HUL CEO Rohit Jawa: Rural growth lagged behind urban over the last year

Sharing an overview of how the FMCG landscape has evolved over the last few years and some key trends in the June quarter, Hindustan Unilever's Chief Executive Officer and Managing Director, Rohit Jawa said, "In the last 2 years, market volume recovery has been gradual and much lower than what we would have liked due to the impact of sustained high inflation, combined with erratic weather patterns. Consequently, rural growth which used to surpass urban had lagged behind urban over the last year."

In a July 23 earnings call, Jawa said, "In the last few months, we are seeing some green shoots in rural demand recovery. However, our 2-year CAGR rural growth still lags that of urban. We continue to closely monitor rural progress. There are a few critical factors that could impact the pace of recovery. India was hit by one of its worst heatwaves this year with many parts of country experiencing record high temperatures. This was followed by rainfall deficit in the month of June. And while we are seeing recovery in July, we need to be watchful on how the entire monsoon season pans out and the overall impact on agriculture."

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Jawa highlighted that India is undergoing a significant transformation at a fast pace, which is reflected in the changing consumer trends. With increasing affluence, the new India is spearheaded by aspiration for better quality of life. Consumers have become increasingly discerning seeking higher order benefits and making holistic buying decisions, he said. "This has also translated in premium segments performing better than mass, not just in FMCG but across industries," added Jawa, stating the impact of the growing aspirational class.

Next he also emphasized on the the landscape for information consumption and decision-making which is rapidly shifting with consumers increasingly turning to digital sources supported by the country's focus on building digital ecosystems.

"HUL has traversed this macroeconomic scenario with single-minded focus on our priorities for driving volume growth, strengthening competitiveness and maintaining healthy margins," Jawa shared in the call.

"In this backdrop, we have delivered a robust volume led performance in this quarter. We generated revenue of INR 15,166 crores, led by 4% underlying volume growth. Underlying sales growth at 2% was impacted by negative UPG as we passed on the benefits of lower commodity prices to consumers."

HUL's net profit at Rs 2,538 crores grew 3% year-on-year.

Jawa stated, "We continue to focus on operational excellence and build back our gross margins with a substantial part of those being reinvested behind brands and capabilities."