HUL expects tailwinds from a better festive season: Rohit Jawa

Hindustan Unilever Limited (HUL) has delivered a resilient and competitive performance in the second quarter ended September 30, 2023, with Underlying Sales Growth (USG) of 4% and Underlying Volume Growth (UVG) of 2%. HUL reported a 5% growth in its Q2 GY2024 revenue at Rs 29,958 crore. Total sales at Rs 15,364 crore grew by 3% during the quarter.

EBITDA margin at 24.6% was up 130 bps YoY. Profit After Tax before exceptional items (PAT bei) grew 12% and Profit After Tax (PAT) at Rs 2,717 crore grew 4%.

In the quarter, there was a one-off credit from favourable resolution of past indirect tax litigation benefiting both topline and bottomline. Excluding this one-off, USG, UVG, EBITDA margin, PAT (bei) growth would have been 3%, 2%, 23.8% and 7%, respectively. Gross Margin and Advertising & Promotions investments increased 700 bps and 420 bps, respectively vis-a-vis SQ’22.

Rohit Jawa, CEO and Managing Director, HUL, commented, “We delivered a resilient and competitive growth whilst stepping up our EBITDA margin in a challenging operating environment, marked by subdued rural demand and heightened competitive intensity. Looking forward we remain cautiously optimistic. FMCG demand is likely to continue a gradual recovery with tailwinds from the upcoming festive season, sustained buoyancy of services and Government’s thrust on capex. At the same time, we need to be watchful of volatile global commodity prices as well as the impact of monsoon on crop output and reservoir levels. In this context, our focus is to provide superior value to our consumers, drive competitive volume growth, and invest behind our brands. We remain confident of the mid to long term potential of Indian FMCG sector and HUL’s ability to deliver a Consistent, Competitive, Profitable and Responsible growth.”

Home Care: Volume led growth on a very high base

Home Care grew 3% with mid-single digit UVG. Fabric Wash had mid-single digit volume growth with the premium portfolio continuing to outperform. Household care volumes grew in high single digit led by Dishwash. Further price reductions were taken in both Fabric Wash and Household Care. Brand and marketing investments were stepped-up to protect competitive position. During the quarter, Vim Pure range with plant-based actives and Comfort Intense Fabric Conditioner were launched.

Beauty & Personal Care: Mid-single digit volume led growth

Beauty & Personal Care grew 4% with mid-single digit UVG. Skin Cleansing had a low-single digit volume growth with Lux and Hamam continuing to outperform. Revenue declined as further price reductions were taken in soaps. Skin Care and Colour Cosmetics grew double-digit driven by focused interventions in new demand spaces and channels of the future. Hair Care delivered high-single digit growth with Clinic Plus and Indulekha continuing to outperform. Oral Care grew mid-single digit led by Closeup. Key launches in this quarter include new range of Vaseline moisturizers, Lakme serums and cosmetics, Pond’s serum, Indulekha Anti-Dandruff Oil and Shampoo.

Foods & Refreshment: Mid-single digit growth driven by pricing

Foods & Refreshment grew 4%. Tea delivered a modest growth as the category continued to witness consumers downgrading. Coffee grew in double-digits. HFD delivered mid-single digit price led growth, broad-based across the portfolio. Foods and Ice Cream both grew in mid-single digit on a high base. Foods Solutions, Mayonnaise and Peanut Butter continue to clock strong growths. During the quarter, Horlicks Strength Plus, Slow Churn Ice Cream and new blends of Lipton Green Tea were launched.