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HUL bets big on health and hygiene categories

The company has seen robust demand of health and hygiene products and intends to launch slew of products in this category going forward.

April 30, 2020 / 09:06 PM IST
 
 
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Hindustan Unilever believes health and hygiene products will remain in demand given the precautionary measures taken by citizens in light of the COVID-19 pandemic, HUL said in a post-earnings conference call.

Even in the last quarter, the company saw robust demand for health and hygiene products. It intends to launch a slew of products in this category going forward.

“We are seeing a change in demand patterns of health and hygiene products and going forward we expect an upswing in categories like health, hygiene and nutrition. In the wake of COVID-19 pandemic, hygiene products have seen increased demand across companies,” said Sanjiv Mehta, Chairman and Managing Director, HUL.

"With the GSK CH merger effective from April 1, iconic brands such as Horlicks and Boost will now enable us to also address the nutrition needs of consumers,” Mehta added.

Her further said the company is optimistic and hopeful on medium term potential of a low penetration category and is working out plans to take Horlicks deeper in to the markets.

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The company has been working with various authorities to streamline and scale up operations and HUL has also ramped up their capacity.

“We have ramped up our capacity for key categories such as sanitizers, hand wash, etc. We are also operating with shorter planning cycles and stepping up agility and building resilience in the supply chain,” said Srinivas Phatak, Executive Director and Chief Financial Officer, HUL.

With COVID-19, most customers prefer ordering from home rather than stepping out, Mehta said they will offer their products on all the channels.

HUL has seen deceleration in both urban and rural markets.According to Mehta,  rural has been struggling with low liquidity and low income levels.

FMCG giant Hindustan Unilever on April 30 reported a profit of Rs 1,519 crore in the fourth quarter, registering a 1.2 percent decline YoY due to the lockdown in the second half of March.

The standalone profit in the same period last year was at Rs 1,538 crore.

Revenue for the March quarter dropped 9.4 percent year-on-year to Rs 9,011 crore due to a decline in volumes.

On the segment front, homecare business revenue fell 4.3 percent year-on-year to Rs 3,350 crore but its earnings before interest and tax (EBIT) rose 2.7 percent to Rs 636 crore in Q4FY20.

Revenue from beauty & personal care segment declined 13.5 percent to Rs 3,801 crore and its EBIT was down 22.5 percent at Rs 945 crore compared to the same quarter last year.

Foods and refreshment segment registered a 6.7 percent YoY degrowth in revenue at Rs 1,788 crore and a 35 percent fall in EBIT at Rs 225 crore in the March quarter.

Profit during the year grew by 11.6 percent to Rs 6,738 crore on revenue of Rs 38,785 crore that increased by 1.5 percent over the previous year.

HUL said it had a strong balance sheet and cash position. "However, we are systematically reviewing all areas of cash generation and usage and re-evaluating all costs in the prevailing circumstances, so that we can continue to invest towards the best opportunities. We continue to set a high ambition on savings opportunities across the value chain."

On the segment front, homecare business revenue fell 4.3 percent year-on-year to Rs 3,350 crore but its earnings before interest and tax (EBIT) rose 2.7 percent to Rs 636 crore in Q4FY20.

Revenue from beauty & personal care segment declined 13.5 percent to Rs 3,801 crore and its EBIT was down 22.5 percent at Rs 945 crore compared to the same quarter last year.

Foods and refreshment segment registered a 6.7 percent YoY degrowth in revenue at Rs 1,788 crore and a 35 percent fall in EBIT at Rs 225 crore in the March quarter.

"Demand patterns are changing, and we are likely to see an upswing in categories like health, hygiene and nutrition. In the near term, we are also likely to see some adverse impact on discretionary categories and out of home channel," HUL said.

Profit during the year grew by 11.6 percent to Rs 6,738 crore on revenue of Rs 38,785 crore that increased by 1.5 percent over the previous year.

HUL said it had a strong balance sheet and cash position. "However, we are systematically reviewing all areas of cash generation and usage and re-evaluating all costs in the prevailing circumstances, so that we can continue to invest towards the best opportunities. We continue to set a high ambition on savings opportunities across the value chain."

The company has not so far cut any salaries of laid of employees due to the slowdown, however, it has 'left the option open if required'.
Moneycontrol News
first published: Apr 30, 2020 08:02 pm

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