Rural uptick for HUL in 4.4% growth in Q1FY21; urban lags

An over 31 per cent cut on ad spends, a portfolio prioritisation exercise and unlocking of synergies from the nutrition business (with Horlicks becoming part of its portfolio with the completion of the GSK acqusition) has helped FMCG major, Hindustan Unilever registered a 4.4 per cent increase in sales in Q1 FY21. The revenue from the quarter is Rs 10,560 crore, while the net profit grew by 7 per cent at Rs 1,881 crore. The company's volume growth declined by 7 per cent, excluding the GSK volume. The biggest gainer has been the company's food and refreshment business which saw a 52 per cent growth, while home care de-grew by 2 per cent and beauty and personal care underwent a 12 per cent de-growth. "Health, hygiene and nutrition constitute 80 per cent of our business and that has grown by 6 per cent, despite supply led constraints," says Sanjiv Mehta, Chairman and MD, Hindustan Unilever. He says that consumption sentiments would dramatically improve only when a vaccine for the coronavirus is discovered.

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Unlike previous quarters, when the FMCG major witnessed de-growth in rural consumption, in Q1 FY21, rural has been far more resilient than urban markets. While low incidence of virus outbreak in rural areas definitely has a role to play, Mehta says that higher MNREGA spends, supply of free food and a good monsoon has resulted in more money in the hands of the rural consumers. "Rural consumption is no longer less than urban," says Mehta.

On the innovation front, Mehta says that the company would focus on health, hygiene and nutrition. "As far as the other innovations are concerned, we will go back to them once there is some semblance of normalcy," he said.

The HUL CMD expects categories such as sanitisers and other hygiene products to be a big contributor to the company's revenue even after the virus scare dies out. "Demand for hygiene may not be at current peak, but there will surely be a change in the behaviour of our countrymen."

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