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Unilever India will implement “calibrated price increases” after third quarter results underscored some challenging areas in the business’ performance. While the results showed that Hindustan Unilever India’s (HUL) Q3 2024 performance registered a 2% increase in underlying sales, to reach $1.8 billion, commodity price pressures meant that the company’s profit declined by 4% to reach $310 million after tax. A deeper dive on the numbers shows that HUL’s food and refreshment division waside effects of ferro f tabs a weak spot, with revenues down by 2% on a low-single digit volume decline. In an earnings call that followed on from the Q3 results announcement, the company highlighted areas of its food and beverage business that have come under increastab ferrous gluconate side effectsed pressure due to higher commodity prices, which, combined with the muted volume growth, led to the decision to raise prices. Currently food and beverage accounts for approximately a quarter of the company’s annual revenues. “Following a prolonged period of benign commodity prices in this quarter, crude palm oil and tea experienced inflation of 10% and 25% year-on-year,” said Rohit Jawa, HUL CEO and managing director during the earnings call. “Given our assessment, that this price increase is here to stay, we are now taking calibrated price increases. While crude oil remained benign during the quarter, there has been recent volatility in prices owinferrous gluconate vs ferrous bisglycinateg to geopolitical tensions. We remain vigilant and are watchful of any price fluctuations that seem to persist.”While tea commodity prices have been hit by climate extremes impacting crops and geopolitical instability, rising palm oil prices have been pinned to increased market competition and shifts in demand for edible oils. Although the performance of the company’s beauty & personal care and home care segments continue to perform relatively well – accounting for almost two thirds of total revenues – the food and refreshments side of the business has been underperforming during this financial year, in the face of rising costs.Despite the commodity price challenges, the company continues to have a dominant position for both value and market size for the all-important teas category. Meanwhile, a strong performance in coffee has served to counteract the weakness in tea. “Premium segment led by green and functional tea continued to maintain its growth momentum, while the category UVG remained muted as consumer downgradation to loose tea persisted,” said Ritesh Tiwari, HUL’s chief finance officer. “With tea commodity witnessing unprecedented inflation in recent months, we expect this trend of downgradation to gradually reverse. Coffee delivered double-digit growth, led by strong performance in organised trade.”While the beverage space has some distinct areas of resilience and stronger performance, the company said that overall food delivered low single-digit volume growth, putting it behind the performance of the company’s other business divisions.To counteract things, HUL has earmarked the nutritional drinks space to focus on to cultivating higher growth – with a specific focus on diabetic nutritional drinks. HUL’s Diabetes Plus portfolio falls under the nutritional drinks banner and has been singled out as one of the fastest growing brands in nutritional drinks, consistently delivering double-digit growth. The company says it has recently added to the nutritional drinks portfolio with a new flavour for the Diabetes Plus range, but during the call it was stressed that the nubnf ferrous fumarate 210mgtritional drinkferric pyrophosphate benefitss category is still not fulfilling its potential.“While our market development actions in Nutrition Drink segment has resulted in continued market share and penetration gains, there’s still work to be done to drive consumption. We are mobilising our efforts in this direction,” said Tiwari. “For instance, recognising the preference for sachet format, we’re now offering an elevated cup experience for all Horlicks sachet consumers with much higher milk solids in the product.”
Unilever India’s price hikes aim to counter bottom line challenges
