HUL Cuts Ad Spend as Q2 Revenue Shows Modest Growth
HUL reported a 14.88% decrease in advertising spending for Q2 FY2024, while revenue rose 1.5%. Net profit declined 4%, prompting a review of its Ice Cream division.
Aryan
Hindustan Unilever Limited (HUL), one of India’s largest FMCG companies, has reported a significant reduction in its advertising and promotion (A&P) expenditures for the second quarter ended 30th September 2024. The A&P spend for this period was Rs 1,464 crore, reflecting a 14.88% decrease year-on-year (YoY) compared to Rs 1,720 crore in the same quarter of the previous year. Additionally, there was a 10.95% decline quarter-on-quarter (QoQ) from Rs 1,644 crore in the June 2024 quarter.
Despite this reduction in advertising spending, HUL's revenue from operations in Q2 FY2024 increased slightly by 1.5%, reaching Rs 15,508 crore, up from Rs 15,276 crore a year earlier. However, the company experienced a 4% decline in its standalone net profit, which fell to Rs 2,612 crore from Rs 2,717 crore reported in the same quarter last year.
These financial results come amid strategic evaluations by the company’s Board of Directors regarding its Ice Cream business. Following recommendations from an Independent Committee appointed on September 6th, 2024, the Board announced on October 23rd, 2024, its decision to separate the Ice Cream division. This move reflects HUL’s ongoing efforts to streamline operations and focus on core growth areas.
In summary, while HUL has seen stable revenue growth despite reduced advertising expenditures, its profit margins have been affected. The forthcoming separation of the Ice Cream division may signal a significant shift in the company's strategy, aiming to enhance operational efficiency and drive future growth.
