FMCG markets are recovering gradually although the operating environment remains challenging, Hindustan Unilever Limited said on Thursday, even as it posted a 7.26 per cent increase in consolidated net profit to ₹2,554 crore for the quarter that ended in June against ₹2,381 crore in the same quarter last year. The net profit dipped 1.76 per cent sequentially compared to the previous quarter’s profit of ₹2,600 crore during the March quarter.

Rohit Jawa, CEO and Managing Director of HUL, said,‘FMCG markets are recovering gradually, although the operating environment remains challenging. In this context, we have delivered a resilient and competitive performance while stepping up our EBITDA margin.

The company reported 3 per cent volume growth with underlying sales growth of 7 per cent. In the March quarter, the company reported underlying volume growth of 4 per cent. 

The total income for the company during the quarter posted a 6.24 per cent increase with ₹15,679 crore during the June quarter as compared to ₹14,757 crore last year.

An increase of 1.9 per cent in total income was witnessed as compared to the March quarter’s ₹15,375 crore.

Rural demand

“The rural market grew by 2 per cent while the urban market grew by 8 per cent during the quarter of the overall FMCG market growth in mid-single digital volume. The rural demand turning positive is a good recovery, but more work needs to be done. The reduction of inflation and capex investments by the government has led to positive rural income. We will have to closely watch the weather-related risk and El Nino impact,” said Ritesh Tiwari, Chief Financial Officer of Hindustan Unilever Limited.

The home care segment grew in double digits for the company with 10 per cent revenue growth, and fabric wash and household care grew double digits through focused market development and premiumisation, according to the company.

Beauty and personal care delivered 4 per cent revenue growth, skincare and colour cosmetics grew double-digit, and hair care delivered mid-single-digit growth for the company.

Premium space

HUL stated that overall, one-third of its business is in the premium space, which is rapidly growing. The company that has its premium product brands, Love Beauty Planet and Simple, in its haircare and skincare segments is seeing strong growth and has introduced Simple in offline stores.

“India is changing fast. We have to evolve and be ahead of the curve in terms of channel and portfolio changes. Some things are great, and we need to continuously deploy them, keep discipline, and the strategy should not change with every leader, especially when they are successful,” said Rohit Jawa, CEO and Managing Director of HUL.

The company stated that it remains focused on building back gross margins and investing competitively in Advertising and Promotional spending.

“Rural markets have seen volume growth (on a low base). The quarter saw sequential margin improvement with inflation moderating across most commodities (ex-tea and coffee), which were reinvested in A&P to help drive demand. The pricing element has been reduced to 3 per cent and future growth will likely be volume-led. We look forward to hearing about the strategy ahead for the company,” said Amnish Aggarwal, Head of Research, Prabhudas Lilladher Pvt. Ltd.