Hindustan Unilever's Financial Performance in the December Quarter

Hindustan Unilever Limited (HUL) has announced a modest year-on-year revenue growth of 1.4% in its December quarter, reaching Rs 15,408 crore on a standalone basis. This growth comes in the face of challenging market conditions, particularly in urban areas where consumers are tightening their budgets due to high food inflation and a shift towards smaller pack sizes of essential goods.

Total sales for the quarter stood at Rs 15,195 crore, a slight increase from Rs 14,928 crore in the same period last year, marking a growth of approximately 2%. Net profits saw a significant jump of 19% year-on-year to Rs 3,001 crore, largely attributed to gains from the sale of the Pureit business. However, net profit before exceptional items remained flat.

Urban Demand and Consumer Behavior

CEO & MD Rohit Jawa highlighted the sharper than expected slowdown in urban growth over recent quarters, a trend he believes will persist in the near term. "This is clearly driven by households adjusting their budgets, leading to a shift towards smaller pack sizes across various categories," Jawa explained. This trend is not limited to the economy segment but is also evident in the premium segment, indicating a broad-based consumer response to economic pressures.

Rural vs. Urban Market Dynamics

In rural markets, where consumers typically have smaller budgets, the preference for smaller pack sizes has always been prevalent. However, the current trend shows that even in urban areas, where larger packs are usually favored, smaller packs are now outpacing the growth of larger ones. This shift is a direct response to the high commodity inflation that has prompted FMCG players to implement price hikes in the third quarter.