HUL Q3 Results: Management says operating environment challenging after 2% volume growth

Hindustan Unilever Ltd. reported volume growth of 2% for the October to December quarter, which was flat on a sequential basis and was lower than the 5% volume growth it reported during the same period last year.

A CNBC-TV18 poll had projected HUL's volume growth to be between 2% and 3%.

The company in its investor presentation mentioned that the operating environment remains challenging.

India's largest consumer goods company said that there has been a gradual recovery in volumes, albeit on a soft base and while urban markets continue to remain resilient, rural remains subdued.

HUL reported a net profit of ₹2,519 crore, which was lower than the CNBC-TV18 poll of ₹2,655 crore. On a year-on-year basis, the bottom line was up 0.6%.

Revenue for the quarter stood at ₹15,188 crore, compared to the CNBC-TV18 poll of ₹15,385 crore. Even on a year-on-year basis, HUL's revenue was nearly the same as the December quarter last year.

EBITDA or Earnings Before Interest, Tax, Depreciation and Amortisation was at ₹3,540 crore, which was marginally lower than the ₹3,695 crore projection from the poll.

EBITDA margin rose by 10 basis points from last year to 23.3% but missed expectations of 24% by 70 basis points.

Among the various business segments, the Home Care business saw revenue decline 1.3% from last year, but the EBIT fell 9%. Even the EBITDA margin of the home care business was under pressure, falling 150 basis points from last year to 17.7%.

Beauty and Personal Care segment's revenue remained flat from last year, while EBIT increased by 2%. Margins of the BPC segment grew by 50 basis points to 25.6% from 25.1%.

Volume growth for the beauty and personal care business grew in mid-single-digits led by hair and premium skin businesses. The skin cleansing business declined from last year due to price cuts, while the oral care business grew in mid-single digits led by Closeup.

Shares of HUL had ended 0.8% higher at ₹2,567 ahead of the quarterly results.