Leading fast moving consumer goods (FMCG) player Hindustan Unilever emerged strong out of a whirling inflationary cycle in the July-September quarter. The Mumbai-headquartered company managed to grew its top-line and bottom-line by healthy double digits, gaining market share in majority of its categories, irrespective of inflationary pressure that grew heavier in recent months.
Led by its two of the larger categories – home care and beauty & personal care – HUL’s net sales grew 16 per cent year-on-year (YoY) to Rs 14,872 crore from Rs 12,812 crore same quarter last year. It’s consolidated net profit grew 11.7 per cent YoY to Rs 2,670 crore from Rs 2,391 crore.
While its home care business surged 34 per cent to Rs 5,142 crore from Rs 3,838 crore. Largest segment beauty & personal care surged 11 per cent to Rs 5,595 crore – up from Rs 5,026 crore.
According to Reetesh Tiwari, Chief Financial Officer at HUL, superior performance by two of its key home care categories – fabric wash (detergents) and dishwasher – helped it post healthy growth. While premiumisation and market development activities led to high double-digit growth in fabric wash category, dishwasher products (Vim) grew in similar fashion. Its foods business grew by double digits too, led by categories like ice cream and coffee. Health food drinks, represented by brand Horlicks, continued to gain market share and penetration on the back of focused market development actions, the company said.
While its volume offtake grew by low-single digit – by 4 per cent – in the quarter, it remained well ahead of market trends. As per Nielsen, volumes in the FMCG market in India shrank by 6 per cent during the September quarter as both urban and rural markets remained in red. HULs top-line growth performance too exceeded the broader market, which grew 6 per cent by value compared to HUL’s 16 per cent
Steep inflation, however, impacted its bottom-line performance and reduced its margins. According to Sanjiv Mehta, the company’s net material inflation for HUL surged by a whopping 22 per cent in September 2022 quarter – double of that in the same quarter last year – putting pressure on its margins.
Depreciation of the Indian rupee has further added to its woes. According to the company, crude oil costs grew grown 35 per cent, soda ash by 55 per cent and skimmed milk prices have surged by 30 per cent on a YoY basis. Only respite in recent months, it has witnessed is from cut in palm oil prices, which it has passed on to consumers to certain extent by reducing soap prices.
Mehta, however, said he remains cautiously optimistic about the near term. “Demand environment remains challenging with inflation impacting consumption. However, with softening in some commodities and monetary and/or fiscal measures taken by the government, we are cautiously optimistic in the near-term,” he said.
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