Latest news with #HindustanUnileverLtd
Mint
2 days ago
- Business
- Mint
FMCG stocks face margin pressure. Here's why
The fast-moving consumer goods (FMCG) sector is seen as a favourite among investors due to its stable cash flows and performance even in turbulent times. But recently, FMCG companies have been facing a new wave of margin pressure. From rising input costs to subdued demand, multiple forces are compressing the profitability for companies, and the markets are taking notice. Market acknowledgement of this fact is reflected in the performance of the FMCG index. Looking at the broader markets over the past year, the Nifty FMCG index rose 0.96% as compared to a 9.06% increase in the Nifty50. Here's a closer look at why FMCG stocks are under margin pressure right now. Reasons for Margin Pressure At the core of the problem is cost inflation. Sharp price rise in key raw materials- especially palm oil, wheat, maida, potato, cocoa, tea, etc, have pressured margins and have made it necessary for the companies to raise the prices. But companies can pass on these costs through price hikes only to some extent. The confluence of a few macro factors further impacted the margins, which have pushed global commodity prices higher. These factors are: geopolitical disturbances due to the Russia-Ukraine war, the Israel-Hamas war, and reciprocal trade tariffs by the US. Slowdown in various advanced economies, including the US and the UK, and climate change (untimely monsoon, floods, droughts) are the other factors. Managements of various top FMCG giants have highlighted the uncertainty in input costs and remain cautious in their margin guidance in the recent investor presentations. The management of Hindustan Unilever Ltd (HUL) revised FY26 earnings before interest, tax, depreciation, and amortization (Ebitda) margin guidance downward from 23–24% to 22–23% due to inflation. Operating profit margins (OPM) for FY25 of Marico Ltd are lower, from 21% to 20%, while Britannia's margins have fallen from 18% to 16.4%. Further, the pace of real GDP growth decreased from 9.2% in FY24 to 6.5% in FY25. The weakness in consumption was seen in the flat volume growth of the FMCG sector, both in rural and urban areas. To make matters worse, India's consumer food price index fluctuated during the previous fiscal year, with a peak in October 2024 (marking an inflation rate of 10.08%). The cumulative impact of inflationary pressures, as well as low GDP growth, has pulled down household savings and reduced consumption expenditure. Another factor contributing to the margin pressure is the intense competition in the FMCG space, not just from large brands but also from aggressive local players and small direct-to-consumer (D2C) brands. Recovery signs in the FMCG space Despite a weak short-term outlook, the FMCG companies are cautiously positive for the FY26 recovery. Management sees macro factors to normalise soon, including stabilising CPI inflation, easing raw material prices. India's overall retail inflation fell to 3.16% in April 2025, the lowest in nearly six years. Companies are implementing gradual price increases to slowly rebuild and recover their margins without disturbing the demand. Consumption expenditure is expected to pick up slowly due to the continuous recovery in rural demand because of the good monsoon. Further, improvement in urban demand can be seen due to lower inflation levels and tax cuts announced in the Union Budget, which is expected to boost disposable incomes. What could turn things around? The companies are focusing on deepening penetration and distribution in core and growth categories. The companies continue to execute on their strategy of premiumization (a shift towards branded products) and innovation. Companies are improving supply chain management and achieving cost optimization through modern trade, e-commerce, quick commerce, and digital transformation. They are continuously focusing on volume-led competitive growth. Conclusion The FMCG stocks are facing margin pressures right now. Rising input costs, weak demand, and intense competition, all putting pressure on the profitability of the companies and affecting the revenue growth as well. For FMCG companies, the solution lies in premiumization, cost optimization, deeper penetration, and digital transformation. Investors should be selective with stock picking, looking for companies that are adjusting to changing consumer preferences through product innovation and deeper distribution. Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock before making any investment decisions. Happy Investing. Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. This article is syndicated from
Mint
3 days ago
- Business
- Mint
Multi-channel push: From quick commerce to premium beauty, HUL adapts to evolving consumer habits
