For the past two years, Hindustan Unilever’s results have mostly shown weak demand, with urban consumers spending less and rural demand recovering only slowly.
HUL’s underlying volume growth, a measure of how many more products it sold rather than how much prices rose, was 7% in the September quarter. That is the highest since the June quarter of 2021. Underlying sales growth, which includes price increases, was 15%, the best in 14 quarters. Turnover reached ₹18,071 crore.
Those are strong numbers for India’s largest consumer goods company, particularly in a quarter when many companies said consumers were under pressure.
Profit flat
Profit attributable to shareholders rose only 3.9% to ₹2,790 crore, close to analysts’ estimate of about ₹2,784 crore. But the comparison is distorted. The year-ago quarter included a one-time tax gain of ₹273 crore. Excluding exceptional items, profit grew 9%.
The bigger issue is margins. EBITDA rose 8% to about ₹3,900 crore, while sales grew 15%. Costs are rising faster than revenue, which is a common pattern this season.
Palm oil, crude-based packaging, freight and other inputs have become more expensive because of the war in the Gulf. HUL appears to have chosen to keep growing volumes rather than raise prices fully to protect margins.
Investors noticed. The shares fell as much as 2.9% to ₹1,765.50 on Wednesday after the results.
Growth across the business
The growth was not dependent on one category. Home care, which includes Surf Excel and Vim, grew underlying sales 22% with double-digit volume growth.
Beauty and wellbeing grew 16%, also with double-digit volumes. Personal care grew 9%, helped by brands such as Pears and Dove. Foods grew 9%, mostly from price increases, but the segment’s profit rose almost 16% to ₹834 crore.
The board declared an interim dividend of ₹19 a share.
A different picture
HUL’s results contrast with those from Tata Consumer earlier this week, where tea volumes were flat and category demand fell about 6%. They also contrast with the mass-market weakness reported by Vishal Mega Mart and with cement makers whose profits have been squeezed.
One explanation is that HUL sells everyday household and personal care products that families buy regardless of conditions, and when budgets are tight, consumers tend to stick with known brands rather than try new ones. HUL’s large distribution network and marketing spending also help it gain share when smaller competitors struggle with higher costs.
What to watch
The question now is whether HUL can keep volumes growing while restoring margins. Management has said it is focused on growing profit through volume, which suggests it will keep prices competitive even if it means narrower margins for a while. With oil near $115 a barrel and the rupee weak, input costs are unlikely to fall soon.
For now, HUL’s results are a positive sign about Indian consumer demand, even if they were not as strong for profits.
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