HUL Q2 Results 2024: Net Profit Declines, Revenue Grows Slightly

Hindustan Unilever Limited (HUL) has announced its financial results for the second quarter of FY 2024-25, revealing a mixed performance. The company reported a net profit of Rs 2,612 crore, which represents a decline of 3.9% compared to Rs 2,717 crore in the same period last year. Despite the dip in profits, HUL's revenue saw a marginal increase of 1.5%, reaching Rs 15,508 crore, up from Rs 15,276 crore in Q2 FY 2023-24.  

The company's Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) came in at Rs 3,647 crore, down by 1.3% compared to Rs 3,694 crore a year ago. However, HUL managed to improve its margins slightly, with EBITDA margins increasing to 23.5%, compared to 23.2% in the corresponding quarter last year.  

Additionally, HUL achieved 3% domestic volume growth for the quarter, signaling resilience in consumer demand. The board of directors has also declared an interim dividend of Rs 29 per share, comprising an interim dividend of Rs 19 and a special dividend of Rs 10 per share. The record date for both dividend payments is set for November 6, 2024.

Quick Insights

• Revenue: ₹15,508 crore, up by 1.5% YoY.
• Net Profit: ₹2,612 crore, decreased by 3.9% YoY.
• EBITDA: ₹3,647 crore, down by 1.3% YoY.
• EPS: ₹11.10 per share, down by 3.5% YoY.
• Segment Performance: Domestic volume growth stood at 3%. The personal care and home care segments contributed significantly to revenue, while food and refreshment remained stable.
• Management's Take: “Despite a challenging macroeconomic environment, we have delivered steady volume growth. Our margins remain robust due to a strong focus on cost control,” said the management. They also highlighted their plan to demerge the ice cream business to unlock shareholder value.
• Stock Reaction: Shares of HUL closed down by 0.83%, at ₹2,659.35, result announced post market hour.

Management Commentary

HUL’s management emphasized the company’s focus on maintaining a resilient business model amidst economic headwinds. The leadership team highlighted that the decline in net profit was primarily due to inflationary pressures in key input costs. However, the company remains optimistic about future growth, driven by its strategic initiatives and cost-saving measures. The announcement to demerge the ice cream business was made following a recommendation by an independent committee, which will determine the best mode of separation by the end of the year. The demerger is expected to maximize shareholder value.  

“We continue to focus on innovation and premiumization across our product lines, which has helped us maintain steady volume growth despite the challenges in the market,” the company stated.  

Stock Market Reaction

Post-results, HUL’s stock reacted negatively, with the share price on the BSE declining by 0.83% to ₹2,659.35. The stock has been down approximately 10% from its 52-week high of ₹3,035, reflecting cautious investor sentiment following the earnings announcement. The market had expected stronger numbers, with CNBC-TV18’s poll forecasting a net profit of ₹2,675 crore and revenue of ₹15,665 crore, both of which HUL missed.  

On the day of the earnings announcement, trading volumes in HUL shares increased as investors reacted to the results and the demerger news. Despite the short-term dip, analysts remain optimistic about the long-term prospects of the stock, citing strong brand equity and market leadership in the FMCG sector.

About Hindustan Unilever and Upcoming News

Hindustan Unilever is one of India's largest FMCG companies, with a vast portfolio of brands spanning personal care, home care, and food & refreshment segments. As the company moves forward with its plan to demerge the ice cream business, more announcements are expected by the end of the year. This move is part of HUL’s broader strategy to focus on its core businesses and unlock value for its shareholders.  

With the festive season ahead, HUL is optimistic about stronger demand across its product categories. Additionally, the management remains confident that the company’s strong cost management and premiumization strategies will drive better margins in the coming quarters.