Hindustan Unilever Limited (HUL), a leading FMCG company in India, reported a decline in its standalone net profit by 6% year-over-year (YoY) for the quarter ended March 2024. The company’s net profit stood at 2,406 crore, down from 2,552 crore in the same period last year.
HUL’s revenue from operations rose marginally by 2% YoY to 14,693 crore, primarily driven by a 2% volume growth. The Home Care (HC) segment grew by 1% YoY, while the Beauty & Personal Care (BPC) segment contracted by 2% YoY. The Foods & Refreshment (F&R) segment delivered a 4% YoY growth led by pricing.
At the operating level, HUL’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) declined by 1% YoY to 3,435 crore, resulting in an EBITDA margin contraction of 20 basis points to 23.1%. The company’s EBITDA margin was impacted by higher advertising and promotion (A&P) expenses, increased royalty payments, and the termination of the GSK consignment agreement.
Despite the challenging operating environment, HUL declared a dividend of 24 per share. The company’s management expressed cautious optimism about the future, expecting a gradual recovery in volume growth in FY25 driven by its own initiatives and an improvement in demand.
Analysts have provided mixed reactions to HUL’s Q4 results. Motilal Oswal believes that HUL’s volume growth has bottomed out and expects a gradual recovery in FY25. Antique Stock Broking, on the other hand, is more cautious, citing pricing pressures and competitive intensity as potential headwinds to margin expansion. JM Financial maintains a ‘Buy’ call on HUL shares, citing the company’s strong brand portfolio and distribution network.
At the time of writing, HUL’s share price was trading 1.51% lower at 2,225.00 apiece on the BSE.
