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Hindustan Unilever (LON:) (NSE:HUL), a prominent player in India’s FMCG industry and the Personal Care Products sector, is reducing prices on its products owing to falling raw material costs, as announced on Thursday. The price cuts are largely observed in single and multi-packs within the soap and laundry sectors, accompanied by consumer promotions and minor grammage recalibration, according to CFO Ritesh Tiwari. This strategic move aligns with InvestingPro Tips, which highlight that HUL has consistently increased its earnings per share and holds more cash than debt on its balance sheet.
In contrast, HUL has raised prices in areas such as coffee and the health food drinks (HFD) portfolio due to increasing raw material costs. This follows a series of price hikes implemented by the company over the last two years, primarily attributed to rising palm oil costs, which have led to a cumulative price growth of 25% in the FMCG market over three years. HUL’s ability to adapt its pricing strategy in response to market conditions is part of the reason why it has maintained dividend payments for 23 consecutive years, another noteworthy point from InvestingPro Tips.
Despite facing inflationary pressures, tepid rural demand, and advertisement expenditures, CEO Rohit Jawa maintains a cautiously optimistic outlook for future demand. This optimism is fueled by the forthcoming festive season and the government’s emphasis on capital expenditure. InvestingPro’s real-time data supports this optimism, showing a 44.1% revenue growth for HUL.
For the third quarter ending September 2023, HUL reported a topline growth of 4% to INR 15,027 crore ($2.02 billion), with about 2% volume growth and unchanged pricing growth. The company also disclosed a standalone net profit of INR 2,717 crore ($366 million) for the September quarter, marking a 3.86% year-on-year increase. InvestingPro data reveals a gross profit of $120.14M USD for the same period, further emphasizing the company’s financial health.
The EBITDA for the same period stood at INR 3,694 crore ($498 million), a rise of 9.4% YoY. Concurrently, HUL saw an improved EBITDA margin of 24.5%, up by 130 basis points YoY, demonstrating strength in its premium segment. This aligns with InvestingPro’s data, which shows an EBITDA growth of 32.59% for HUL.
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This story originally appeared on Investing
