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FMCG major Hindustan Unilever Ltd (HUL) posted a flat consolidated net profit for the quarter ended in September 2023. It clocked ₹2,657 crore net profit during the quarter against ₹2,670 crore in the same quarter last year. Sequentially, the net profit was up 4 per cent compared with the first quarter profit at ₹2,556 crore.
Along with its financial result, the company announced an interim dividend of ₹18 per equity share of face value of ₹1 each on Thursday.
Revenue from operations has also stagnated, growing 3 per cent to ₹15,340 crore (₹14,872 crore) during the reporting period. HUL’s underlying volumes grew 2 per cent in the second quarter. Its volumes grew 3 per cent in urban areas for the quarter, and fell 1 per cent in rural areas. Rural recovery is likely to remain gradual, the company said in its investor presentation.
HUL also reported an EBITDA margin of 24.6 per cent, growing 130 bps year on year.
Rohit Jawa, CEO and MD of HUL, said that the operating environment is challenging, marked by subdued rural demand and heightened competitive intensity.
“Looking forward, we remain cautiously optimistic. FMCG demand is likely to continue a gradual recovery with tailwinds from the upcoming festive season, sustained buoyancy of services and the government’s thrust on capex,” he added.
While rural demand has been marred by the double whammy of food inflation and uneven monsoons in the north, the management maintains that rural demand has improved from a negative 4 per cent last quarter to a negative 1 per cent this quarter. However, the management remains optimistic as it is starting to observe positive real rural wage growth levels.
Analysts’ view
Poor rural demand notwithstanding, experts believe that multiple price cuts led to poor revenue growth. “Price cuts in categories like Fabric Wash, Home Care and Skin Cleansing led to the value-added growth remaining flat, resulting in the overall revenue inching upwards at an albeit slower pace. Although the premium portfolio aided in the company registering a mid-single-digit volume growth in the Home Care and the Beauty & Personal Care segments, the business witnessed a mid-single-digit decline in volumes in the Foods and Refreshment segment,” Anushi Vakharia, Research Analyst, StoxBox.
Presenting a cautiously optimistic view on the operating environment, the company said in its presentation- that it expects tailwinds from a better festive season and thinks that rural recovery is likely to remain gradual. With the entry of small FMCG firms, it also expects the competitive intensity to remain high, and it will keep a watchful eye on commodity prices.
The management also added that it expects price growth to be negative if commodity prices remain where they are.
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