FMCG giant Hindustan Unilever (HUL) said on Thursday it was difficult to assess consumer demand and growth in these unprecedented times and added there could be further disruption ahead.
Chairman and MD Sanjiv Mehta told mediapersons it was hard to say when the recovery would set in. He further said operations, which had come to a near standstill after the countrywide lockdown, were slowly ramping up and were close to 75-80% of the normal levels. However, he said it was not clear to what extent trade pipelines had shrunk, to what extent demand had been impaired and the reasons for that.
“We need to wait till normalcy returns to get a sense of what is happening to demand,” Mehta said.
Hit by the countrywide lockdown following the outbreak of the corona virus pandemic, HUL reported a sharp 7% contraction in volumes for the three months to March.
Revenues for the quarter were down 9% y-o-y at Rs 9,011 crore lower than consensus estimates. The company’s net profits saw a slight fall to Rs 1,519 crore as the operating profit margin came in at 22.9%, down 160 basis points y-o-y leaving the operating profit lower by 15% y-o-y at Rs 2,065 crore.
CFO Srinivas Phatak said the macroeconomic scenario has been challenging for some time now, even prior to the outbreak of Covid-19. “The slowdown in market growth was visible in the first two months of the quarter with a greater deceleration in both discretionary spends and in rural areas,” he said.
Given the market had grown by about 2%, Phatak said HUL was gaining share and it would be reasonable to expect that it had grown by about 3% in the quarter.
Half of the 9% fall in revenues, he explained, could be attributed to reduced stock levels at distribution locations and the rest to lower stocks with retailers and loss of consumer demand.