FMCG major Hindustan Unilever saw a 13 per cent uptick in profits year-on-year to Rs 2,381 crore for the June 2022 quarter, as against consolidated profits of Rs 2,097 crore in the June 2021 quarter.

Total income rose 20 per cent to Rs 14,757 crore in Q1FY23 as against Rs 12,260 crore in Q1FY22.

Despite a softening of palm oil prices, inflation continues to impact operating conditions. Ritesh Tiwari, Executive Director, Finance & IT and Chief Financial Officer said at a press briefing, “Inflation has been a real challenge for the industry for the last few quarters. Several commodities have inflated to their decadal high at the same time. Against the 10-year median price, crude, caustic soda and barley have all inflated more than 15 per cent.”

With the dollar strengthening, they are seeing the impact of currency-led inflation . Inflation is impacting consumer demand and market growth is driven by price hikes taken by the company. Rural demand was still faring worse than urban demand, and the company continues to see minimal growth in volumes, he said.

HUL reported a 6 per cent volume growth, an improvement over the negative volume growth reported in the previous quarter. However, executives noted that growth would continue to be price-led in the near term. 

HUL’s press release noted that, “EBITDA margin at 23.2 per cent remained healthy, despite the unprecedented inflation in input costs,” However, Tiwari noted that pressure on margins is going to persist in the near term in the sequential quarters as well. The positive impact of a softening in palm oil prices and potential commodity price tapering will be seen from the December quarter. 

Company officials said while 12 per cent of the 20 per cent commodity inflation has been transferred as price hikes to consumers, the company remains unclear regarding reducing prices in the future. The executives said while they are taking steps to reduce non-consumer facing costs, they will also consider introducing bridge packs to new categories. 

Responding to a query on whether consumers have the capacity to take a future price increase, CEO and Managing Director Sanjiv Mehta said, “When we come to the premium part of the portfolio, where we are over-indexed to the market, there is much more capacity to take price increase, vis a vis mass market. We remain circumspect about taking price increases. We play many levers, after playing many lever we consider this option.”

Mehta added, “While there are near-term concerns around inflation, the recent softening of commodities, forecast of a normal monsoon, and monetary/ fiscal measures taken by the government augur well for the industry. We are confident of the medium- to long-term prospects of the Indian FMCG sector and remain focused on delivering Consistent, Competitive, Profitable and Responsible growth.”

social-fb COMMENT NOW