HUL Predicts Mid-to-High Single Digit Growth in FY25, Offering Hope for FMCG Sector

India’s largest consumer goods company, Hindustan Unilever (HUL), announced on Friday that it expects volume growth in the mid-to-high single digits for the financial year 2024-25. This follows an underlying volume growth of 2% and a sales increase of 3% for FY24.

HUL’s performance is often seen as a reflection of the broader Indian consumer goods sector, which has been struggling with weak demand, especially among low-income households affected by high inflation, particularly in rural areas.

“2024 was a transition year from high inflation to a period where commodity costs became lower. This led us to reduce prices, which impacted our overall growth,” said Nitin Paranjpe, HUL’s chairman, at the company’s 91st annual general meeting.

“We expect the FMCG industry to allow us to achieve mid-to-high single-digit volume growth in the medium-to-long term,” Paranjpe added.

For the year ending March 31, HUL’s turnover increased by 2.5% to ₹59,579 crore, while profit after tax grew by 1.5% to ₹10,114 crore. Volumes grew by 2%.

Growth Opportunities Ahead

HUL is focusing on expanding its premium products while also hoping for a recovery in the mass-market segment. “The mass-market segment has been hit hard by inflation, reducing people’s discretionary income and demand. We hope to see a recovery here moving forward,” Paranjpe said, noting that organized trade continues to provide growth opportunities.

In the March quarter, India’s FMCG industry saw a 6.6% growth in value and a 6.5% increase in volume, according to market researcher NIQ. In March, rural demand outpaced urban markets for the first time in 15 months.

Earlier this year, HUL’s parent company, UK-based Unilever Plc., announced plans to spin off its €7.9-billion ice cream unit by the end of 2025 to focus on its beauty, personal care, homecare, and nutrition businesses. HUL has not yet decided on its ice cream business, Paranjpe said.

Regarding Unilever’s global job cuts announced in March, Paranjpe said the impact on the India business will be modest. Unilever employs 128,000 people worldwide, with over 19,000 in India.

“India is a top-priority country for Unilever, with many growth opportunities. Therefore, while efficiency improvements are always possible, the impact on India will be less severe than elsewhere,” Paranjpe stated.

India’s Growth Prospects

Paranjpe highlighted India’s plans to become a middle-income country and grow its economy to $10 trillion. Achieving this goal would lift millions out of poverty, provide housing for all, and create suitable livelihoods.

“This ambitious goal requires India to increase its growth rate from around 7% annually over the last decade to over 8%. While challenging, it is necessary and possible,” Paranjpe said. “India has been one of the fastest-growing large economies in the world over the last decade, with growth rates well ahead of the US and UK at 2%, Japan at 1%, and almost on par with China at 7%.”

Paranjpe emphasized the importance of digital infrastructure, financial inclusion, and economic growth driven by past investments. He also noted that greater participation of women in the workforce and India’s growing working-age population could be key assets in the country’s next phase of growth.