HUL bets on cost cuts to revive growth: MD

Mumbai's Hindustan Unilever is aiming to reignite growth after a sluggish two-year stretch that saw cost reduction, portfolio tightening, and increased investment in core areas like distribution and new categories. Managing Director and CEO Priya Nair revealed the company's plans at its Capital Markets Day event.

HUL intends to hike capital expenditure to 3% of turnover from the current 2%, with over 75% of the extra funds directed towards growth and cost savings. CFO Niranjan Gupta disclosed that the company targets a 500 basis points (5 percentage points) boost to growth through enhanced margins, operational efficiencies, and savings. Ultimately, these gains will be reinvested into areas such as product design, packaging, media, pricing, product architecture, and distribution.

HUL aims to hit an Ebitda margin target of 22-24% for the fiscal year 2026, up from the 23.6% margin it reported in the previous year. The strategy revolves around four growth areas: increasing consumption, premiumization, expanding into new consumer categories, and entering new markets. Nair explained that consumption and premiumization are expected to contribute 40% each to incremental revenue, while new spaces will contribute 20%.

The company, widely regarded as a benchmark for consumer demand in India, is banking on shifting consumer preferences within the existing portfolio. In the beauty and wellness segment, HUL sees significant potential in expanding categories like bodywash, skin cleansing, and functional deodorants. Executive Director Harman Dhillon highlighted the company's focus on functional deodorants, noting low usage in India and changing lifestyles as an opportunity. HUL plans to invest in developing these products.

Moreover, the company is allocating more resources to premium beauty, with over 60% of its media spend directed towards digital channels. HUL is also investing more in premium brands, allocating twice the resources compared to non-premium brands.

In the food segment, Rajneet Kohli, executive director, stated that the business will reposition some established brands to align with evolving consumption trends. For example, Horlicks will be promoted as a lifestyle nutrition product, focusing on superfoods and protein. The broader food strategy encompasses premiumization, functional nutrition, convenience, and ready-to-drink beverages.