Hindustan Unilever's Profit Drops by 3.86% in Q2, Announces Rs 29 Dividend and Ice Cream Business Separation
Hindustan Unilever Ltd (HUL) reported a 3.86% decline in its standalone net profit for Q2 2024, with earnings falling to Rs 2,612 crore. This comes as FMCG demand saw moderated growth, particularly in urban markets. HUL also declared a Rs 29 per share dividend for FY25 and announced the separation of its ice cream business. Despite the challenges, HUL maintained a healthy EBITDA margin of 23.8%, and its home care segment performed strongly, growing by 8%. However, food and refreshment and personal care segments saw declines.
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INDC Network : Business : Hindustan Unilever Ltd (HUL), one of India’s largest FMCG companies, has reported a 3.86% decline in standalone net profit for the second quarter of FY24, marking a fall to Rs 2,612 crore from Rs 2,717 crore in the same quarter last year. The decline is attributed to moderated FMCG demand, especially in urban markets, while rural demand showed slow recovery.
Despite the profit dip, HUL's total income for Q2 rose by 1.65%, reaching Rs 15,817 crore compared to Rs 15,559 crore a year ago. This modest growth reflects the overall challenging market conditions in the FMCG sector.
Dividend Announcement and Special Payout
To reward its shareholders, HUL declared an interim dividend of Rs 29 per share, including a special dividend of Rs 10. This will result in a total payout of Rs 6,814 crore for the financial year FY25. The company emphasized its strong financial model and well-funded operations as key drivers behind this substantial dividend.
Ice Cream Business Separation
One of the significant announcements from HUL this quarter was the decision to separate its ice cream business, which currently contributes around 3% to the company’s turnover. This move follows a recommendation by an independent committee after a thorough review of the business. The separation is aimed at enhancing operational focus and creating better growth opportunities for the segment.
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Business Segment Performance
In terms of business performance, HUL’s home care segment emerged as a strong performer, growing by 8% with high-single digit volume growth. The growth was broad-based, with both fabric wash and household care segments showing robust volume increases. The company’s liquids portfolio continued to outperform, registering strong double-digit volume growth.
However, HUL’s food and refreshment segment faced challenges, with a 2% decline in revenues and low-single digit volume decline. The company attributed this decline to weaker demand in certain categories.
Similarly, the personal care segment also struggled, registering a 5% decline, primarily due to negative pricing actions and low-single digit volume decline. The skin cleansing category saw a significant dip as a result of price adjustments made earlier in the year. Despite this, HUL’s premium portfolio performed well, with the body wash category continuing to grow in double digits, strengthening its leadership position in the market.
EBITDA Margin and Strategic Focus
HUL maintained a healthy EBITDA margin of 23.8%, even though the base quarter last year benefited from a one-off indirect tax credit related to past litigation, particularly in the beauty and well-being segment.
CEO and Managing Director Rohit Jawa commented on the quarter’s performance, stating, “FMCG demand witnessed moderated growth in urban markets, while rural continued to recover gradually. We delivered a competitive and profitable performance, focusing on our strategic priorities and maintaining strong EBITDA margins.”
Jawa further emphasized the company’s continued commitment to investing in aspirational brands, scaling market-making innovations, and maintaining operational discipline. He highlighted the importance of watching for gradual recovery in consumer demand, while also ensuring a competitive advantage through solid business fundamentals.
