HUL Q2 Results: Net profit drops 4% to ₹2,612 crore, dividend declared; 5 key highlights

HUL Q2 Results: Hindustan Unilever Limited (HUL) announced its July- September quarter results for fiscal 2024-25 (Q2FY25) on Wednesday, October 23, reporting a four-per cent drop in its standalone net profit to ₹2,612 crore due to higher expenses amid a slowdown in the urban markets, compared to ₹2,717 crore in the corresponding period last year.

The fast-moving consumer goods (FMCG) giant's total revenue from operations in the second quarter of the current fiscal rose nearly 1.5 per cent to ₹15, 508 crore, compared to ₹15,276 crore in the year-ago period.

Also Read: HUL highlights demand slowdown in urban markets, bets on rural relief

“In the September quarter, FMCG demand witnessed moderating growth in urban markets while rural continued to recover gradually. In this context, we delivered a competitive and profitable performance. We continued executing our strategic priorities of transforming our portfolio whilst generating healthy EBITDA margin and cash flows, providing attractive returns to our shareholders,” said Rohit Jawa, CEO and Managing Director, HUL.

“We remain watchful of a gradual recovery in consumer demand while creating a sustained competitive advantage through our business fundamentals: investing behind our aspirational brands, scaling market-making innovations and maintaining operational rigour,” added Jawa.
 

Here are 5 key highlights of HUL Q2 Scorecard

1.P&L Account: Sales, volumes

India’s biggest household products maker's net profit fell in the September quarter amid a lingering spell of weak consumer goods demand. Revenue from product sales was up 2.36 per cent to ₹15,703 crore in the September quarter, from ₹15,340 crore in the year-ago period. The profit miss comes amid a downturn in sales of everything from snacks and coffee to cars in India. 

Also Read: Unilever’s ice-cream business hive-off: Should HUL follow its parent’s exit?

The seller of Dove soap to Knorr soup is betting on demand in India’s rural areas, outpacing urban centres to help support sales. Rural incomes have improved over ample monsoon in the past few months. Rural demand has gathered pace over the last three quarters, including the July-September period, overtaking growth in urban pockets, which accounts for two-thirds of HUL's revenue.

HUL owns power brands such as Surf, Rin, Lux, Pond's, Lifebuoy, Lakmé, Brooke Bond, Lipton, and Horlicks. HUL, regarded as a bellwether of local market sentiment, reported underlying sales growth of two per cent and underlying volume growth of three per cent. HUL's total expenses were ₹12,581 crore in the September quarter, up 3.03 per cent year-on-year (YoY) due to higher tea and crude oil prices weighing the bottom line.

The Dove soap maker's earnings before interest, tax, depreciation, and amortization (EBITDA) for the September quarter were Rs. 3,647 crore, down 1.3 per cent from ₹3,694 crore in the year-ago period. The EBITDA margin of 23.5 per cent declined by 70 basis points from 24.2 per cent last year.

Also Read: HUL Q2 Results Preview: Net profit, revenue likely to remain flat on muted demand; volume growth seen at 5%
 

2.Dividend

The board of the Indian unit of Unilever Plc approved an interim dividend of ₹19 per share for the year ending March 31, 2025 (FY25). HUL board also declared a special dividend of ₹10 per share, resulting in a total dividend payout of ₹6,814 crore. The interim dividend's record date is November 6, and the purpose of the dividend payment is November 21, 2024.

“The board declared a total interim dividend of Rs. 29 per equity share of the face value of Re. 1 each (which includes a regular interim dividend of Rs. 19 and a special dividend of Rs. 10 per equity share) for the financial year ending March 31, 2025. The record date to determine the entitlement of the shareholders for the interim dividend has been fixed as November 6, 2024, and the dividend will be paid to the shareholders on November 21, 2024,” said HUL in a regulatory filing to the stock exchanges on Wednesday.

3.Ice cream biz to be separated, ‘Pureit’ to be divested

As part of a portfolio restructuring, HUL will carve out its ice cream business, which accounts for three per cent of its revenue. This aligns with parent company Unilever’s plans to separate its global ice cream business across jurisdictions. The portfolio restructuring will enable the company “to sharpen focus on the core business categories and further strengthen its play in trending demand spaces such as Beauty, Foods, Health and Wellbeing,” said HUL in a statement. 

Also Read: Extremely clear that market is facing muted demand, says Nestle India chairman

HUL said it will decide the separation mode by the end of this year. This follows its UK parent's decision to spin off its ice cream unit, home to the Magnum and Ben & Jerry's brands. HUL's ice cream business—which has brands such as Kwality Wall's, Cornetto, and Magnum—maintained its volume vis-à-vis last year.

At their meeting on July 15, 2024, the Board of Directors approved the sale and divestment of HUL's water purification business, carried under ‘Pureit’ and subject to customary closing conditions. "Accordingly, the relevant assets and liabilities have been classified as held for sale as of September 30, 2024," said HUL in its exchange filing.

4.Vertical growth

In the September quarter, HUL's revenue from the Home Care segment grew 8 per cent to ₹5,731 crore. "Growth was broad-based, with both fabric wash and household care growing volumes in the high-single-digit range. Liquids portfolio, with strong double-digit volume growth, continues to outperform," said HUL.

Also Read: Investors shy away from FMCG stocks but embrace quick commerce platforms: Why?

HUL strengthened its liquids segment by expanding Rin liquid and forayed into the floor cleaner market with a superior product under the Vim brand. The Beauty & Wellbeing segment also reported a growth of 2.51 per cent to ₹3,421 crore led by a "mid-single digit" underlying volume growth.

"Hair Care continued its growth momentum and grew in high-single digits, led by outperformance in Sunsilk, Dove, and Tresemme. Skincare and Colour cosmetics delivered a mid-single-digit growth. Premium Skin portfolio maintained its double-digit growth trajectory," it said.

HUL's personal care business declined five per cent to ₹2,411 crore in the September quarter, as against ₹2,536 crore a year ago. This was due to "negative pricing and low-single-digit volume decline," said HUL. The skin cleansing business, in which HUL operates with brands Lux, Dove, and POND'S, declined primarily due to pricing actions taken during the year. 

"Premium portfolio grew ahead of the segment, and within that bodywash, it continued to strengthen its market leadership with high double-digit growth. Oral Care (Pepsodent) delivered a competitive high-single-digit growth led by Closeup," it said.

Similarly, HUL's revenue from Foods & Refreshment was down 1.24 per cent to ₹3,803 crore due to a "low-single-digit volume decline". "Tea continued to cement its market leadership through value and volume share gains. Green and Functional tea maintained strong volume growth; however, overall category volumes remained subdued. Coffee grew in double-digits," said HUL.

Nutrition drinks as Horlicks continued to gain market share while consumption remained subdued. "Foods (such as Kissan and Knor brands) saw low-single-digit volume growth. Strong volume growth in Food Solutions, Mayonnaise, Peanut Butter, and International sauces continued on the back of market development actions, range extensions and distribution expansion," it said. HUL revenue from 'Other Segment', which includes Exports, Consignment, etc was down 5.24 per cent to ₹560 crore.

5.Change in management

In a separate exchange filing, HUL informed that its Executive Director, Legal, Corporate Affairs and Company Secretary Dev Bajpai had requested early retirement from the services by the end of this year. Hence, the HUL board has approved the appointment of Radhika Shah to succeed Bajpai, effective January 1, 2025. Ahead of the announcement of Q2FY25 results, shares of HUL settled 0.90 per cent lower at ₹2,658 apiece on the BSE.