High inflation, raw material prices may pressure margins in near term, says CMD
Hindustan Unilever Ltd. (HUL), India’s largest consumer goods maker, reported standalone third-quarter net profit grew 17% to ₹2,243 crore aided by strong all-round performance but warned that high raw material costs and inflation could hit margins in the near term.
EBITDA margin at 25.4% improved 100 basis points year-on-year.
Sales revenue increased 10.4% to ₹12,900 crore.
While the performance comes in the backdrop of high inflation and slack in rural demand, HUL said sales in its business segments that make ice creams and beauty products returned to pre-pandemic levels.
“In the context of unprecedented inflation, we continue to manage our business dynamically driving savings harder across all lines of P&L and taking calibrated pricing actions using the principles of net revenue management,” the company said in a filing with stock exchanges.
“We have delivered a strong and resilient performance in the quarter despite moderation in market growth and significant levels of commodity inflation,” said CMD Sanjiv Mehta.
“The growth is extremely competitive with our market share gains being highest in more than a decade.”
Mr. Mehta said in the near-term, the operating environment would continue to remain challenging. HUL said it would continue calibrated price increases, in line with moves at consumer goods peers.
‘Rural demand weak’
Observing that demand from rural India had lulled, HUL urged the government to continue some support measures it had extended at the onset of the pandemic.
Consumer goods makers had expected buying to pick up as pandemic restrictions eased, but high inflation has limited consumers’ spending power and piled pressure on companies already grappling with rising raw material and shipping costs.
(With Reuters inputs)
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