Price hikes boost Hindustan Unilever’s Q4 profit

The company had logged a net profit of Rs 2,190 crore in January-March period a year ago

Hindustan Unilever Ltd (HUL) reported a higher-than-expected profit in the fourth quarter as “calibrated” price increases helped the consumer goods maker offset the impact of higher input costs.

The results come at a time when fast-moving consumer goods (FMCG) companies have been coping with supply-chain issues and rising costs of everything from wheat to oil, exacerbated by Russia’s assault on Ukraine. To make things worse, many Indian households are spending less on non-essential items to make their budgets work amid inflationary pressures.

“In challenging circumstances, we have grown competitively and protected our business model by maintaining margins in a healthy range,” HUL CEO and Managing Director Sanjiv Mehta said on Wednesday. He also highlighted “near-term concerns” around “significant inflation” and “slowing market growth”.

Net profit at the maker of Dove soap and Hellmann’s mayonnaise rose 9 per cent to Rs 2,327 for the quarter ended March 31. Excluding the one-time, the company earned Rs 2,269. That was higher than the average profit forecast of Rs 2,200 crore by analysts in a Bloomberg survey.

Revenue rose 10.4 per cent to Rs 13,846 crore. Total expenses rose 11.5 per cent to 10,782 crore.

HUL’s tepid performance in the beauty and personal care business is a reflection of weak discretionary spending by Indian households, according to Akshay D’Souza, Chief of Growth & Insights at Bizom.

During the quarter, the company recorded flat growth in volume, with urban markets performing much better than their rural counterparts.

HUL has been managing its business well by saving more and hiking prices during a period of unprecedented inflation, Abneesh Roy of Edelweiss Securities said in a note.

The company hiked prices by about 10 per cent in the fourth quarter and warned of more “sticker shock” going forward. “As things stand today, there is going to be more price increase,” Mehta said on an earnings conference call, citing massive inflation and the impact of the geopolitical crisis in Ukraine.

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