StoxBox: Views on Hindustan Unilever Q4 FY24 Result

Hindustan Unilever posted a weak performance as major metrics decline further during the quarter due to subdued consumption trends, bumpy weather patterns and lack of commodity price growth not just in the quarter but over the fiscal. Volume growth across segments continued to remain subdued, with low to negative single digit growth. The demand in rural areas remained under stress due to the inflationary environment, uneven weather patterns and intense competition from the local and regional players. As in the previous quarter, the premium segment has been doing well compared to the mass segment which we believe should continue in future owing to higher disposable income with urban population. The beauty and personal care divisions had the highest margins amongst segments, as consumers continue to prefer premium goods to mass-produced ones. We believe that the easing consumer price inflation and the company’s shift in focus towards high growth areas by changing its portfolio mix would help in price support and aid demand recovery in future. We remain optimistic on the company from a medium to long term perspective, owing to an-above-normal monsoon forecast, normalization of rural wages and comfortable valuation vis-à-vis historical averages.

Hindustan Unilever Ltd. Q4FY24 Result First Cut – Lacklustre performance; Expectations of volume recovery ahead

  • Hindustan Unilever Ltd. posted consolidated revenues of Rs. 14,693 crores (down 1.5% QoQ / up 0.4% YoY) which missed market estimates of Rs. 14,913 crores. This was primarily due to slow down across segments.
  • The company reported consolidated EBITDA of Rs. 3,435 crores (down 2.9% QoQ / down 1% YoY).
  • The company reported an EBITDA margin of 23.4% in 4QFY24 compared to 23.7% posted in the previous quarter and 23.7% in the year ago period. The gains in gross margin on the back of net productivity and mix improvement was offset by increase in digital spends, higher employee benefit expenses and an increase in other operating income.
  • PAT stood at Rs. 2,406 crores compared to Rs. 2,541 crores in the previous quarter and Rs. 2,552 crores in Q4FY23. PAT came marginally lower than the street estimates of Rs. 2,462 crores.
  • The homecare segment reported a segmental margin of 19%, while the underlying sales grew by 1% and volume growth experienced mid-single-digit volume growth. Both fabric wash and household care sub-segments reported mid-single digit volume growth and had negative price growth on account of pricing actions taken earlier.
  • The BPC segment reported a negative sales growth of 2% and flat volume growth. However, it reported a segmental margin of 26% which is the highest amongst segments. Hair care and Oral care categories performed better than skin care & colour cosmetics and skin cleansing sub-segments.
  • The food and refreshment segment reported a 19% segmental margin. The sales grew the highest at 4% driven by pricing, while volume growth remained flat during the quarter. Functional nutrition drinks and ice-cream categories delivered high-single digit and double-digit growth, respectively. In beverages sub-segment, tea saw some downtrading while coffee portfolio continued to perform well. Foods category posted mid-single digit growth on strong performance from soups and food solutions categories.
  • The company announced a final dividend of Rs. 24 per share.

Disclaimer: This press release serves for informational purposes only and does not constitute professional advice. Any reliance on the information provided is at the reader’s discretion.

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