Poor show in Q3 FY24: HUL is hoping for rural income recovery for growth

Leading fast moving consumer goods (FMCG) player Hindustan Unilever (HUL) is pinning its hopes on a prospective recovery in rural income levels, after it reported a flat top line for the October-December (Q3 FY24) quarter. According to the top management of the Mumbai-based company, rural income growth and winter crop yields will be key factors in determining the pace of recovery.

“Looking forward we expect a gradual recovery in market demand to continue aided by increased government spending, recovery in winter crop sowing and better crop realisation. Rural income growths and winter crop yields are key factors that will determine the pace of recovery,” said Rohit Jawa, CEO and Managing Director of HUL.

During the December quarter, the consumer goods company that leads the Indian market in some of the key segments like beauty & personal care and home care, reported net sales of Rs 15,259 crore - marginally lower than the Rs 15,314 crore it had posted in the same quarter last year. Its net sales also declined marginally over the previous quarter. 

While its net profit for the quarter inched up by 0.1 per cent to Rs 2,508 crore, it declined sequentially by 5.6 per cent. According to it, the company recorded a 2 per cent rise in volumes. Its premium portfolio grew steadily, but the mass market segments dented its growth.

According to Ritesh Tiwari, Chief Financial Officer at HUL, the reduction of prices of its products during the quarter impacted its top-line performance.

The beauty and personal care, the largest business segment that contributes 38 per cent towards the company’s top-line, remained flat at Rs 5,705 crore, while home care business revenue declined 1 per cent year-on-year to Rs 5,448 crore.

“With commodity prices remaining benign, competitive intensity to remain high in the near term”, the company said. To strengthen its business, the management is now focused on driving competitive volume growth. “Price growth to be marginally negative if commodity prices remain where they are,” it said, adding that HUL is stepping up investments behind its brands and long-term strategic priorities whilst maintaining EBITDA margins in a healthy range”.

Also read: HUL Q3 FY24 results: Net profit climbs just 1%; revenue slips to Rs 14,928 crore

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