HUL's ad spends grew only by 2.3% in FY20 over last year

Hindustan Unilever Limited (HUL) spent 5.09% more on advertising in the quarter ending March 31, 2018 than the corresponding quarter last year. The FMCG giant spent Rs 1,175 crore in Q4FY20, up from Rs 1,118 crore in Q4FY19.

However, the advertising spend in Q4 witnessed a negligible increase of 0.34% from Rs 1,171 crore in the quarter ending December 31, 2019.

The advertising spend for the entire 2019-20 was up by only 2.3 % from the previous year. The company reported an annual ad spend of Rs 4,713 crore in FY20 while it was Rs 4,607 crore in the previous year.

The spread of Covid-19 affected the business from mid-March, which culminated into scaling down of operations after the national lockdown.

The company reported a 3.43% (YoY) drop in consolidated net profit at Rs 1,520 crore for March quarter, compared with Rs 1,574 crore in the same quarter last year. Revenue for the quarter fell to Rs 9,055 crore from Rs 10,018 crore in the quarter a year ago. Domestic consumer growth declined by 9% with a decline of 7% in underlying volume growth.

Home care, beauty & personal, food & refreshment saw a decline in sales by 4%, 14% and 7%, respectively, in Q4FY20.

Covid-19 is having an unprecedented impact on people and the economy. In a statement, HUL said, “As Hindustan Unilever Limited, we have moved at speed to support our multiple stakeholders and maintain our operations through the crisis and prepare for growth in a new normal. We have structured our immediate response into five areas: supporting our people; protecting supply; serving demand; contributing to society, and maintaining our financial strength.”

The company has taken various measures to support its business partners, including special medical coverage insurance for the front line. HUL has been working closely with various authorities to commence quickly and scale up the supply of the products. The company is currently operating at about 70% of normative levels and is hopeful to improve this in the coming days. In this hour of need, HUL has ramped up capacities in key categories such as sanitisers, handwash, etc., and is also operating with shorter planning cycles, stepping up agility and building resilience in the supply chain.

Demand patterns are changing, and HUL is likely to see an upswing in categories like health, hygiene and nutrition. In the near term, some adverse impact on discretionary categories and out-of-the-home channels can be seen. HUL has redesigned its communications to stay relevant to the consumers in the current environment.

Sanjiv Mehta, Chairman and Managing Director, commented, “Covid-19 is perhaps the biggest challenge for us both from the lens of sustaining lives as well as livelihood. The human impact of the pandemic is uncertain and we are fully committed to working with the Government and our partners to ensure we overcome this crisis together. Our portfolio of trusted brands, our financial stability and quality of leadership teams positions us well to deal with the crisis and, for the changing world that will come afterwards. With the GSK CH merger effective from April 1, iconic brands such as Horlicks and Boost will now enable us to address nutrition needs of consumers. Our approach will be to protect our business model, grow competitively and contribute to the nation.”

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