Nomura Analyst Assesses Volume Growth for Hindustan Unilever Ltd.
What happened
Hindustan Unilever Ltd. reported multi-quarter-high revenue growth for the three months ended September, but consolidated gross margins fell to multi-quarter lows of 47.6%. This decline was driven by raw-material costs increasing 24% year-on-year, exceeding the 14.8% operating revenue growth. A Nomura analyst suggested that the two-year compound annual growth rate for volume growth is about 3.5%, which is a more sustainable range than the quarterly figure.
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Why it matters
The increase in raw-material costs, triggered by elevated commodity prices, puts pressure on the profitability of fast-moving consumer goods companies. Hindustan Unilever Ltd. responded by implementing calibrated pricing actions and reducing advertising expenses to curb the drop in EBITDA margin.
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Who's involved
Who could feel it
Possible knock-on effectsThese are possibilities Brind reasoned out, not predictions, and not advice. Most are not stated in any report.
- West AsiaSpeculative
Geopolitical instability in West Asia could drive elevated commodity prices, increasing the costs of raw materials for manufacturers.
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The entities involved
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Nomura
corporation in Japan