HUL faces margin pressure as crude prices surge and input costs rise
Hindustan Unilever Ltd (HUL) reported flat profit in the September quarter, as rising input costs threaten to squeeze margins in the coming quarters.
The country’s largest consumer goods maker reported consolidated net profit of ₹2,796 crore, unchanged from a year earlier. This was due to a one-off tax-related gains of ₹273 crore in exceptional items in the base period. Earnings before interest, taxes, depreciation and amortization (Ebitda) margin fell 140 basis points to 22.6%.
The personal care segment, which includes brands such as Dove and Closeup and is the third-largest category by revenue, reported a year-on-year decline in Ebitda to ₹449 crore from ₹492 crore.
Rising crude oil and commodity prices threaten to weigh on consumer companies’ profitability in the coming quarters. Brent crude hovered around $115 a barrel on Wednesday, up 90% from a year earlier. Crude-linked inputs are used in several HUL products, including Surf Excel and Wheel detergents. The Nifty FMCG index has fallen about 20% this year, making it one of the worst-performing sectors in the Indian stock market.
HUL shares fell as much as 2.63% on the National Stock Exchange after the results were announced, before closing at ₹1,815, down 0.41% from Tuesday’s close. The company cut its advertising and promotion spending.
“Investors remain concerned about margin sustainability, as profitability was shielded by cutting ad spend,” said Sandeep Abhange, consumer and midcaps analyst at LKP Securities. “As the company enters a high volume base in the upcoming quarters, it will become key if the company can maintain this growth,” he added.
India’s retail inflation rose to 5.54% in September, a 22-month high, from 4.83% in August. Rising costs are prompting consumer companies to increase prices to protect profitability, and HUL is no exception.
“We will continue to take pricing (hikes), as we’ve said, depending on how costs come in,” chief executive officer Priya Nair said at a post-results media briefing. She did not provide guidance on profit for the coming quarters.
At 7%, volume growth in Q2 FY27 (September quarter) is the highest the company has seen in 21 quarters. The company also declared an interim dividend of ₹19 per share.
AWL Agri Business, formerly Adani Wilmar, reported a 2.5% year-on-year decline in net profit in the September quarter of FY27. Nestlé India, meanwhile, posted a 36.3% increase in quarterly profit, but its shares fell as much as 8.3% after the company flagged rising raw material costs.
Also Read | Is Hindustan Unilever stock undervalued?
HUL cut advertising and promotion spending by 9.25% to ₹1,481 crore in the September quarter, from ₹1,632 crore a year earlier. The company had reported an 11-quarter high of ₹1,657 crore in advertising and promotion spending in the June quarter of FY27. Nair said the company was seeing significant efficiency gains from its advertising campaigns.
“It will always happen in inflationary times,” Nair said of the spending cut. “We are also taking a calibrated approach to media. We have a very different opportunity in home care, where prices are inflated, and a very different situation in the rest of our business, where we are growing our media spends,” she said.
The personal care segment, which includes brands such as Dove and Closeup, reported a year-on-year decline in segment earnings before interest, taxes, depreciation and amortization (Ebitda) to ₹449 crore from ₹492 crore.
“On a year-on-year basis, that shows the drop because of the inflation, but underlying, if you see that personal care margins have remained at around 17%,” said Niranjan Gupta, chief financial officer at HUL.
Management said rural and urban demand remained positive during the quarter. “Overall, we’ve seen both urban and rural demand remain positive. In fact, rural demand, we are seeing a quarter-on-quarter increase for our business,” Nair said.
Also Read | For HUL, where there’s a will, there’s a whey
HUL’s home care segment, which includes Surf Excel detergent, reported 22% underlying sales growth, driven by double-digit underlying volume growth. The fabric-wash business recorded strong double-digit growth across liquids, powders and bars. The segment uses crude-linked raw materials such as linear alkylbenzene sulfonic acid (LABSA), which is used in detergents, and took a 10% price hike during the quarter.
The household care segment accelerated, reporting double-digit underlying sales growth driven by volumes. Vim Liquids continued to outperform, with double-digit volume-led growth.
The beauty and wellbeing segment reported 16% underlying sales growth, driven by double-digit underlying volume growth. Hair care accelerated its double-digit, volume-led growth, while skin care and colour cosmetics also recorded double-digit, volume-led growth. Premium skin care sustained its growth trajectory, supported by double-digit growth in organized trade.
Personal care reported 9% underlying sales growth. Skin cleansing recorded double-digit underlying sales growth, aided by price increases. Focused market-development initiatives for Pears and Dove bars supported double-digit, volume-led growth in the segment.
In foods, underlying sales growth was 9%, with low-single-digit underlying volume growth. Packaged foods recorded broad-based, double-digit growth, while coffee posted high-single-digit growth driven by volumes.
HUL said Oziva, its acquired health and wellbeing brand, reported subdued performance. Minimalist, another acquired brand, accelerated growth and strengthened the portfolio through innovation in emerging demand categories.
Neethi Lisa Rojan is a senior correspondent focusing on the consumer goods and retail sector working from Mumbai for Mint since 2026. She has been a journalist for a little over two years with Moneycontrol and The Morning Context. She has covered the consumer and healthcare sectors in earlier roles. She was a double gold medallist during her bachelor’s from Mahatma Gandhi University Kerala and post-graduation from Pondicherry University. With a background in commerce and journalism, she brings a sharp analytical lens to stories on India’s fast-evolving consumer goods and retail sector.<br><br>With an academic background in business administration and a keen eye for financial statement analysis, she bridges the gap between corporate data and compelling narrative journalism. Her reporting is characterized by a focus on how evolving consumer behaviours and regulatory changes impact India's largest mass-market brands. She is a keen learner with diplomas in international business, human rights and journalism. She specialized in business journalism at the Asian College of Journalism, Chennai. When she is not looking into shopping carts, you can find her explaining the latest conspiracy theory.
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