HUL remains skeptical about rural demand even after Q2; says, trusts govt to improve agrarian wages

FMCG major Hindustan Unilever Limited remained sceptical about the revival of rural demand in the near future despite posting a double-digit profit rise on-year.

Written by Prachi Gupta

October 15, 2019 11:01 IST

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FMCG major Hindustan Unilever Limited remained sceptical about the revival of rural demand in the near future despite posting a double-digit profit rise on-year. “The near-term outlook for demand especially in rural India remains challenging,” HUL said announcing its Q2 results. However, the company has put hopes in the government to improve rural incomes as the same is likely to spur demand for FMCG companies. Despite the slowdown in Indian consumer goods industry and acknowledging the “short-term challenges”, the British-Dutch company is bullish about the potential of the FMCG segment and said that it is “well-positioned” to leverage the same.

Indian companies have been reeling under a demand slowdown for close to nine months now owing to various reasons including liquidity crunch, unemployment, low rural income and a general downbeat in consumer sentiment. However, HUL said that the various measures announced by the government and the apex bank body will likely spur investment and improve liquidity.

Premium fabric wash, skincare lever sales

As India has seen an economic slowdown this year, fast-moving consumer goods makers have also been a victim of the same as they witnessed sluggish sales growth. However, for HUL, certain categories have helped lever the sales including the recent launch in fabric wash category called Love & Care. “Household Care continued its growth momentum helped by up-gradation and increase in penetration,” HUL said. The company also did well in the skincare segment with double-digit growth and said that Ice cream and Frozen Desserts categories saw a “robust growth trajectory”.

Major takeaways from Q2 result

HUL’s revenue stood at Rs 9,852 crore, witnessing a jump of 6.69%.
HUL reported EBITDA at Rs 2443 crore which has improved by 21%.
The FMCG major said that PAT rose by double-digit 20% at Rs 1832 crore. After incorporating the corporate rate cuts, profit after tax increased by 21% to Rs 1848 crore.
HUL’s interim dividend stood at Rs 11 per share for the year ending 31st March 2020.
HUL, which is one of the leading FMCG companies in India, has reported volume growth of 5% while the same stood at 10% in the comparable period a year ago.