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.