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After a muted Q4, high base could pose growth challenges for HUL

Muted volume growth, higher ad spends may be a drag on profitability

Ram Prasad Sahu Mumbai

Premium

The pace of volume growth is also uncertain, and expected to be gradual, given the high levels of consumer inflation

3 min read Last Updated : Apr 27 2023 | 8:09 PM IST

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The country’s biggest fast-moving consumer goods company, Hindustan Unilever (HUL), disappointed the Street with sales and operating performance missing estimates. Net sales grew by 11 per cent, while brokerages expected the number to be upwards of 12.5 per cent, largely led by higher volume growth (its Q4 figure stood at 4 per cent), even as pricing growth at 7 per cent was in line with Street expectations.

The single-digit pricing growth was largely on account of price cuts in the soap portfolio on the back of falling raw material prices. Even as the home care segment continues to lead on the growth front, registering a 19 per cent jump year-on-year (YoY), the food and refreshment segment, which accounts for about a quarter of overall sales, saw a muted 3 per cent growth.

Within foods (tea business), the company indicated that consumers were downtrading to loose tea, with the price gap between premium variants and loose tea widening. Ev