Hindustan Unilever (HUL) has increased prices by 2-5%, signaling further hikes as the company faces 8-10% cost inflation driven by the West Asia war, which has sent oil prices soaring and impacted raw material costs for products ranging from detergents to lotions and dishwashing liquids.
Strong quarterly performance despite challenges
Despite the cost pressures, HUL reported a strong performance in the fourth quarter, with consolidated revenues rising nearly 8% year-on-year to Rs 16,351 crore. Underlying volume growth reached 6%, a 15-quarter high, driven by a recovery in demand after a prolonged sluggish period, supported by a benign domestic macro-economic environment.
Net profits surged 21% to Rs 2,994 crore in Q4, compared to Rs 2,475 crore in the same period last year, aided by proceeds from the divestment of its stake in Wellbeing Nutrition. Underlying sales growth stood at 7%, the highest in 12 quarters.
Strategic price adjustments and cost savings
"We expect some recalibration between volume and price. We will take calibrated price increases, focus on savings across the P&L, and leverage our financial stability and operating scale to navigate short-term challenges while remaining focused on long-term growth," said MD & CEO Priya Nair in a post-earnings briefing.
Crude-linked inflation has impacted HUL's home care, personal care, and beauty & wellbeing segments, while the foods portfolio has seen only packaging cost increases, according to CFO Niranjan Gupta. The company has also scaled back trade discounts, promotions, and media spends to manage costs.
Market reaction and future outlook
HUL's stock price dropped 2.7% to Rs 2,251 on the BSE following the earnings announcement, which analysts attributed to the price hikes. "Driving competitive volume-led growth will continue to remain our priority," Nair emphasized.
The company's strategy to enhance omni-channel capabilities and premiumise brands has paid off, helping to shore up growth. "We will be doubling down on a few segments and categories, focusing on where the growth is," Nair added.
HUL maintained its outlook, betting on FY27 to be better than FY26, with higher reservoir levels and increased minimum support prices expected to support rural incomes, offsetting risks from a below-normal monsoon and potential El Nino conditions.
