HUL Q3 results key takeaways: Upbeat about pick-up in consumer sentiment, says management

While the home care sector was led by new product launches, the food & refreshments business was led by ketchups and soups categories. “Our Nutrition business too grew in double-digits as business returned to normalcy post restoration of disrupted supply lines. With relaunch as ‘Plus’ range from the house of ‘Horlicks’, we made strategic intervention into the high sciences space of adult nutrition. Ice Creams, Foods Solutions and Vending businesses are improving progressively as out-of-home consumption occasions increase,” the company said in a statement.

The company reported its October-December quarter results on Wednesday, clocking a 19 percent growth in net profit to Rs 1,921 crore, and a 20.9 percent growth in revenue to Rs 11,862 crore.

Domestic consumer growth (excluding the impact of merger of GSK CH and acquisition of ‘VWash’) grew at 7 percent , while beauty & personal care grew 9% led by skin cleansing, hair care and oral care. The company added that the obsessive demand for hygiene products such as sanitizers tapered off with the country opening up. However, the company expects to see continual demand on its hygiene and personal care segments on the back of behavioral changes brought about by the COVID1-9 pandemic.

With commodity prices, especially that of palm oil, crude and tea touching multi-year highs, the company expects some pricing challenges in the skin cleansing and tea categories, which it said are seeing unprecedented inflation levels. Tea saw double digit price hikes during the quarter, and a 2.5 percent  hike in the skin cleansing category. The company will also be hiking prices of its skin cleansing products by 2.5 percent  more. However, the company maintains that while it will pass on some of the hikes to consumers, it is looking to maintain a price value equation to capture consumer demand as the country is opening up. It expects to see some pressure on margins in the short term.

Mehta said, “Inflationary pressures are building up in select commodities and we will manage them judiciously. I am confident that we are very well positioned to capture the growth opportunities and accelerate momentum.”

On the innovation pipeline for the quarter, the company has charted a clear focus on consumer-relevant innovation, led by beauty & personal care and hair categories. It will also be dialing up innovation in the nutrition space. “Next 2-3 quarters will be about consumer relevant innovation,” the management added.

Commenting on the on-going legal battle with Sebamed over advertisements targeting its soaps, the company said that Sebamed has had no impact on volumes. Earlier this month, Skincare major Sebamed rolled out advertisements targeting the pH levels of HUL’s soap brands such as Dove, Lux and Pears, comparing them with Rin.