Hindustan Unilever has reported a 1 per cent rise in net profit in the December quarter at ₹2,508 crore, against ₹2,481 crore logged in same period last year, on the back of weak demand and price cuts taken in certain product categories.
Overall income was flat at ₹15,781 crore (₹15,707 crore), on the back of intense competition in the mass product categories. The company reported an underlying volume growth of 2 per cent. The homecare, beauty and personal segments form 75 per cent of its business, and the company said it was continuing to see volume recovery with a mid single-digit underlying volume growth. The segments have seen 2 per cent swing in demand with two-year CAGR in this segment increasing from negative 1 per cent in September quarter and 1 per cent in December quarter, said CEO Ritesh Tiwari.
The homecare segment registered a decline in revenue. EBITDA margin was up 0.10 per cent to 24 per cent.
Sales volume in skincare and colour cosmetics declined, compared to last year, due to lower disposable income and delayed winter, while market development actions in bodywash continue to yield good results.
Volume-led double-digit growth saw with broad-based performance across brands. Future formats, including serums, masks and conditioners continue to gain traction, said the company.
Ritesh Tiwari, CEO, Hindustan Unilever, said the company expects rural demand recovery to be gradual as the pressure on inflation eases and the government focusses on improving rural income, even as the demand in urban market bounces back faster.
Rural income will depend on winter crop yields and will be a key factor that will determine the pace of recovery, he said.
The demand for premium products in the urban areas are growing faster and the company’s focused spends on premium products acorss categories has paid of well, he added.
The gross margin are still 2 per cent lower than pre-Covid levels even though it has improved 4 per cent pre-inflationary period, he added.
Rohit Jawa,Managing Director, Hindustan Unilever said the company had run the pilot on revised volume-based distributor commission for one year before rolling it out across 130 centres in last three months and it was targeted to help distributors earn more commission.
Overall, the response from the distributors has been very encouraging and stoppage of distribution by few in certain market had no much impact on the company, he added.
The company is clearly geared up to face intense competition from other brands in the general category and recent price cuts has helped sustain growth in this category even while modern trade is growing faster, said Jawa.