Price Moves and Market Trends: HUL's Strategic Adjustments Amid Commodity Fluctuations

Hindustan Unilever Limited (HUL) has strategically reduced the prices of its products in the tea and homecare sectors, attributed to declining commodity prices and competitive market dynamics. Conversely, the company has heightened the prices of its skincare items due to the escalating costs of palm oil, a substantial component in its skin cleansing product line.

In an earnings call, HUL's CFO Ritesh Tiwari highlighted the volatility in palm and palm derivative prices, which has resulted in sequential price surges in skin cleansing products over the past 6 to 12 months. The company remains vigilant about these fluctuations, ready to adjust as necessary while adhering to its replenishment pricing principle across various segments, including tea.

The FMCG giant also noted notable growth in rural markets surpassing urban counterparts in the recent quarter, supported by economic factors like reduced inflation and improved liquidity. Meanwhile, HUL's gross margins are on an upswing, anticipated to sustain around 22 percent in upcoming quarters. The impact of additional tariffs by the U.S. is deemed negligible, allowing the company to focus on enhancing its market performance. The company is preparing for shareholder discussions regarding the demerger of its ice-cream division scheduled for August 12.

(With inputs from agencies.)