HUL lowers prices of tea, homecare products but goes for hike in skincare segment

New Delhi, Jul 31 (PTI) HUL has slashed prices of products in categories such as tea and homecare products due to lower commodity prices and competitive pressure, but raised the prices in the skincare segment on account of rising palm oil prices.

The leading FMCG maker is keeping an eye on the price movements of palm and palm derivatives, a key input for its skin cleansing products, which are softening and will pass on the benefits to the consumers as it has done in other segments as tea, HUL CFO Ritesh Tiwari said in an earnings call.

"Skin cleansing has seen a material increase in the last 6-12 months, in terms of palm and palm oil derivatives. Because of that, we have taken sequential price increases," he said.

Going forward, HUL is seeing "some softening in palm and palm derivatives".

"It remains volatile, so we will keep watching how that unfolds," Tiwari said, adding, "We will stay true to the principle of replenishment pricing when it comes to tea or, for that matter, when it comes to skin cleansing." The FMCG leader further said like previous quarters, the rural market has continued to grow ahead of urban markets in the June quarter, though urban markets have also improved sequentially and expects this recovery to be sustained.

"Rural is ahead of urban, but urban has also improved. We have seen improvement and gradual recovery of the urban market," he said, adding, "We expect this recovery to be sustained." Factors such as lower inflation, improved liquidity in the country, taxation relief the government gave in the Budget, help urban areas to recover, he said.

Tiwari said HUL's gross margins will improve, and invest that improvement in gross margin back into the business. The company will hold margins of 22 per cent for the next few quarters.

Tiwari said the 25 per cent additional tariff imposed by the Trump administration on imports from India will have an "insignificant" impact on the company, as HUL has a very small amount of exports to the US.

"So the impact is insignificant. Now that's the direct impact, the indirect impact of tariffs and what it happens in terms of the economy, etc, I think that's an area which we have to wait and watch as to how it unfolds, and as and when required, we take appropriate actions to ensure that our business keeps improving our performance," he said.

On the outlook, HUL said the growth guidance remains unchanged.

"We expect the first half of this financial year to be better than the second half of last financial year. If commodity prices stay within the current range, we anticipate low single-digit price growth," said Tiwary.

Updating the progress of the demerger of the ice-cream business, Tiwari said a meeting for HUL shareholders will be considered to approve the demerger scheme on August 12, as per the direction of the National Company Law Tribunal (NCLT).

Over direct-to-consumer (D2C) skincare brand Minimalist, HUL said it, along with the founders, is now working closely to chart the future course of growth trajectory of the company. PTI KRH TRB TRB