The royalty payment from Hindustan Unilever Ltd (HUL) to the parent company Unilever has increased by 80 basis points. The FMCG juggernaut said on Thursday that its board has authorized raising the royalty and central services agreement fee to the Unilever group from 2.65 percent in 2021–2022 to 3.45 percent of the total revenue.
The Unilever group and I signed into a 10-year technology, trademark license, and central services deal in January 2013.
The corporate logo, technology, and trademarks held by Unilever may be used by HUL. The Unilever group’s central services are also available to the business.
On the day the higher payout was announced, HUL beat Street expectations by reporting a standalone net profit increase of 11.70% for the three months ending December 31. HUL’s net earnings were Rs 2,505 crore as opposed to Rs 2,243 crore during the same time last year.
Its profit was estimated by analysts to be about Rs 2,450 crore. Revenues increased by 16% during the quarter to Rs 14,986 crore from Rs 12,900 crore in the same quarter last year. HUL also said that underlying volume increase was 5%, up from 4% in the previous three months.
Regarding the rise in the payment to Unilever, HUL said that the new contract calls for royalty and central services fees to climb to 3.45% of sales in a gradual manner over the course of three years. The agreement is pending the necessary regulatory clearances, it was said.
The first increase will be 45 basis points from February to December 2023, then it will increase by 25 basis points from January to December 2024, and then by 10 basis points starting in January 2025.
“Unilever had asked for a review of the present agreement since it was about to expire. Unilever has provided HUL with a continual supply of advantages, including quicker innovation, better goods and technology, more knowledge, and improved services, the company said. According to the business, doing so has enabled it to quickly and effectively respond to changing customer requirements and to benefit all parties involved.
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In the third quarter that concluded in December 2022, Asian Paints Ltd.’s consolidated net profit increased by 6.4% to Rs. 1,097.06 crore.
Compared to the same quarter last year, total operating revenue was up to Rs 8,636.74 crore from Rs 8,527.24 crore.