Even as India is amidst the second wave of the COVID-19 pandemic that brings further uncertainty, Hindustan Unilever Ltd (HUL) is confident about its growth prospects for the coming quarter.

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The management believes that even though the second wave is a cause of concern and brings about great uncertainty, the impact this year will not be as adverse as last year.

Addressing the media on its Q4 earnings, HUL's chief financial officer (CFO) Srinivas Phatak said, "While it is difficult to predict consumer demand with certainty, on the back of capabilities, we have built over the last year, we are confident about dealing with challenges in the short term and maintain competitive growth."

The company's confidence comes from the fact that there isn’t a stringent national lockdown this year and that states have adopted localised lockdowns while keeping stores open and supply chains moving.

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The fast-moving consumer goods major reported a 16 percent volume growth and a 41 percent growth in net profit to Rs 2,143 crore in the January to March quarter.

A revival in consumer sentiment over the past two quarters and a recovery in discretionary spending as more people stepped out boosted the company’s earnings, the management said.

"Our 80 percent of the business, which is hygiene, nutrition delivered double-digit growth and there was a clear momentum building up," Sanjiv Mehta, chairman and managing director of HUL told CNBC-TV18.

The first two weeks of April too, Mehta said, saw good growth for the company. "As mobility slowed down, there has been an impact after the first two weeks of April. However, it is too early to say how things will be in the June quarter. As we haven't gone for a general lockdown and are going for micro containments and local lockdown, we won’t see the adverse impact that we saw last year," he added.

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Mehta also added that due to localised lockdowns, the company is not seeing panic buying like last year. With several states imposing curbs on store timings, HUL believes that ecommerce and general trade will continue to see the highest growth rates. However, consumer trends similar to last year are emerging yet again, especially with a focus on health, hygiene, and nutrition.

HUL, which saw demand for hygiene products such as sanitisers taper off over the past 1-2 quarters, is now seeing demand returning. The trend of demand in health, hygiene, and nutrition are here to stay, even much after the pandemic, the company said.

According to Phatak, within the health and nutrition categories, the pandemic has also accelerated demand for immunity products as well as the segment of natural products including vitamins, minerals, and supplements.

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"The obsessive nature like using sanitizers at one stage had tapered off, but we are again seeing it now with the second wave. People are again now starting to buy sanitizers. But I think the secular trend of health, wellness, hygiene that’s going to remain much after the pandemic. Those behaviours will now be ingrained in us," Mehta added. ​

Input Cost Pressures

HUL's management said the focus for the company will remain volume-led competitive growth despite input cost pressures. Last quarter, the company took up to a 7 percent hike in prices of skin cleansing products and a double-digit hike in tea.

Mehta said the company has seen a lot of headwinds in the form of inflation in the last 6-7 months driven by palm oil and crude-driven derivates. While the management didn’t specify on what price hikes were taken in the past quarter, Phatak said despite inflation at historic highs, the company has been taking price increase in small chunks every few weeks, while trying to balance the price-value equation.

"Inflation is at historic highs, but this is the time to be responsible and maintain competitiveness and continue to price in a calibrated manner and make it meaningful for consumers as well," he added.

(Edited by : Jomy)

First Published:Apr 29, 2021 9:22 PM IST