There will be some impact on profitability in short term due to coronavirus: HUL

FMCG major Hindustan Unilever Ltd (HUL) on Tuesday said the coronavirus pandemic has imposed incremental operating costs on the business and there will be some impact on its profitability in the short term.
According to a PTI report: In a regulatory filing, HUL, however, said it is difficult to assess the exact quantum of impact on its profitability at this stage.
“The integrity of our financial model remains intact. The company doesn’t foresee any incremental risk with regards to its ability to service financial arrangements and recoverability of its assets including inventory and receivables,” it added.
In terms of business impact of the lockdown, HUL said it has severely impacted the FMCG market and the loss of livelihoods has taken a substantial toll on consumer demand.
Stating that it is closely observing the changes in demand patterns and consumer behaviours, HUL said, “We are seeing heightened consumer focus on health, hygiene, and nutritional needs. Our portfolio comprising of categories like skin cleansing, home and hygiene, nutrition, tea, coffee and foods is well positioned to cater to these consumer demand spaces.”
On the other hand, with mobility restrictions, lockdown of retail spaces and fear of loss of income, the impact on discretionary categories like hair care, skin care and colour cosmetics is more accentuated, it added.
“While we are seeing some demand revival in these categories, the exact time which these categories will take to recover fully remains to be seen,” it said.
HUL further said its out of home businesses comprising ice creams and foods solutions and consumer durables business of water have been most severely impacted by the lockdown.
After suspension of operations due to the lockdown during initial days, HUL said it has ramped up production to 80-90 per cent of normative levels.
“All our factories and all of our warehouses, except one in Assam, are open with the requisite government permissions and adherence to highest safety standards,” the filing said.
On the future impact of the pandemic on its business operations, the company said it is difficult to assess at this point, as the situation is unravelling at a fast pace.
“Even though the current situation is volatile, we are confident about our ability to manage the crisis and come out of it in a strengthened position,” it said.