HUL misses D-Street estimates on sluggish demand in Q4 FY24

Amid stiff competition from regional players and a depressed demand environment, fast moving consumer goods bellwether Hindustan Unilever (the India arm of UK’s Unilever) on Wednesday posted lower-than-expected results for the January-March period of financial year 2023-24.

However, bringing some cheer to investors, HUL’s board has proposed a final dividend of Rs 24 per share, touted to be its highest-ever, taking the total to Rs 42 apiece for the year. The FMCG major’s share price has slipped 10% in the last 12 months.

HUL’s sales rose marginally to Rs 14,693 crore during the fourth quarter ended March 31, from Rs 14,638 crore in the corresponding period last year. Meanwhile net profit declined 6% year-on-year to Rs 2,406 crore. 

In the full financial year, the company’s total income grew 2.7% annually to Rs 61,442 crore, while profit saw a 1.6% year-on-year improvement to breach the Rs 10,000-crore milestone.

Amongst the three primary segments, the home care and foods & refreshment segments in the fourth quarter saw underlying sales growth of 1% and 4%, respectively. Meanwhile the beauty & personal care segment registered a 2% dip.

Earnings before interest, tax, depreciation and amortisation (EBITDA) for the quarter came in at Rs 3,435 crore, 1% down from Rs 3,471 crore in the same period last year.

The fabric wash category, which includes products such as Surf Excel Matic and Comfort, saw mid-single digit volume growth during the quarter, led by the premium portfolio. Simultaneously, the household care category registered a similar performance led by outperformance in Vim liquid.

Additionally, premium skin care maintained its strong double-digit growth trajectory led by innovations in new demand spaces and formats, HUL said.

Notwithstanding the performance, HUL Managing Director and Chief Executive Rohit Jawa took a positive note. “Looking forward, I am optimistic of consumer demand gradually improving due to a normal monsoon and better macro-economic indicators,” he said.

“With the price sensitive market being hit by sustained firmness in food inflation, stiff competition from peers in the segment also added to the pressure,” reasoned Nirav Karkera, who heads research at financial services provider Fisdom.

The FMCG giant, as well as sectoral experts, are hopeful of a faster recovery across rural markets in the coming quarters, amid predictions of a strong summer and an above-normal monsoon this year.

The company’s shares fell marginally on Wednesday to close at Rs 2,259.15 apiece on BSE.

"The stock price of HUL has already corrected significantly from its record high of Rs 2,859 and seems to be stabilising around the Rs 2,200 mark on monthly charts," underscored Sugandha Sachdeva, founder of SS WealthStreet, adding that if the support zone holds, there is potential for the stock to recover with initial resistance expected around Rs 2,450.