The company is currently focusing on soaps and sanitizers. Thus, has increased the production of hand sanitizers by 60x to assist the on-going situation.
FMCG major Hindustan Unilever's Q4FY20 profit declined by 1.2 percent year-on-year to Rs 1,519 crore and revenue fell 9.4 percent YoY to Rs 9,011 crore due to decline in volumes after the lockdown in the second half of March.
While addressing conference call, the management said it expects shift in consumer demand to health, hygiene and nutrition segment.
"The company is deferring some of the expansion plan unless that is very important, and will cut down expenses which are not core and not adding value. We will not take price increase in the near term," it added.
Here are the highlights of Hindustan Unilever's Q4FY20 earnings call compiled by Narnolia Financial Advisors:
Management Participants: Sanjeev Mehta - Chairman
Before COVID-19, the macro economic scenario had been challenging led by high retail inflation, liquidity issues and lower GDP. However, the government and RBI took various measures to push the growth and are in right direction.
The recovery in rural demand is not yet visible while resulting low consumer confidence has reflected into continued slowdown of FMCG market growth before COVID-19.
Due to nationwide lockdown in second half of March-20 supply chain got disrupted (resulting 50 percent drop in primary level stock) impacting distribution and trade inventory. In April, supply chain gradually improved and the company is able to do 75-80 percent of its normal level.
Amidst COVID-19 situation the company has protected frontline team and distributors by providing reimbursement of insurance cover, initiated COVID-19 helpline number etc.
The company is doing continuous interaction with people through digital medium and is also analyzing the change in the consumer patterns.
The company's brands & portfolios are being readjusted as per consumer behaviour and innovation is been made on the same.
The company is currently focusing on soaps and sanitizers. Thus, has increased the production of hand sanitizers by 60x to assist the on-going situation.
The company has dropped the prices of hand sanitizers and hand wash by 50 percent and 15 percent respectively.
The company is confident of managing the crises and come out of the situation in a competitive position.
The company market share grew by 50 bps and around 80 percent of the business has gained share as of Q4FY20.
The company's operation remained impacted from middle of March-20.
Domestic consumer growth stood at -9 percent in Q4FY20, 50 percent of the impact is on account of reduced stock at distributor location due to disturbance in primary distribution network and rest is on account of lower stock retailer and loss in consumer demand for ice cream and discretionary category.
The company's ice cream business witnessed sharp decline since mid of March-20.
The company's food category witnessed some boost whereas the discretionary category remained impacted.
The material cost increased by 40bps on account of inflation in raw material prices like oil, SMP (up by 60 percent) and Tomato paste.
Improvement in other expenses led by supply chain efficiency, saving initiatives, costs settlement and benefits from currency markets.
The company will continue looking for consistent, competitive, profitable and responsible growth.
Management expects shift in consumer demand to health, hygiene and nutrition segment.
The company is bringing in Lifebuoy germs kill spray and Domex disinfectant spray into the market along with other innovative products like germ removal wipes, germ wash boosters are expected to come in next 4-6 weeks.
The company will continue to bring in science for inventory management.
The company is deferring some of the expansion plan unless that is very important.
The company will focus on rebalancing media expenses across channels both from competitive as well as consumer demand context. Thus, as of now the company’s motto is 'Earn and then spend'.
The company will cut down expenses which are not core and not adding value.
The company expects demand in personal care to get normal post lockdown and will focus more on value packs.
The management will not take price increase in the near term.First Anniversary Offer: Subscribe to Moneycontrol PRO’s annual plan for ₹1/- per day for the first year and claim exclusive benefits worth ₹20,000. Coupon code: PRO365
