Hindustan Unilever Q1 FY27 earnings call

Hindustan Unilever Limited delivered a strong Q1 FY27, achieving a 10% Underlying Sales Growth (USG) and 5% Underlying Volume Growth (UVG), marking its highest growth in 13 quarters. This performance was driven equally by volume and price, reflecting decisive actions in portfolio transformation, execution sharpening, and market development. The company also reported a significant sequential increase in Advertising & Promotion (A&P) spends to ₹1,657 crores, the highest in 11 quarters, indicating continued investment in brand building and long-term growth.

Home Care led with 14% USG and high-single digit UVG, its strongest performance in three years, with Fabric Wash and Household Care showing double-digit growth. Beauty & Wellbeing delivered 12% USG and high-single digit UVG, driven by double-digit growth in Hair Care and Premium Skin Care. Personal Care grew 4% USG, with Skin Cleansing showing mid-single digit growth led by premium bars and Bodywash. Foods segment recorded 7% USG and mid-single digit UVG, with Lifestyle Nutrition (Horlicks and Boost) maintaining double-digit growth and Boost crossing the ₹1,000 crore annual turnover milestone.

HUL is investing in future-fit capabilities, including the launch of Unilever Fragrance House in India and a Liquids Lab of the Future in Mumbai, accelerating R&D and formulation development. The company's Haridwar and Sonepat factories received World Economic Forum's Global Lighthouse Network recognition for supply chain resilience and sustainability, bringing HUL's total WEF Lighthouse designations to 8. Digital transformation and AI integration across the value chain, including a digital-first distribution center in Vijayawada, are enhancing operational efficiency and consumer service.

Despite an uncertain global environment, India demonstrated resilience with stable macroeconomic foundations. The FMCG demand environment remained stable during the quarter, with robust growth observed in both rural and urban areas. Management expressed confidence that FY27 will be better than FY26, driven by continued market development, channel expansion, and portfolio transformation. The company expects EBITDA margins to remain around the current guided range, managing commodity volatility through structural savings, calibrated pricing, and judicious media investments.

HUL has adopted a calibrated pricing strategy to navigate inflation in crude-linked derivatives, ensuring competitive positioning while maintaining profitability. The company's strong balance sheet and cash generation enable continued investment in brands and innovation. Management indicated that maintaining EBITDA margins around 23% is feasible within a crude price range of $75-$100 per barrel, leveraging P&L flexibility and a 'playbook' for managing cost pressures.

Quick commerce continued its strong double-digit growth, with HUL focusing on improving availability, curated assortments, and price-pack architecture for this rapidly evolving channel. The company's portfolio expansion strategy includes extending existing brands into new demand spaces (e.g., Horlicks protein, Vaseline moisturization), introducing more Unilever brands, and strategic acquisitions like Minimalist and OZiva to gain scale and leverage R&D capabilities. This broad-based growth across categories and channels, including General Trade, Modern Trade, and E-commerce, underpins the company's confidence.