HUL Share Price Tanks Over 5% After Q2 FY25 Earnings Results

Hindustan Unilever’s (HUL) share price dropped over 5% on Thursday, October 24, 2024, after its second-quarter results fell short of market expectations. The stock fell by as much as 5.78% to ₹2,452.60 on the BSE.

Hindustan Unilever’s (HUL) consolidated net profit for the July-September quarter fell by 2.4% to ₹2,591 crore, compared to ₹2,668 crore in the same period last year, which was lower than expected. The company’s revenue grew 2.1% year-on-year to ₹16,145 crore.

During the earnings call, HUL management highlighted that this trend was seen across the entire consumer goods sector, not just HUL. The company plans to focus on volume-led growth and is prepared for further price increases to remain competitive.

HUL’s premium product portfolio performed better than its mass-market products, and the premiumisation trend was strong in rural markets, too, with expectations that it would continue.

HUL also announced the separation of its ice cream business, which includes brands like Kwality Walls, Cornetto, and Magnum and accounts for 3% of its revenue. CEO Rohit Jawa explained that while ice cream is a high-growth business, it requires significant investment and delivers lower margins. The decision aligns with parent company Unilever PLC’s earlier move to separate its global ice cream business.

HUL’s gross margins during the quarter decreased by 140 basis points to 51.6%, mainly due to rising raw material costs. To limit the impact on EBITDA margins, the company reduced advertising and promotion spending by 15%, resulting in a smaller EBITDA margin contraction of 50 basis points to 23.8%. Going forward, HUL plans to improve gross margins and increase advertising spending while introducing slight price hikes to support revenue and margins.

About Hindustan Unilever

Hindustan Unilever operates in the FMCG sector, focusing on Home Care, Beauty & Personal Care, and Foods & Refreshment segments. It has manufacturing facilities across India and mainly sells its products within the country. The company’s brands are available in over 8 million stores, and about 90% of Indian households use at least one of its products. India is the company’s main market, generating 96% of its revenue, while the remaining 4% comes from international sales. HUL is a market leader in various categories, including skin cleansing, skincare, hair care, fabric wash, household care, tea, health food drinks, and ketchup, dominating around 90% of its businesses.

On October 24, 2024, Hindustan Unilever Ltd’s share price opened at ₹2,647.00, touching the low of ₹2,452.60 as of 01:24 PM on the NSE.

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