HUL reports flat Q3 results as rural demand woes continue

Bengaluru: Amid a rural slowdown in some parts and heightened competition in the fast moving consumer goods industry, sectoral bellwether Hindustan Unilever (HUL) on Friday reported a lower-than-expected set of numbers for the October-December quarter of financial year 2023-24.

The consumer goods player posted a 1 per cent growth in net profits at Rs 2,508 crore, against Rs 2,481 crore clocked in the corresponding period the year before. Meanwhile, revenue from operations saw a marginal growth of 0.5 per cent annually to Rs 15,781 crore during the quarter. 

The company registered an underlying volume growth of 2% during the third quarter and undertook meaningful price cuts in the fabric wash and skin cleansing categories, company’s senior management said during the post-earnings media briefing.

“We remain confident of the mid to long term potential of Indian FMCG sector and HUL remains well positioned to unlock this opportunity whilst navigating the short-term challenges,” HUL Managing Director and Chief Executive Officer Rohit Jawa said.

During the December quarter the company’s gross margins saw 4% year-on-year improvement, however they remain 2% short of pre-Covid levels, Chief Financial Officer Ritesh Tiwari underscored. Amid increasing competitive pressures, the company invested Rs 400 crore in advertising and promotional measures, he added.

“While the short-term performance was anticipated to be weak, and volume could be the primary driver for revenue growth in the near term, the company's dedication to innovation instils confidence in its long-term prospects,” said Neerav Karkera, who heads research at financial services provider Fisdom.

Even as the company continues to serve consumers across all price points, it remains focused on innovation to drive premiumisation across categories, the executives said.

“If at all the yields of winter crops are better and government spending continues to help recovery and with that the rural income growth picks up pace, that in our view will determine the pace of recovery of rural demand overall,” CFO Tiwari said.