HUL increases ad spend by 19% in Q3

MUMBAI: FMCG major Hindustan Unilever Ltd (HUL) increased its spending on advertising and promotions for the fourth consecutive quarter ended 31 December as competitive intensity continued to be high.

HUL‘s spending on advertising in the quarter ended 31 December, the third quarter of financial year 2012-13, rose 19 per cent to Rs 8.22 billion from Rs 6.90 billion a year earlier.

The increase in ad spend by HUL has served as a relief to television broadcasters in a year of slowdown. Incidentally, HUL is the largest ad spender in the country.

Broadcasters have looked at FMCG companies to rescue them from a slowdown in their ad revenues this fiscal as certain high-spending categories like financial services have pulled back spends. While certain broadcasters have admitted that ad revenue growth in the first two quarters have been muted, the third quarter has been particularly good.

For the nine months ended 31 December, HUL‘s advertising spend increased by 22 per cent to Rs 24.10 billion from Rs 19.74 billion a year earlier.

HUL said, "The operating context remained challenging during the third quarter with input costs holding firm and high competitive intensity. Advertising and promotion was stepped up and maintained at competitive levels."

The company increased its spend on advertising for the first time in the fourth quarter of 2011-12 after a slowing economy dented ad spends for a few quarters. In the quarter ended 31 March 2012, its advertising spends were Rs 6.77 billion, up 8.67 per cent from a year earlier.

For the whole of 2011-12, HUL‘s advertising spends was down 3.58 per cent to Rs 26.97 billion from Rs 27.97 billion a year earlier.

During the third quarter of 2012-13, the domestic consumer business of HUL grew by 15 per cent with the underlying volume growth of 5 per cent. Both its home and personal care (HPC) and food & beverages (F&B) businesses registered double digit growth.

HUL said despite intense competition, its net profit increased 16 per cent to Rs 8.71 billion in the quarter ended 31 December from Rs 7.25 billion a year earlier.

HUL chairman Harish Manwani said, "In an environment that continued to be challenging, we have delivered another quarter of broad-based growth and margin expansion."

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