increased 25.8%.
Dabur India's revenues increased 22.7%, riding on a 14.2% growth in volumes. The consumer care business accounted for 68% of total revenues and increased 16.9%, led by shampoos, hair oils, health supplements, toothpastes and the foods segment. Revenues from international business accounted for 20% of the revenues and increased 27.5%. Decline in input costs resulted in a 263 basis points increase in operating margins to 20.7% from 18.1% last year.

Drug story
Results of pharmaceutical companies for the September quarter were a mixed bag.
Ranbaxy Laboratories came in better than expectations at the net profit level, riding on exceptionally high other operating income. Net profit stood at Rs 116.6 crore, against a loss of Rs 394.5 crore a year ago. Profitability was helped by a sharp leash on selling, general & administration expenses and other operating income, which stood at Rs 170 crore, helped by a licensing income of Rs 75 crore and scrap sales of Rs 50 crore. Revenues declined 8.8%.
GlaxoSmithKline Pharmaceuticals' numbers were more or less in line. Revenues increased 11.9%, led by good performance in the vaccine segment (on new launches like Rotarix, Cervarix and Infanrix Hexa) and key priority brands. The pharmaceuticals business, which brought in 85% of the revenues, increased 12% given higher contribution from focus brands. Operating profit margins remained more or less flat at 36.9%. Net profit increased 8.6%, hit by lower other income and lower-than-expected margins.
Piramal Healthcare's numbers were in line, too. Operating margins dropped 280 basis points to 17.7% on account of higher staff and raw material costs due to the low margin operations of Minrad and RxElite integration. Revenues increased 12%, driven by a 16.2% increase in domestic formulations, particularly from anti-infective, anti-diabetic, and dermatology therapy segments. CRAMs business fell 2% due to continuing issues of global slowdown in pharma outsourcing. Net profit increased 45%, helped by forex gains.
Cipla's results missed street estimates at the revenue level but were slightly better at the net profit level. Revenues increased 6.6%, impacted by slower than expected growth in exports and domestic sales. Exports were impacted due to a fall in revenues from the formulations business. Domestic revenues were impacted due to seasonal variations. Operating performance was strong and margins increased 1080 basis points to 26.39%. This was due to lower raw material costs, attributed to a change in the product mix, with lower contribution from the anti-retroviral segment. Net profit increased 82%, driven by strong operating performance.
Pallavi Pengonda (p_pallavi@dnaindia.net)

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