Hindustan Unilever (HUL) rose 1.65% to Rs 2,142.15 after the company on Tuesday (2 June) informed that it has ramped-up its production to 80-90% of normative levels, from approximately 70% levels in April.
HUL said that all its factories and warehouses, except one in Assam, are open. Almost all its suppliers in India, are now operational. The FMCG major said it felt the adverse impact of COVID-19 in form of fractured supply lines and demand decline from mid-March.
The firm is seeing heightened consumer focus on health, hygiene, and nutritional needs. Its portfolio comprising of categories like skin cleansing, home & hygiene, nutrition, tea, coffee and foods is well positioned to cater to these consumer demand spaces.
"The impact on discretionary categories like hair care, skin care and colour cosmetics is more accentuated. While we are seeing some demand revival in these categories, the exact time which these categories will take to recover fully remains to be seen", it added.
The company's out of home businesses comprising of ice creams and foods solutions and its consumer durables business of water has been most severely impacted by the lockdown.
"We are operating with shorter planning cycles, stepping up agility, reducing complexity and working longer shifts to build resilience in our supply chain. Our B2B (business-to-business) sales ordering app Shikar and our hyperlocal ordering platform of Humara Shop have witnessed increased adoption and usage by trade and consumers under the lockdown", HUL said.
The company said that the future impact on the business operations is difficult to assess at this point, as the situation is unravelling at a fast pace. "The pandemic has imposed incremental operating costs on the business. While there will be some impact on our profitability in the short term; however, it is difficult to assess the exact quantum at this stage", it added.
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With respect to the GSK Consumer Healthcare merger, workmen at the company's Nabha plant, that it acquired as part of the merger are currently on a strike. The company said that it is working with all stakeholders to find a resolution and will take appropriate steps as required. "We will provide a detailed update to the markets in the month of July on the merger and the synergy benefits", HUL added.
HUL manufactures branded and packaged consumer products including soap, detergent, personal care products and processed food.
On a standalone basis, HUL's net profit declined 1.24% to Rs 1519 crore on a 9.4% decline in net sales to Rs 8,885 crore in Q4 March 2020 over Q4 March 2019.
Domestic consumer growth declined by 9% with a decline of 7% in underlying volume growth. EBITDA for Q4 March 2020 stood at Rs 2065 crore, declining 11% year on year from Rs 2321 crore in Q4 March 2019. Reported EBITDA margin reduced by 40 bps (160 bps reduction on comparable basis after adjusting for accounting impact of Ind AS 116).
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