HUL expects improvement in FMCG demand with no price hike in short term

Leading FMCG maker HUL expects an overall improvement in the demands gradually with no immediate price increase in the near term, its CFO Ritesh Tiwari said on Wednesday. Moreover, overall FMCG demand from rural markets, which was on the decline, has started to grow sequentially and will accelerate further in the coming quarter, he said.
“We expect FMCG demand to continue improving gradually. Forecast of above-normal monsoons and improving macroeconomic indicators augur well. We expect price growth to be a low single-digit decline in the first half of FY24,” said Tiwari during earning call.

Over the prices, he said if commodity prices remain where they are, then they “will plateau in mid-terms and become positive in low single-digit rates by the end of this financial year”.

He expects that in the second half of FY 2024-25, the company should see a marginal increase in price in the low single digits.

HUL has already completed the process of price correction in all portfolios in the last few quarters.

In the March quarter, HUL had a price decrease in its Home Care and Personal Care products because of deflation in the commodity prices. “Now, the job of correcting our prices and passing on the benefits of commodity deflation, we have completed doing that across the board of HUL,” he said, adding that “Again sequentially, there is no reason for us to further increase any price”. Now these commodity prices remain where they are, then year-on-year their impact will continue.

“Which means in short term, we will see a marginal decline in low single digit numbers in our UVG (under value growth) in short term,” he said.

Over the rural demand, Tiwari said it has started to grow with a gradual recovery of demand.

“I am hoping with the good monsoon outlook that we have got forecast in the country and improving macro conditions, we should see this recovery to continue and further accelerate,” said Tiwari.

Meanwhile, HUL also announced top-level changes in the company. BP Biddappa will join its Management Committee as Executive Director of Human Resources for South Asia.

“Biddappa will also join the HUL Board as a Whole Time Director, subject to shareholder approval,” it said.

Anuradha Razdan — Executive Director, Human Resources, HUL and Chief HR Officer, South Asia — will be appointed to a global role as Chief Reward & Organisation Development Officer for Unilever.

This change will be effective from June 1, 2024, it added.