Hindustan Unilever Limited (HUL), India's leading fast-moving consumer goods company, has reported a 5% year-on-year growth in consolidated turnover for the quarter ended June 30. The company's performance was driven by a 4% increase in underlying volume growth, demonstrating resilience in a gradually recovering market environment.

Financial Highlights

HUL's consolidated turnover stood at Rs. 16,323.00 crores. The company's EBITDA margin was 22.80%, down 130 basis points year-on-year, reflecting strategic investments across various lines of the profit and loss statement. Despite the margin compression, the company's Profit After Tax (PAT) grew by 6%, primarily due to a re-estimation of certain tax provisions pertaining to prior years.

Segment Performance

The company witnessed varied performance across its business segments:

• Home Care: Delivered robust volume growth with a 4% Underlying Sales Growth (USG), driven by high single-digit Underlying Volume Growth (UVG).
• Beauty & Wellbeing: Achieved a 7% USG with low single-digit UVG, supported by strong performance in premium brands and market share gains in e-commerce.
• Personal Care: Grew 6%, primarily driven by pricing actions.
• Foods: Reported a 5% USG with mid-single-digit UVG, led by double-digit growth in the Beverages portfolio.

Strategic Investments and Portfolio Transformation

HUL continues to invest strategically in its business, focusing on portfolio transformation and future-readiness. The company has shifted approximately 500 basis points of its portfolio towards Future Core and Market Makers categories over the past two years. This shift aligns with evolving consumer preferences and high-growth segments.

Leadership Transition

HUL announced a significant leadership change. Rohit Jawa, who has served as CEO and Managing Director for the past two years, will be stepping down. Priya Nair, who returns to HUL after leading Unilever's Global Beauty & Wellbeing Business, will succeed Jawa as the new CEO and Managing Director.

Acquisitions and Business Expansion

HUL completed the acquisition of Minimalist, a skincare brand, for Rs. 2,706.00 crores. The company is focusing on leveraging synergies in R&D, supply chain optimization, international expansion, and offline distribution scale-up for Minimalist.

Additionally, HUL's health and wellbeing brand OZiva has shown remarkable growth, tripling its turnover year-on-year and reaching an annual recurring revenue of Rs. 450.00 crores.

Outlook

HUL expects the first half of the current fiscal year to perform better than the second half of the previous fiscal year. The company anticipates low single-digit price growth if commodity prices remain within the current range. HUL remains committed to driving competitive volume-led growth while maintaining its EBITDA margin guidance of 22-23%.

Rohit Jawa, outgoing CEO and Managing Director, commented on the results: "We have delivered a competitive performance this quarter with an Underlying Sales Growth of 5% driven by an Underlying Volume Growth of 4%. Our strategic focus on portfolio transformation and investments in future-ready capabilities positions us well to capitalize on the gradual recovery in consumer demand."

As HUL navigates through a changing market landscape and internal transitions, the company remains focused on long-term value creation for its shareholders while adapting to evolving consumer needs and market dynamics.

Hindustan Unilever Limited (HUL), India's largest consumer goods maker, has ushered in a new era with Priya Nair taking the helm as CEO on August 1. Nair's appointment marks a historic moment as she becomes the first woman to lead the company. However, she steps into the role facing a landscape of significant challenges that have been impacting HUL's performance.

Market Challenges

HUL has been grappling with several key issues:

• Sluggish volume growth
• Market share losses to local brands
• Underperforming stock returns

The company's stock has seen a modest 4.00% increase over the past three years, a stark contrast to the benchmark index's impressive 42.00% surge during the same period. This underperformance highlights the hurdles HUL faces in maintaining its market dominance.

Financial Performance

Despite the challenges, HUL has shown resilience in its financial results. The company recently posted quarterly profits that exceeded forecasts, demonstrating its ability to maintain profitability. However, the broader picture reveals ongoing struggles:

• Tepid sales growth
• Consumer demand slowdown, particularly in urban markets
• Urban markets contribute two-thirds of HUL's sales

Competitive Landscape

The beauty and personal care segments, key areas for HUL, have seen intensified competition:

• Local startups like Mamaearth are gaining ground
• Global rivals such as L'Oreal are increasing their market presence

This heightened competition puts pressure on HUL to innovate and adapt to changing consumer preferences.

Leadership Transition

Priya Nair brings valuable experience to her new role:

• Previously served as president of the beauty unit at Unilever (HUL's parent company)
• Held the position of Global Chief Marketing Officer at Unilever

Her appointment has been well-received by the market:

• The CEO change announcement triggered a stock rally
• Three brokerages upgraded their ratings for HUL
• 17 analysts raised their price targets for the company

Strategic Focus

Unilever's global CEO has indicated a strong commitment to the Indian market:

• Plans to invest disproportionately in India
• Recognizes India as Unilever's second-largest market by revenue
• Acknowledges India as Unilever's largest market by volume

As Priya Nair takes charge, she faces the task of navigating HUL through these challenges while capitalizing on the company's strengths and the parent company's support. Her leadership will be crucial in revitalizing growth, reclaiming market share, and adapting to the evolving consumer landscape in India's competitive FMCG sector.