HUL profit slips on weak rural demand, Nestle’s profit climbs

Bengaluru: The India versus Bharat debate showed in the July-September quarter earnings of two fast-moving consumer goods majors, on Thursday. While Hindustan Unilever reported a marginal decline in consolidated net profit on the back of weak rural demand, Nestle India posted a healthy increase in profits due to healthy urban demand, which remains the focus of its business.

Both the companies’ net profit figures beat analyst estimates.

HUL’s net profit fell to Rs 2,657 crore from Rs 2,670 crore in the same period last year. Consolidated total income stood at Rs 15,806 crore in the quarter under review compared to Rs 15,253 crore in the year-ago period, while total expenses were Rs Rs 12,211 crore against Rs 11,965 crore a year ago.

HUL said its board has approved an interim dividend of Rs 18 per share for the financial year ending March 31, 2024.

Addressing reporters in a virtual earnings call, HUL CEO and Managing Director Rohit Jawa said "It (the FMCG market) is recovering faster in urban and lesser in rural, but it is recovering on a two-year basis. It sort of comes back to where it was".

He said rural and urban poor consumers with income constraints had to bear the brunt of high inflation. On the other hand, consumers in metros and urban areas with high incomes continue to be resilient.

On the outlook, Jawa said that the company remains cautiously optimistic as FMCG demand is likely to continue a gradual recovery propped by the upcoming festive season, sustained buoyancy of services and government's thrust on capital expenditure

"We need to be watchful of volatile global commodity prices as well as the impact of monsoon on crop output and reservoir levels,” Jawa added

Nestle India, meanwhile, reported an increase of 37.28 per cent in net profit at Rs 908.1 crore for the quarter ended September 30, helped by a consistent performance almost across all major brands. Around 80 per cent of its business comes from urban India.

Nestle India's net sales rose 9.43 per cent to Rs 5,009.5 crore, as against Rs 4,577.44 crore in the corresponding period last fiscal, the company said. 

"We crossed Rs 5,000 crore turnover, which has been our first in any quarter in the history of the company and a landmark for us," said Nestle India Chairman and Managing Director Suresh Narayanan.

Nestle India's total expenses in the July-September quarter were at Rs 3,954.5 crore, up 5.92 per cent, as against Rs 3.733.12 crore in the corresponding period a year ago. Its domestic sales were up 10.33 per cent to Rs 4,823.7 crore, as against Rs 4,372 crore.

Commenting on the results, Narayanan said: "We have, yet again, delivered consistent performance almost across all major brands. Domestic sales grew double-digit, on account of mix, volume and price."

(With agency inputs)