Results for the quarter ending 31st March 2020

Hindustan Unilever Limited (HUL) announced its results for the quarter ending 31st March 2020. The spread of COVID 19 impacted the business from mid-March, which culminated into scaling down of operations post the national lockdown. Domestic Consumer Growth declined by 9% with a decline of 7% in Underlying Volume Growth. Reported EBITDA margin reduced by 40 bps (160 bps reduction on comparable basis after adjusting for accounting impact of Ind AS 116). Profit after tax (PAT) was lower by 1%. In this challenging economic context, HUL performance has been competitive with corporate market share gains.

Financial Year 2019-20: Growth competitive and Profitable

For FY 2019-20, Domestic Consumer Growth was 2% with Underlying Volume Growth of 2%. Our EBITDA margin improved by 100 bps on comparable basis, PAT (bei)^*, grew by 11% to Rs. 6743 Cr. and PAT at Rs. 6738 Cr. was up by 12%. We sustained our track record of strong cash generation. The Board of Directors have proposed a final dividend of Rs. 14 per share, subject to the approval of the shareholders at the AGM. Together with the interim dividend of Rs. 11 per share, the total dividend for the financial year ending 31st March 2020 amounts to Rs. 25 per share; an increase of 14%.

Sustaining lives and livelihoods

COVID-19 is having an unprecedented impact on people and the economy. As Hindustan Unilever Limited, we have moved at speed to support our multiple stakeholders and maintain our operations through the crisis and prepare for growth in a new normal. We have structured our immediate response into five areas: supporting our people; protecting supply; serving demand; contributing to society; and maintaining our financial strength.

Our people are our priority. We have been proactive and swift in ensuring safe working conditions and providing the necessary infrastructure and equipment across all operations. We have also taken various measures to support our business partners including special medical coverage insurance for the front line. We have been working closely with various authorities to commence quickly and scale up supply of our products. We are currently operating at about 70% of normative levels and are hopeful to improve this in the coming days. In this hour of need, we have ramped up capacities in key categories such as sanitizers, handwash etc. We are also operating with shorter planning cycles, stepping up agility and building resilience in the supply chain.

Demand patterns are changing, and we are likely to see an upswing in categories like health, hygiene and nutrition. In the near term, we are also likely to see some adverse impact on discretionary categories and out of home channel. We have a strong pipeline of relevant innovations and are staying close to consumers to adapt to the emerging demand patterns in the short term and prepare for any structural changes in the medium term. We have redesigned our communications to stay relevant to the consumers in the current environment.

It's our purpose to go beyond the business and ensure that we use our scale and brands as a force for good to the society. As a responsible company, we stand united with the nation and have committed Rs. 100 crores in the fight against the Coronavirus. We have amplified our efforts right from donating Lifebuoy soaps to the needy, to strengthening health care infrastructure and spreading awareness of the right behaviour through our communications.

HUL has a strong Balance sheet and cash position. However, we are systematically reviewing all areas of cash generation and usage and re-evaluating all costs in the prevailing circumstances, so that we can continue to invest towards the best opportunities. We continue to set a high ambition on savings opportunities across the value chain.

Sanjiv Mehta, Chairman and Managing Director commented: “COVID-19 is perhaps the biggest challenge for us both from the lens of sustaining lives as well as livelihoods. The human impact of the pandemic is uncertain, and we are fully committed to working with the Government and our partners to ensure that we overcome this crisis together. Our portfolio of trusted brands, our financial stability and quality of leadership teams positions us well to deal with the crisis and, for the changing world that will come afterwards. With the GSK CH merger effective from 1st April, iconic brands such as Horlicks and Boost will now enable us to also address the nutrition needs of consumers. Our approach will be to protect our business model, grow competitively and contribute to the nation.”