HUL says operating environment is expected to remain volatile with global slump

HUL Annual Report Findings: Leading FMCG maker HUL expects the operating environment to remain volatile with global slowdown risks and weather-related uncertainty although price increase will tail off.

In its annual report for 2022-23, the company said that it anticipated a recovery in market volume gradually as consumption habits readjust with a lag.

"In the near term, the operating environment is expected to remain volatile with global slowdown risks and weather-related uncertainty," said the report.

It further said,"While inflation has moderated, commodities remain elevated vis-a-vis longer-term averages. Looking forward, we expect that the price-volume growth will rebalance."

In the March quarter earnings call, HUL said the rural slowdown is "bottoming out" and a gradual recovery in volume is expected.

However, HUL also warned that the near-term operating environment is likely to remain volatile due to a global slowdown risk and uncertainty related to weather phenomena like El Nino, and heat waves.

On the medium to long-term outlook, HUL in the annual report said that it stays confident about the potential of the Indian FMCG sector and its ability to deliver consistent, competitive, profitable and responsible growth.

In 2022-23, HUL's turnover was up 16 per cent to Rs 58,154 crore.

HUL's outgoing Chief Executive Officer and Managing Director Sanjiv Mehta said that the company delivered an impressive performance in 2022-23.

In a challenging macroeconomic environment, marked by geopolitical uncertainties, high commodity inflation and tepid market growth, the company delivered yet another year of strong results, he added.

"Going forward, in a rapidly changing and challenging business environment, I truly believe that our clear and compelling compass strategy, underlined by our purpose to make sustainable living commonplace, will hold us in good stead, making us more resilient and agile," Mehta said.

Besides, HUL is expanding its reach further to make its brands available to consumers and it continues to partner with a diverse set of customers, including traditional distributors, modern trade partners, digital commerce platforms as well as thousands of neighbourhood retailers.

"In a rapidly evolving distribution landscape, digital transformation was one of our key enablers for growth," said Mehta.

Its e-B2B app Shikhar is now used by 1.2 million retail outlets allowing them to place orders directly with HUL's distributors anytime.

"We embedded technology to improve fulfilment service to our retailers. For example, in Chennai, we are able to fulfil 90 per cent of the orders on the same or next day through our Samadhan initiative," said Mehta.

Last year, Surf Excel crossed the milestone of being a $1 billion brand.

"Our skin care brand Pond's has been leading the premiumisation agenda with on-trend innovations and future formats. With a very strong performance, both these brands crossed Rs 2,000 crore turnover," said HUL Chairman Nitin Paranjpe.