Categories Concall Highlights, Consumer, Earnings

Hindustan Unilever Ltd Q2 FY24 Earnings Conference Call Insights

Key highlights from Hindustan Unilever Ltd (HINDUNILVR) Q2 FY24 Earnings Concall

  • Q2 Performance
    • HUL crossed INR 15,000 crores quarterly turnover for the first time.
    • Underlying sales growth was 4% with volume growth around 2.5%.
    • EBITDA margin improved 130 bps to 24.6% year-on-year.
    • PAT before exceptional items grew 12% and EPS grew 4%.
  • Market Share Trends and Focus Areas
    • Gained share in over 60% of business by value.
    • Continues to gain volume share in over 75% of business.
    • Some losses in value shares in mass segments of portfolio.
    • Grow core brands through product superiority and execution.
    • Transform parts of portfolio through on-trend spaces in Beauty and Foods.
    • Execution and tailoring portfolio through design for channel approach.
    • Reset cost base through net revenue management programs.
  • Macro Environment
    • Demand trends stable, market growing high single digits.
    • Rural demand remains subdued, urban and modern trade leading.
    • Price growth moderating as input costs have declined.
  • Skin Care And Color Cosmetics Growth
    • Double-digit growth driven by brands like Ponds, Lakme, and Indulekha.
    • Extending brands into new growth spaces like sun care and serums.
    • Innovating in formats like face washes with Simple.
  • Focused Interventions In New Demand Spaces
    • Targeting new formats like serums and masks that are growing fast.
    • Entering new spaces like hydration and sun protection.
    • Leveraging channels like e-commerce for growth.
  • Rural Demand
    • Rural volume growth improved to 8% this quarter vs -6% last year, but still below pre-pandemic levels.
    • Inflation moderating leading to more disposable income and FMCG expenditure in rural areas.
    • Uneven monsoon and its potential impact on kharif harvest and rabi sowing are risks.
  • Resurgence Of Small/Local Players
    • Seen in categories like detergent bars and tea as commodity prices softened.
    • Small players growing faster than larger players.
    • HUL over indexed in premium segments, so mass segment growth impacts overall value growth.
  • Tea Business Performance
    • Saw downgrading trend from premium tea to mass/loose tea.
    • Loose tea prices fell more than premium tea prices.
    • Led consumers to switch to cheaper loose tea options.
    • Impacts HUL more as premium tea player.
  • Volume Growth Outlook And Pricing Actions
    • Gradual recovery in volumes expected as high inflation moderates.
    • Supporting factors: Inflation moderating, upcoming festive season, resilient urban income growth.
    • Taken price cuts in skin cleansing and laundry categories this quarter.
    • Expect marginally negative price growth in near term if costs remain stable.
  • A&P Spending
    • Currently at 11.4% of sales versus 7.2% last year.
    • Principles: Share of voice ahead of market share, frequency and reach objectives.
    • Will remain firm given competitive intensity and support growth.

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