New Delhi: FMCG major Hindustan Unilever sees stable demand in this fiscal helped by government initiatives such as increases in minimum support prices but the challenge of an expected below-normal monsoon will have to be navigated.
Besides, the company expects premiumisation of products to continue in FMCG helped by "secular trends of young population, growing affluence, rising urbanisation and burgeoning digital connectivity", which would enhance spending patterns of consumers, the company said in the outlook of its Annual Report for FY2018-19.
"The demand trends in the markets is stable and the government initiatives such as increases to Minimum Support Price (MSP), provision of health insurance, direct income distribution etc will lend further impetus to the rural economy," said HUL Chairman and Managing Director Sanjiv Mehta.
However, he has also raised concerns over several challenges as rising commodity prices, a below-normal monsoon this year, which may impact the rural and semi-urban demand.
"Commodity inflation, potential disruptions due to global events and a below normal monsoon this year are possible headwinds which the business will need to navigate with caution," Mehta said.
According to him, the FMCG markets continue to offer sizeable headroom for growth by increasing consumption and penetration and HUL is well placed to leverage this opportunity.
"Your Company's strategy to lead premiumisation, market development, build channels of the future whilst keeping the sustainable living plan at its core, will enable it to create long-term value for all stakeholders," said Mehta adding that HUL "will continue to focus on being Purpose-led and Future fit."
Over the performance of FY 2017-18, Mehta said HUL's domestic consumer business grew by 12 per cent with 10 per cent underlying volume growth.
"We delivered over Rs 8,500 crore of EBITDA, our EBITDA margins are at its highest ever at 22.9 per cent and our profit crossed the Rs 6,000 crore mark for the first time," he said.
In FY 2018-19, ended on March 31, HUL reported a revenue of Rs 38,224 crore.
"Profit after tax before exceptional items, PAT, grew by 18 per cent to Rs 6,080 crore and Net Profit at Rs 6,036 crores was up by 15 per cent," he added.