Economic headwinds and inflationary pressure have taken a noticeable toll on one of India’s premier consumer goods companies. Hindustan Unilever Ltd. (HUL), a behemoth in the fast-moving consumer goods (FMCG) sector, has disclosed a 6% dip in its standalone net profit for the fourth quarter, recording ₹2,406 crore compared to ₹2,552 crore during the same period last year. When it comes to sales, the company observed a minor uptick, reaching ₹14,693 crore, an indicator of the challenging market conditions faced by consumers and businesses alike.
As the quarter concluded in March, HUL, the bellwether for FMCG players in the nation, revealed an Underlying Sales Growth (USG) of 1% and an Underlying Volume Growth (UVG) of 2%. These figures reflect several intertwined factors: a general downtrend in consumption, a lack of notable price increases, and the urban market outperforming its rural counterpart in terms of growth. The concept of USG encompasses the turnover increase, sans any changes stemming from acquisitions, disposals, etc., while UVG accounts for volume growth, inclusive of a mix impact when considering the turnover realization for the products sold.
A segment-by-segment breakdown has the Beauty and Personal Care category facing a contraction of 2% in its USG, despite maintaining flat volumes. Interestingly, the premium products in HUL’s portfolio have outperformed the broader market. Home Care witnessed moderate growth of 1%, with a mid-single-digit surge in UVG. This segment, encompassing Fabric Wash and Household Care, experienced volume growth driven by the strong performance in premium offerings, and consistently noted a year-over-year decline in price due to strategic actions taken throughout the year by the company.
In the realm of Foods and Refreshment, the situation looked slightly brighter with a 4% USG, coupled with steady volume development. As we zoom out to view the financial year as a whole, HUL posted a net profit increase of 1.52%, climbing to ₹10,114 crore from the preceding year’s ₹9,962 crore. Top-line growth for the fiscal year was reported at 2.45%, tallying up to ₹59,579 crore.
Rohit Jawa, the CEO and Managing Director of HUL, expressed a measured yet optimistic outlook in light of these figures. “In FY24 we delivered a resilient performance with 3% USG,” he remarked. Peering into the future, Jawa projects a gradual improvement in consumer demand, bolstered by the anticipation of a normal monsoon and improving macroeconomic indicators. Considering India’s growing affluence, relatively underdeveloped but promising FMCG consumption, and a robust digital infrastructure, Jawa’s confidence in the medium to long-term potential of the Indian FMCG sector remains unshaken.
To cap the announcement, HUL’s Board laid out a proposition of a final dividend of ₹24 per share. This, in conjunction with an interim dividend of ₹18 per share disbursed earlier, results in an annual dividend payout of ₹42 per share. When put against the previous fiscal year, this marks an 8% increase, a clear signal that, in spite of the economic hurdles, HUL remains dedicated to delivering value back to its shareholders. As India navigates the choppy waters of inflation and economic shifts, the responses and strategies of industry leaders like HUL will be a key narrative to follow.
