FMCG major Hindustan Unilever expects low-single-digit price growth in the second half of the financial year, according to the company's Executive Director, Finance & IT and Chief Financial Officer, Ritesh Tiwari.
Tiwari added that if commodity prices remain where they are and if HUL maintains its EBITDA at current levels, then it will evaluate strategic opportunities for pricing. He excluded Tea from this outlook citing inflation as the reason.
Hindustan Unilever's net profit rose three percent year-on-year to Rs 2,538 crore in Q1FY25 from Rs 2,472 crore in the same quarter of the previous financial year. The company's domestic volume growth came at four percent. The total revenue of the company was at Rs 15,596 crore, rising 1.71 percent from Rs 15,333 crore in the year-ago quarter, the FMCG major said in a regulatory filing.
Demand & volume outlook
The management in its Q1 FY25 earnings call stated that FMCG and rural demand will continue improving gradually.
"In the last two years, market volume recovery has been gradual and much lower than what we would have liked due to the impact of sustained high inflation combined with erratic weather patterns. Consequently, rural growth, which used to surpass urban growth, had lagged behind urban growth over the last year. In the last few months, we are seeing some green shoots in rural demand recovery. However, over two year CAGR rural growth still lags that of urban. We continue to closely monitor rural progress. There are a few critical factors that could impact the space of recovery," Managing Director and CEO Rohit Jawa said.
Last year in the same quarter the rural demand fell by 4 percent.
The Lifebuoy maker said the home care division delivered a strong performance with 4 percent USG (underlying sales growth) and high-single digit UVG (underlying volume growth). Household care segment saw volume growth in mid-single digits driven by strong performance in the premium dishwash portfolio.
While underlying volume growth was in low-single-digit growth in personal care, the segment declined by five percent due to pricing actions in skin cleansing in personal care. "Price cuts taken in the quarter and during the year has resulted in revenue decline. Bodywash maintains its strong competitive growth momentum," Tiwari said.
Oral care delivered a broad-based mid single-digit growth driven by pricing. Skin cleansing witnessed a resilient volume recovery with low single-digit volume growth.
In June quarter '24, home care contributed 37 percent, Beauty & Wellbeing contributed to 21 percent of our business, while Personal Care was at 16 percent.
Further, Foods and Refreshment contributed one-fourth of our total business. Margins in all four segments remain healthy with Home Care at 20 percent, Beauty & Wellbeing at 31 percent, Personal Care at 18 percent and Foods and Refreshment at 19 percent.
Tiwari said that the recent announcement regarding the sale of its water purification business brand PureIt is in line with its strategic intent to focus sharply on its core categories in Beauty & Wellbeing.
Beauty & Wellbeing saw mid-single digit volume growth led by Hair care. It delivered 3 percent sales growth while volumes grew in double-digit, driven by a strong performance in Sunsilk, Clinic Plus and Dove.
Foods & refreshment had a sales growth of 1 percent with volumes remaining stable. In the adult nutrition range, Tea continued to cement its market leadership through value and volume share gains. Coffee delivered double digit growth driven by pricing.
Jawa highlighted that the company focused on premiumization strategy and said that it has yielded almost 300 basis points increase in the premium contribution over the last three years.
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