HUL: Low Price Growth, Volume-Led H2

New Delhi, Oct 23 (PTI) FMCG firm HUL is anticipating a "low-single digit price growth" in the upcoming quarters, especially in product categories that did not benefit from reduced GST rate, and expects a volume-led growth in the remaining second half of the fiscal year, its CFO Ritesh Tiwari said on Thursday.

HUL, which reported a flat volume-led growth in the September quarter due to goods and services tax (GST) transition-related impact, is focusing "to drive volume-led improvement and acceleration in performance in the second half of the financial year compared to the first half," he said.

In the first half of the current fiscal year (H1), HUL's total income was at Rs 33,103 crore, up 3 per cent with a volume growth of 2 per cent. Its EBITDA was at 23 per cent, down 110 bps.

"Going forward, with all the GST changes, we are not planning any further price changes for all the GST-impacted categories because we have done all the price changes. The focus now will be to stabilise this price in the market," Tiwari told reporters in an earnings call.

He further said of the total portfolio, 40 per cent is impacted by GST, "but there is... 60 per cent business, which sits (with) no impact of GST".

"Now we will see where commodities are trended. As of now, the commodity is benign, and which is why we called out that we anticipate low single digit price growth going forward," Tiwari said.

On the demand trends going forward, he noted that there is an overall positive macro environment, eased monetary policy, along with GST rate reductions and lower inflation, especially food inflation, which augur well for the road ahead.


"All these elements give a good macro uplift. We do expect (that) because of this, there will be improvement in the overall trading conditions," he said, adding that the company has also worked on building momentum of innovation and portfolio transformation.

"So all these three factors put together, we do expect our volume growth to be better in the second half of the financial year compared to the first half," Tiwari said.

He further said HUL, which reported a flat volume because of the GST transition impact, expects it to "finish by early November and from November onwards, and we should start seeing normal trading conditions".

Commenting on the impact of GST rate reduction on demand pattern, Tiwari said HUL expects it to positively impact its premiumisation journey besides boosting overall consumption.

"We also believe it will further support our journey of premiumisation as consumers (will be) able to access more amount of the portfolio at a lower price point, because we'll end up giving price changes. We have passed on all benefits of GST to our consumers," he noted.

Tiwari said the company has seen growth from urban as well as rural markets.

"So as of now... overall demand growth trends for FMCG are stable, and at this point, both (urban and rural markets) are contributing. We are seeing growth from urban as well as rural," he added.