Horlicks and Boost maker HUL sees slowdown in food segment in the last three months

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Horlicks and Boost maker HUL sees slowdown in food segment in the last three months
BCCL
  • Shares of fast moving consumer goods company fell 5% after the company reported lower than expected volume growth along with cautious commentary.
  • The company reported 9% year-on-year growth in net profit to ₹2,187 crore as against ₹2,009 crore in the same quarter last year.
  • Further, the company said they remain cautiously optimistic about demand recovery.
Shares of consumer goods company Hindustan Unilever (HUL) fell as much as 5% on Tuesday after the company reported its September quarter earnings.

Although the company reported 9% year-on-year growth in net profit to ₹2,187 crore as against ₹2,009 crore in the same quarter last year, investors were disappointed on lower than expected volume growth.

The company delivered 4% year-on-year volume growth in the July-September quarter lower than estimates of 5-7%.

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Food segment that includes products like Horlicks, Kissan, Bru, Kwality Wall’s saw a slowdown in revenue growth. Food segment grew only 7% in the September quarter as against 12% in the June quarter. Hindustan Unilever attributed the dull growth in the food segment to reasonably high sales in the previous quarters.

Horlicks and Boost maker HUL sees slowdown in food segment in the last three months
Flourish chart

The company has declared a dividend of ₹15 per share in this quarter.

Adding to it, the company gave a cautious remark on the demand recovery. “Looking forward, we remain cautiously optimistic about demand recovery,” said Sanjiv Mehta, chairman and managing director of HUL.
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Meanwhile, muted consumer sentiment with rising inflation bothered the (fast moving consumer goods) FMCG major.

“September quarter witnessed a sequential improvement in trading conditions, albeit remained challenging with unprecedented levels of input cost inflation and subdued consumer sentiments,” added Mehta in a statement to stock exchanges.

Cautions comments by HUL will impact the outlook for the sector and competing players like Nestle, Britannia, and ITC. Shares of other FMCG players also ended lower on October 19.
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FMCG companiesStock change on October 19
ITC-6%
Nestle-0.2%
Marico-0.6%
Britannia-0.9%
Dabur-1%

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