Hindustan Unilever Ltd (HUL) is expanding its sales channels, including health and wellness stores, premium beauty outlets, and quick commerce, to adapt to evolving consumer shopping habits, said Rohit Jawa, chief executive and managing director of India's largest packaged consumer goods firm, in its 2024-25 annual report. "We now have a dedicated premium retail organisation focused on distributing and creating demand for our premium beauty products through the beauty and pharma channels. New channels have necessitated superior point-of-sale availability. We are leveraging advanced technology expertise to strengthen our presence in modern trade, e-commerce, and the fast-growing quick commerce,' he added. In October 2024, HUL's beauty and well-being portfolio, which includes brands such as Lakme and Dove, went live in 75,000 outlets with the beauty premium retail organisation (PRO). PRO is an exclusive route to market for offline beauty, with 75% coverage focused on health and beauty stores. Meanwhile, HUL's foods category is witnessing a significant expansion in channels such as modern trade stores and e-commerce, including quick commerce, the company said. It has rolled out several exclusive products for such channels. "We had several modern trade and e-commerce exclusive launches in the year, led by Pukka herbal infusions, Bru cold coffee and Korean meal pots. With our premium ice cream portfolio of Magnum, Cornetto and Slow Churn, we continued to strengthen our play in channels of the future, building on the trend of in-home ice cream consumption,' it added. E-commerce currently contributes 7-8% to HUL's business, a share that is growing faster than the company's overall average. This contribution could potentially reach 15% in the next few years, according to the company's management during their post-earnings call for the March quarter. Quick commerce accounts for approximately 2% of the business. HUL's assortment on quick commerce has doubled in 2024-25 compared to a year ago. HUL said e-commerce has evolved into various models. It has set up teams for each model, focusing on future-ready, need-based portfolios. HUL's wide portfolio of over 50 brands reaches over 9 million outlets in India, making it among the most well-distributed packaged consumer goods companies in the country. It has invested ahead of the curve in organised trade, leading to higher market shares and strong leadership positions across categories. The growing demand in modern trade will help drive sales. "We are also investing in e-commerce capabilities to build a strong digital moat…Under the WiMI 2.0 mandate, HUL is also building specialised new routes to market (RTMs) for emerging segments, such as health and wellness, premium beauty, and gourmet food. These channels will help HUL reach more than 70% of the premium beauty and foods markets, while also driving assortment growth,' it added. The company uses the WiMI (winning in many Indias) strategy to understand and reach diverse consumer groups across the country. Apart from premiumization and more consumers trading up to better brands, HUL has also outlined rapid digitisation as a core area of future growth. This includes digitizing Kirana store partners via apps, bolstering e-commerce offers, and spending more on digital marketing channels. The company still draws a majority of its business from kirana stores or traditional sales channels. Kirana stores are vital to any large packaged consumer goods company's distribution and reach in India, making up to 70-80% of their sales. 'Over the last year, we have focused on strengthening this channel with a 'kirana-centric, distributor-inclusive' model. Our strategy involves building stronger relationships with our distributor partners and kirana stores, partnering with them in their journey of digitisation, empowering them with future-fit capabilities to ensure we position them to succeed in the rapidly evolving distribution landscape,' it said. HUL is also 'actively' collaborating with the Government of India's initiative, Open Network for Digital Commerce (ONDC). 'With the help of an integrated module in Shikhar, neighbourhood kiranas can go live on ONDC seamlessly and sell their entire range of products online,' it said.
Time of India
3 days ago
- Business
- Time of India
HUL MD Rohit Jawa's salary rises to 23.23 crore in FY25; permanent workforce down 8.4%
Hindustan Unilever Ltd (HUL) Managing Director Rohit Jawa's total remuneration rose by 3.75 per cent in FY25 to 23.23 crore, according to the company's latest annual report. Jawa's annual pay package included a salary of 3.65 crore, allowances of 11.45 crore, a bonus of 3.78 crore, and long-term incentive perquisites amounting to 2.76 crore, PTI reported. The report stated that Jawa's remuneration was 146.47 times more than the median remuneration of employees. In FY24, the ratio was higher at 153.03 times. Meanwhile, the number of permanent employees at the FMCG major fell by 8.46 per cent. HUL had 6,604 permanent employees on its rolls as of March 31, 2025, compared to 7,215 the previous year. The median remuneration of employees increased by 8.39 per cent in FY25. 'Average increase made in the salaries of employees other than the managerial personnel in the financial year was 4.62 per cent and does not include increase on account of promotions. Increase every year is an outcome of the company's market competitiveness as against its peer group companies as well as financial performance,' the annual report noted. Addressing shareholders, Jawa said FY25 saw a moderation in urban demand and a gradual recovery in rural consumption. 'Against this backdrop, we remained focussed on driving volume growth and strengthening competitiveness for the business,' he said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Giao dịch CFD với công nghệ và tốc độ tốt hơn IC Markets Đăng ký Undo HUL Chairman Nitin Paranjpe said the company navigated a challenging operating environment, marked by uneven weather patterns, volatile commodity prices, and muted consumer demand. He added that India is 'well-poised to deliver strong and consistent growth with rising affluence, a burgeoning middle class, a vibrant young working population empowered by a strong public digital backbone and growth-oriented policies.' 