Consumption claws back, good rains will help: HUL
Q4 profit marginally misses estimates; HUL expects pricing growth to decline
Consumption demand is recovering and will improve further if rains are plentiful, Hindustan Unilever Ltd (HUL) said on Wednesday, as volumes inched up at India’s biggest seller of soaps, shampoos and detergents.
HUL noted a “gradual” recovery in demand for household goods, even as it pointed to some pockets of weakness, especially in rural markets, where things have not yet “fully recovered”.
“We have seen gradual recovery sequentially; every quarter, it gets a little bit better,” said Rohit Jawa, HUL’s managing director and chief executive. “We believe that the market is slowly returning back to normal. If the macros and if the monsoons do help in the agri-economy, there is a certain factor that’s outside the control of everybody, that will also add to the change,” Jawa said at a post-earnings meet at the HUL’s Mumbai headquarters.
As India’s largest maker of packaged consumer goods, demand for HUL’s products is seen as a mirror to overall consumption demand in
TURNING AROUND
HUL sees demand up every quarter; urban beats rural
NET profit stood at ₹2,406 cr against last year’s ₹2,552 cr
the economy.
March quarter profit fell slightly short of Street estimates, 5.72% lower than a year earlier, as expenses rose. Net profit stood at ₹2,406 crore against last year’s ₹2,552 crore, the company said in a statement to stock exchanges.
Revenue from operations at the maker of Lux soaps and Kissan 2,552 2,472
2,717 2,519 2,406
REVENUE fell to ₹14,857 cr from ₹14,893 cr a year ago ketchups was down marginally at ₹14,857 crore from ₹14,893 crore a year earlier, while expenses rose 0.89% to ₹11,813 crore.
A Bloomberg survey of 26 analysts had estimated HUL to report a profit of ₹2,470 crore. Standalone revenue estimates stood at ₹15,050 crore.
The company reported 2% underlying volume growth and a 1% value growth during the March quarter; volume growth showed no improvement from the December quarter.
Gross margin improved 350 basis points from a year earlier. “We continue to focus on building back our gross margins through improved price coverage, mix and net productivity initiatives. A&P (advertising and promotion) investments increased 200 bps as we continued to step up investments behind our brands. Ebitda margin at 23.4% declined by 30 bps primarily on account of 60 bps impact from termination of GSK consignment selling arrangement and investments in long-term capabilities,” the company said in its earnings announcement.
The HUL management sounded hopeful of continued recovery in demand.
High inflation over the past two years has eaten into household budgets, especially among poorer families. Companies like HUL have also been compelled to raise prices to protect margins. While this has helped them drive revenue and report pricing-led growth, it came at the cost of volumes.
As commodity prices came