HUL’s Q1 show unlikely to give St reason to be bullish

ET Intelligence Group: Hindustan Unilever will announce its June-quarter results on Tuesday, but the performance will not be comparable with its year-earlier show on two counts. One: the constricted sales during the lockdown is likely to have an adverse impact on the revenue of the country’s largest fast-moving consumer goods company. Two: this is the first quarter when the results will include the numbers of the GSK Consumer Healthcare business that it acquired.HUL is the second large FMCG company, after Britannia Industries, to report the numbers for the June quarter. Its net sales are likely to drop 2-3 per cent to over Rs 9,700 crore, with a similar impact on the net profit. Overall volume growth, which dropped 7 per cent in the preceding March quarter, is likely to decline further since 40 per cent of HUL’s product portfolio — comprising its most premium personal products — didn’t register healthy sales during April and May due to the lockdown. 77076496While rural demand picked up, it has come at the cost of down-trading. Certain categories like ice-creams and hygiene products did sell well during the lockdown. Operating margin is estimated to be 25.4 per cent with the company likely to rein in margin correction through reduced advertising and cost-cutting.The newly acquired nutrition brands of Horlicks, Boost and Maltova are now part of the food & refreshments segment of HUL. The segment had contributed nearly a fifth to the company’s revenue in the last fiscal year. With the addition of nutrition brands, the segment is likely to assume a higher salience within the company’s overall business. The coronavirus outbreak provides a great opportunity for the company’s nutrition and hygiene portfolio.The HUL stock is trading 12 per cent lower from its record high hit in April. The June-quarter results are unlikely to offer a reason for the Street to turn more bullish about the stock. What will be tested is the resilience of the FMCG market leader on its natural turf during a challenging time. Amid the uncertainty, investors are going to watch out for the management’s commentary for the impact of the lockdown, demand outlook, uptick in rural demand and the impact of changing the name of HUL’s fairness cream on the sale of the product.

from Economic Times https://ift.tt/39dFKEt
via IFTTT