Hindustan Unilever expected to report 9-11% revenue increase
Hindustan Unilever expects to see a 9-11 percent revenue increase for its third quarter results of this financial year supported by increased domestic consumer demand and cost cutting.
Hindustan Unilever (HUL) usually sets the tone for other businesses’ performance in the Indian fast moving consumer goods (FMCG) market as it is the country’s largest FMCG business. The business’ performance is especially telling in an election year like this one. The business is expected to release its results soon but analysts are confident that the results will show growth in both revenue and volume, as reported by Mint.
ICICI predicted a good performance for the business in its January report which read: “We expect 11.6% year-on-year sales growth mainly led by volume growth of 8% on account of volume growth across categories.” The report also stated that the growth is fuelled by increased demand in rural areas which fits the trajectory of the growing middle class in non-metro locations. The brand’s price increases in product categories including skincare are also expected to have helped the revenue increase.
One of the brands that is expected to have done well is HUL’s Sunsilk shampoo which is expected to have grown from 6-8 percent over the quarter. Even though the cost of many raw materials used in HUL products increased over the quarter, HUL’s cost cutting and some price increases are expected to have worked to offset this. The business, which has been growing consistently for the past three quarters, also saw a strong third quarter in the 2018 financial year reporting 11 percent volume growth in December 2017.
HUL’s growth in rural markets is also important as the business sees non-metros account for around 40 percent of its total sales. So far in this financial year, HUL has experienced growth in the rural market and reported that, in the September quarter, rural growth even overtook urban growth by 1.25 times. This trend is expected to continue for the December quarter.
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