Hindustan Unilever Ltd, one of India’s leading consumer goods companies, saw a drop of over 2% in its stock on Friday after reporting a marginal decline in consolidated net profit for the second quarter ended September 30. The stock price fell to Rs 2,495.10 on the Bombay Stock Exchange (BSE).
In its regulatory filing, Hindustan Unilever revealed that its consolidated net profit for the second quarter was Rs 2,657 crore, slightly lower than the Rs 2,670 crore recorded in the same quarter last year. The decline in profit was attributed to subdued rural demand and increased competition in the market.
The company’s volumes grew 3% in urban areas during the quarter but witnessed a 1% decline in rural areas. Hindustan Unilever expects the recovery in rural areas to be gradual, as mentioned in its investor presentation.
While the company reported a marginal decline in net profit, its total income in the quarter increased to Rs 15,806 crore compared to Rs 15,253 crore in the previous year. However, total expenses for the second quarter were higher at Rs 12,211 crore, up from Rs 11,965 crore in the same period last year.
Despite the challenges posed subdued rural demand and fierce competition, Hindustan Unilever’s CEO and Managing Director, Rohit Jawa, expressed satisfaction with the company’s resilient performance. He emphasized that the company achieved competitive growth while also increasing its EBITDA margin (Earnings Before Interest, Taxes, Depreciation, and Amortization) in a challenging operating environment.
The decline in Hindustan Unilever’s net profit and the subdued rural demand reflect the ongoing challenges faced consumer goods companies. However, the company remains optimistic about its ability to navigate these difficulties and maintain its market position. As investors monitor the company’s performance, the impact of rural demand and competitive intensity will continue to be key considerations.