GuruFocus -
- Turnover: INR15,319 crores.
- Underlying Sales Growth: 2%.
- Underlying Volume Growth: 3%.
- EBITDA Margin: 23.8%.
- Profit After Tax Before Exceptional Items: Declined 2%.
- Interim Dividend: INR19 per share.
- Special Dividend: INR10 per share.
- Total Dividend Payout: INR6,814 crores.
- Gross Margin: 50.4%, declined 150 bps year-on-year.
- Home Care Segment Growth: 8% underlying sales growth.
- Beauty & Wellbeing Segment Growth: 7% intrinsic growth.
- Personal Care Segment Decline: 5% with a single-digit decline in volumes.
- Foods and Refreshment Segment Decline: 2% USD decline.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Hindustan Unilever (LON:ULVR) Ltd (BOM:500696) reported a competitive performance with a turnover of INR15,319 crores and underlying sales growth of 2%, driven by an underlying volume growth of 3%.
- The company's EBITDA margin remained healthy at 23.8%, demonstrating strong operational efficiency.
- The Board approved an interim dividend of INR19 per share, along with a special dividend of INR10 per share, indicating a total payout of INR6,814 crores, reflecting a commitment to shareholder returns.
- Hindustan Unilever Ltd (BOM:500696) has made significant progress in strengthening its competitive position, with market share gains in recent months.
- The company is actively investing in brand development and innovation, with successful campaigns and new product launches in segments like beauty and wellbeing, which are showing strong growth.
- Market volume growth trajectory remained muted, with urban growth moderating and rural growth recovering gradually.
- The company faced a decline in profit after tax before exceptional items by 2% on a reported basis.
- There was a decline in the personal care segment by 5%, with a single-digit decline in volumes, indicating challenges in this category.
- The foods and refreshment segment experienced subdued performance due to continued downgrading in tea and muted consumption in nutrition drinks.
- Hindustan Unilever Ltd (BOM:500696) is facing challenges with commodity price increases, particularly in crude palm oil and tea, which could impact future pricing strategies.
A: Ritesh Tiwari, CFO, explained that the ice cream business, which constitutes about 3% of HUL's turnover, is high growth but also high investment and low margin. The separation will allow the ice cream business to operate with greater flexibility and enable HUL to focus on core areas like beauty, food, and health. The decision was supported by an independent committee and aims to maximize shareholder value while minimizing business disruption.
Q: How is HUL addressing the current inflation in commodities like crude palm oil and tea, and what is the strategy for pricing?
A: Ritesh Tiwari stated that HUL is taking calibrated pricing actions to manage the persistent inflation in commodities. The company aims to maintain a competitive price-value equation while ensuring competitive volume growth. They plan to pass on the net inflation, after savings, to consumers in a measured manner.
Q: What is the outlook for the FMCG market, particularly in urban and rural areas?
A: Rohit Jawa, CEO, noted that urban growth has moderated while rural growth is gradually recovering. The company is focusing on areas with growth potential and investing in brand strength and market development. They expect the market to eventually revert to its mean growth rate, driven by both price and volume.
Q: How is HUL's new soap formulation performing in the market, and what are the expected outcomes?
A: Ritesh Tiwari mentioned that the new soap formulation, which uses less palm oil and includes more beneficial ingredients, has received encouraging feedback. The company expects to see the full impact of this change over the next couple of quarters, with early signs indicating positive consumer reception and sequential sales growth.
Q: What is the impact of quick commerce on HUL's distribution strategy, and how does it affect market share?
A: Rohit Jawa explained that quick commerce is a small but growing part of HUL's e-commerce strategy, serving specific consumer needs for convenience. The company maintains a competitive market share in this channel, which mirrors its general trade market share. HUL is focused on ensuring competitiveness across all channels, including quick commerce.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.