Hindustan Unilever Ltd experienced a drop in shares by over 2% on Friday following the announcement of a slight decline in consolidated net profit for the second quarter ending on September 30. The stock fell to Rs 2,495.10 on the BSE.
In its recent report, Hindustan Unilever stated a marginal decline in consolidated net profit to Rs 2,657 crore for the second quarter due to subdued rural demand and increased competition. In the same quarter last year, the company had achieved a consolidated net profit of Rs 2,670 crore, as disclosed in a regulatory filing by Hindustan Unilever Ltd (HUL).
Although the volumes of the company grew by 3% in urban areas during the quarter, it experienced a decline of 1% in rural areas. Hindustan Unilever expects rural recovery to be gradual, as mentioned in their investor presentation.
Total income for the quarter reached Rs 15,806 crore, compared to Rs 15,253 crore in the same period the previous year. The company also reported an increase in total expenses from Rs 11,965 crore to Rs 12,211 crore for the second quarter.
Despite the challenging operating environment with subdued rural demand and heightened competitive intensity, HUL CEO and Managing Director, Rohit Jawa, expressed satisfaction with their resilient and competitive growth while also increasing their EBITDA margin.
The decline in HUL’s consolidated net profit has led to a decrease in the company’s shares amidst concerns over rural demand and intense competition. However, the company’s CEO remains optimistic about their growth prospects, particularly in urban areas, and is focused on improving their EBITDA margin. It remains to be seen how HUL will navigate the challenges brought about by the current market conditions.
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