HUL becomes 1st FMCG co to hit Rs 50k cr biz for full yr, Q4 net up 9%
MUMBAI: Hindustan Unilever (HUL) has reported a 9% increase in standalone net profit to Rs 2,327 crore in the fourth quarter ended March 31, 2022, while turnover grew 10% to Rs 13,910 crore. The surge was entirely driven by price increases as volume growth was flat in a quarter marked by an unprecedented inflation mainly due to geopolitical situations.
The volume growth in the corresponding quarter (Q4) of the previous year was 16%. Overall gross margin during the quarter under review compressed year-on-year by 331 basis points (100bps = 1 percentage point). However, the company said it grew significantly ahead of the market, gaining value and volume shares in more than 75% of its portfolio.
Also, ebitda (earnings before interest, taxes, depreciation & amortisation) margin was at a healthy 24.6% despite very high inflationary headwinds. For the fiscal 2021-22, HUL’s turnover crossed Rs 50,000 crore — making it the first pure-play FMCG company to do so — clocking a growth of 11% with an underlying volume growth of 3%.
HUL CEO & MD Sanjiv Mehta said, “In challenging circumstances, we have grown competitively and protected our business model by maintaining margins in a healthy range. Our consistent performance is reflective of our strategic clarity, strength of our brands, operational excellence, and dynamic financial management of our business. While there are near-term concerns around significant inflation and slowing market growth, we are confident of the medium- to long-term prospects of the Indian FMCG sector.”
At a media meet, Mehta said, “It is a pretty volatile environment. Coming out of the pandemic, the country was doing a great job recovering the economy, but it was still recovery under way. This fiscal year, we have more or less the same size of the economy which was there two years back. Then we have this headwind of inflation. These are variables we can’t control.
The only thing we can do is, as a business, how do you navigate this choppy weather? We have added Rs 5,000 crore in a year.” Net material inflation over the last two years has been 4.5x. HUL CFO Ritesh Tiwari said, looking ahead, the near-term operating environment remains challenging, and as inflation is impacting volumes, growth will be predominantly price-led.
“We expect more inflation sequentially. We will dynamically manage our business. We will continue to drive savings harder and take calibrated pricing actions while protecting and growing our consumer franchise. Our margins will decline in the short term as price versus cost gap increases. However, the strength of our brands and robust business model will hold us in good stead. We are confident of outpacing FMCG market growth and recovering our margins in a phased manner,” said Tiwari.
Quoting Nielsen’s estimates for the FMCG industry, Mehta said the sector in the last three months grew 1% in value while the volume growth declined by 8%. The rural economy, said Mehta, could revive on the back of better yields in terms of price from selling agri produce.
He said if geopolitics starts settling down, so would commodity prices, thus resulting in a better growth in the second half of the calendar year. Category wise, home care grew at 24%, beauty & personal care at 4% and food & refreshments at 5% during the quarter.