Operating profit, however, fell 0.1 per cent to Rs 2,644 crore in Q1, while operating margins narrowed to 25 per cent from 26.2 per cent a year ago. “The negative impact of adverse mix and higher Covid-19-related costs were deftly managed by dialling up savings and unlocking synergies of the
merger, enabling us to sustain healthy margins,” Phatak said.
While rural areas have shown an uptick in sales , Sanjiv Mehta, chairman and managing director, HUL, declined to give an outlook for the future, saying he’d rather wait for the September quarter to give an assessment of demand. HUL gets 40 per cent of its sales in rural areas.
“We are pleased with what the government is doing to improve demand, especially, in rural areas. However, uncertainty remains, which will last till a vaccine is found. If supply-side disruptions ease, the September quarter should give us a good picture of underlying demand,” he said.
Analysts say HUL’s business remains resilient, given that 80 per cent of its portfolio is focused on health, hygiene, and nutrition, 15 per cent is discretionary in nature, and 5 per cent is focused on out-of-home consumption.
“80 per cent of HUL’s business registered a growth rate of 6 per cent in April-June,” said Kaustubh Pawaskar, associate vice-president (research), Sharekhan. “The nutrition business, including GSK Consumer’s products, registered 5 per cent growth, while the discretionary portfolio, including skincare, deos and colour cosmetics, and out-of-home consumption, which includes ice creams, declined 45 per cent and 70 per cent, respectively,” he said.
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