'Economic development, technological advancements and a better quality of life have fuelled the aspirations of our consumers. These new dynamics present a significant opportunity for the FMCG sector,' he said. Paranjpe said HUL is witnessing a rapid evolution of the Indian consumer due to greater digital access and information. 'We are building a robust portfolio for future growth, by sharpening our 'where to play' choices. In line with this, we announced the acquisition of premium science-backed beauty brand, Minimalist. This acquisition is in line with our vision to become the beauty shapers of India,' he said. In FY25, HUL also divested its water business, Pureit, and announced the decision to demerge its ice cream division, which includes brands such as Kwality Wall's, Cornetto and Magnum. The company, which owns brands like Lux, Rin, Surf Excel, Pond's, Dove, Horlicks, Bru, and Lipton, reported a turnover of 60,680 crore and a profit after tax of 10,644 crore in FY25. Stay informed with the latest business news, updates on bank holidays and public holidays . AI Masterclass for Students. Upskill Young Ones Today!– Join Now
Mint
3 days ago
- Business
- Mint
HUL confident of growth in FY26 amid improving demand, lower prices
New Delhi: Hindustan Unilever Ltd (HUL) expects demand conditions to improve over this financial year aided by broad monetary stimulus, lower food and crude inflation, and higher agricultural output, helping India's largest consumer goods company drive up its sales volume. For fiscal year 2024-25, turnover surpassed ₹ 60,000 crore for the maker of Dove soaps and Kissan sauces and jams. The company reported a 2% increase in sales, a similar rise in volume growth, and a 5% growth in earnings per share (EPS). Profit for the fiscal year improved 5% to ₹ 10,644 crore. 'Looking ahead, we expect demand conditions to improve gradually over the next fiscal year,' Hindustan Unilever said in its annual report for 2024-25. 'Macro conditions will benefit from monetary stimulus, lower food and crude inflation and higher agricultural output. In this context, our focus remains on driving competitive volume led growth across our business.' HUL said it had a 'strong conviction' in the significant mid- to long-term potential of India's fast-moving consumer goods (FMCG) sector, fueled by increasing affluence, substantial headroom for growth in per capita consumption, and rapidly developing digital infrastructure that enhances market access and consumer engagement. HUL boasts a portfolio of more than 50 brands spanning 15 categories, including packaged foods, home care, and personal care, and reaching nine out of every 10 Indian households. At 11.26am on Friday, the stock was down 0.22% at ₹ 2,362.55 on BSE, while the Sensex was down 0.24%. In FY25, India's FMCG industry witnessed subdued demand in urban markets, although rural areas saw a gradual improvement in consumption. Commodity prices increased significantly, particularly in palm oil, tea and coffee, whereas crude oil, soda ash and skimmed milk powder were deflationary. 'Despite this, we maintained a healthy gross margin at 50.3%,' HUL said in its annual report. 'During the year, we continued to generate fuel for growth with our end-to-end net productivity programme across all the lines of the P&L leveraging buying efficiencies, smart formulations, driving logistics and manufacturing cost efficiencies, marketing efficiencies, net revenue management and accelerating simplicity through digital transformation,' the company said. 'We deployed the generated savings to build our brands and strategic capabilities, in line with our capital deployment strategy.' In FY25, HUL segmented its portfolio into core, future core, and market makers portfolios to attract more customers. The company has revamped core brands like Lifebuoy, Vim, and Lakmé, and launched more premium brands such as Liquid I.V. and Hellmann's Mayonnaise. It also acquired new-age personal care brand Minimalist for ₹ 2,955 crore, divested its water purifier business Pureit, and announced the demerger of its ice cream business. 'This year marked a significant transformation towards excelling in demand drivers for our affluent and aspiring consumers. Consumers now navigate across platforms creating a complex web of touchpoints and we aim to go where our consumers are,' Rohit Jawa, chief executive officer and managing director, HUL, said in the report. 'For instance, we have significantly boosted our investments in digital marketing—today 40% of our spends are on digital media. We have over 12,000 influencers whom we collaborate with for our brands,' Jawa added. The company added that its core portfolio will focus on brands 'that are at the sweet spot of premiumisation'. 'We have continued to unlock access to these brands to a larger number of consumers by democratising trends, and as a result, grew faster than the market. We are building segments of the future through our market makers portfolio. While it is currently a smaller part of our business, it will continue to grow rapidly in the years to come. This Rs7,000 crore segment has delivered double-digit growth during the year, as we focus on expanding business,' the company said. HUL also announced the acquisition of the palm undertakings of Vishwatej Oil Industries Pvt. Ltd and an investment in Lucro Plastecycle Pvt. Ltd, a maker of recycled plastics.
