Despite inflationary pressures and dwindling FMCG volumes, Hindustan Unilever Limited (HUL) has increased its advertising spending. For the fiscal quarter ending 30th June, the firm upped its ad spending by 30% to Rs 1334 crore from Rs 1029 crore in the previous fiscal quarter. HUL’s ad spending fell by over 9% in Q4 FY22, to Rs 1,296 crore from Rs 1,418 crore the previous year.
During the Q1 FY23 results call, HUL CFO and Executive Director, Finance and IT Ritesh Tiwari told investors that the FMCG company is ensuring that its brands receive enough support in order to maintain a bigger share of voice. HUL offers over 50 brands in numerous important industries.
Tiwari stated that HUL was able to keep EBITDA margins at a respectable 23.2 percent in the first quarter due to a strong emphasis on fundamentals.
HUL, he claims, is investing in goods and providing better value to customers. Tiwari stated that the FMCG behemoth continues to take measured price adjustments.
He also emphasized that the most essential thing is to increase savings and optimize all non-customer-facing expenditures.
Tiwari stated that the company’s Foods & Refreshment margins fell during the quarter due to an increase in advertising spending. “Foods and Refreshment margins declined by about 200 basis points, attributable mostly to an increase in A&P investments and an unfavorable mix as a result of faster growth in ice-cream business relative to other categories such as health food drinks and tea,” he explained.
In response to a query concerning the EBITDA margin settling at 25%, the HUL CFO replied that EBITDA margins are determined by commodity pricing and competitive investment in the business. He also anticipates an increase in the competitive intensity of ad spending.
Tiwari mentioned that HUL has two primary goals. The first is to expand the consumer franchise, and the second is to defend its business.”We will do this by investing competitively in our brands, increasing savings, and executing calibrated pricing changes when needed.” Second, we will continue on our aim to establish a future-fit, purpose-led HUL and offer consistent, competitive, lucrative, and responsible 4G growth.”
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