HUL's Bold Move: Hindustan Unilever to Spin Off Ice Cream Business After Q2 Results
Hindustan Unilever is set to separate its ice cream business after reporting a decline in Q2 profits. The decision comes as part of a strategy to focus on core areas like beauty and food, amidst fluctuating urban demand.
HUL's Bold Move: Following the announcement of the fiscal year's second quarter results, Hindustan Unilever Ltd. (HUL) is seen to be marking a critical strategic move that includes spinning off its ice-cream business.
HUL's Consolidated Net Profit declined to 2.33% in the fiscal year's second quarter ended on September 30, 2024, at ₹2,595 crore. The experts specified that the net profit declined due to decreased demand from urban market quarters. Ice Cream Business Spin-off
At a board meeting on Wednesday, HUL revealed that it was carving out its ice cream business, which encompasses some of the popular brands like Quality Walls, Cornetto, and Magnum. The step has been the culmination of an independent study and hints that the ice cream business operates on a different business model, failing to cash in on synergy with most of HUL's products. This segment shows an extremely meagre 3% of HUL's sales revenue, giving a reason behind the independent committee's recommendation, formed in September.
"HUL has various business areas where it can direct its energy towards its core business and hence improve its segments like beauty, food, and wellness," opined HUL Chief Financial Officer Ritesh Tiwari.
HUL's Bold Move: Highlights of Financial Performance
Financial Results for HUL: HUL showed 2.36 per cent revenue growth on product sales, which stood at ₹15,703 crore as compared with ₹15,340 crore a year ago. However, the urban demand growth remains slow, and the company's performance overall has also been affected because of it.
Speaking of HUL, the CEO said that the demand for FMCG products has improved a little in the urban sectors, but the rural is going to recover. Total expenditure of HUL for the quarter stood at ₹ 12,581 crore, while registering a 3.03 percent year-on-year growth, and total income increased by 2.14 percent to ₹ 16,145 crore.
HUL's Bold Move: Brand Portfolio
The company boasts an impressive portfolio of its brands, including Surf, Rin, Lux, Ponds, and Lifebuoy. The Company continues to maintain its competitiveness and profitability in a steady manner as the demand patterns shift in markets.
While HUL is moving forward with the demerger of its ice cream business, all its stakeholders will observe how this strategic move affects the company's performance per se and the positioning in the FMCG market.