Mint
22-05-2025
- Business
- Mint
ITC expects consumption uptick on rains, rate cuts
ITC Ltd on Thursday predicted India's consumption engines to keep firing as inflation cools, interest rates fall, and rain clouds gather, following a similar prognosis by industry leader Hindustan Unilever Ltd. Consumption spending is expected to rise steadily as a good monsoon powers a continued rural recovery, the maker of Bingo chips and Gold Flake cigarettes said; alongside, lower inflation and the recent income tax cut are expected to boost disposable incomes in towns and cities. The company expects India's macro-economic variables to remain stable in the year ahead. "The cumulative impact of pick-up in government capex in the second half of FY25 and front-loading of capex outlay in FY26, along with interest rate cuts and liquidity support from RBI, would also be supportive of growth," ITC said in a filing. Also read: Myntra steps out of India to sell clothes in Singapore India's second-largest consumer goods maker reported a 289% jump in March quarter profit, thanks to an exceptional gain from the demerger of its hotels business. Profit touched ₹19,561.57 crore, up from ₹5,020 crore a year earlier. Excluding profit from exceptional items, profit stood at ₹4,875 crore, up 0.77%. ITC's hotels demerger took effect on 1 January this year. A Bloomberg survey of 22 analysts had estimated ITC to report standalone March revenue of ₹16,979 crore, while 18 analysts estimated a net profit of ₹4,942 crore. 'Adjusted profit after tax came in line with our but 2.5% below consensus estimates," Abneesh Roy, executive director, Nuvama Institutional Equities. Roy said revenue and Ebitda were largely in line with Nuvama's estimates. Ebitda is short for earnings before interest, tax, depreciation, depreciation and amortization. Standalone revenue from operations in the fourth quarter grew 9.4% to ₹18,494.06 crore, up from ₹16,907.18 crore in the same quarter of FY24. Expenses grew 12.7% to ₹12,872.66 crore. On 25 April, HUL had said that this is 'a good moment" for the consumer packaged goods industry, as India's macros turn favourable. 'Monsoons have been good, projections have been decent, reservoirs are full, and agri output is strong," chief executive officer and managing director Rohit Jawa said at a post-earnings meet. Also read: Shopping online? Your favourite brands may be saving their best for you For the full year FY25, ITC recorded overall profit after tax (including profit from discontinued operations)of ₹35,196 crore, up 72.3% year-on-year. Standalone revenue from operations grew 10.31% to ₹74,236.07 crore. Earnings per share for the year stood at ₹16.07, against the previous year's ₹15.98. The ITC board recommended a dividend of ₹7.85 per share for FY25. Together with the interim dividend of ₹6.50 paid on 7March, the total dividend for the year totals to ₹14.35 per share. During the quarter, ITC's FMCG business reported a 3.6% increase in revenue to ₹5,494.63 crore, while profit decreased 28%. ITC reported severe price pressures in edible oil, wheat, maida, potato, cocoa and packaging inputs—especially in the second half of the year. These pressures were partially mitigated through focused cost management, portfolio premiumization, supply chain agility, digital interventions and calibrated pricing actions, ITC said. ITC said atta, spices, snacks, frozen snacks, dairy, premium personal sash, homecare and agarbatti business led growth during the quarter. It also reported heightened competitive intensity in certain categories such as noodles, snacks, biscuits and popular soaps. Also read: Marico calls it—India's FMCG sector to rebound this financial year ITC's 'Classmate' notebook business faced stiff competition from smaller brands, which cashed in on the drop in paper prices. 'The FMCG segment delivered a resilient performance amidst weak demand conditions and significant increase in competitive intensity from regional-local players. Costs of several major inputs such as edible oil, wheat, maida, potato and cocoa witnessed sharp escalation, especially in the second half of the financial year, weighing on margins…The business sustained competitive levels of trade and marketing investments during the year towards supporting growth and market standing," the company said. Last month, rival HUL reported a 2% increase in revenue and volumes in the March quarter. Its management pointed to stressed demand in urban markets on account of high inflation that outpaced wage growth, leading consumers to prioritize essentials over discretionary items. ITC, which sells Sunfeast cookies and Aashirvaadstaples, introduced over100 new FMCG products during the year. Its cigarettes business reported a 6% jump in quarterly revenues as volumes rose. 'Cigarette volumes increased 5% year-on-year, slightly ahead of our estimate of 4%," said Nuvama's Roy. Sharp cost escalation in leaf tobacco partly mitigated through improved mix and focused cost management initiatives, during the quarter. In the fourth quarter, segment revenuefor its agriculture business was up18% year-on-year to ₹3,649.16 crore. The paperboards, paper and packaging segment remains impacted due to low-priced Chinese and Indonesian supplies in global markets including India, soft domestic demand conditions and unprecedented surge in wood prices, the company segment reported revenue growth of 5.5% to ₹2,187.62 crore. Rising domestic wood prices and lower selling prices are squeezing margins. ITC is addressing this through plantation initiatives, product optimization and cost control. 'Representations continue to be made at appropriate forums for suitable measures to safeguard domestic industry," ITC said. The company will continue to monitor urban demand recovery, inflation trajectory and private capex going continues to remain concerned about the impact of reciprocal trade tariffs and geopolitical disruptions.
