Dry spell for FMCG companies continues
Two of India’s largest fast-moving consumer goods (FMCG) companies—Nestle India and Hindustan Unilever Ltd (HUL)—reported another quarter of weak earnings, underscoring the persistent impact of subdued demand in the sector.
Nestle India on Thursday reported a 5.2% YoY fall in net profit to `885 crore in Q4 FY25, while HUL, India’s largest FMCG company, reported a fall of 3.67% in its consolidated net profit to `2,464 crore, down from `2,558 crore in the corresponding period last year. Sequentially, consolidated net profit for HUL saw a sharper fall of 17.4%. Sales growth for the two companies remained in low single-digit figures. HUL’s consolidated sales grew by just 3% YoY to `15,446 crore in Q4FY25. For Nestle,
domestic sales grew by 4.2% to `5,235 crore.
A senior analyst at a leading brokerage firm stated large consumer companies continue to face slowdown challenges in the urban market even as rural market remains strong. He stated that volatile commodity prices and competition
from small and niche players remain a concern for them, especially in the food and beauty & personal care segments.
Axis Securities in a recent note had stated that volume growth for FMCG companies under coverage is expected to remain soft, continuing the trend seen in Q3FY25, with rural markets outperforming urban regions due to persistent urban demand weakness.
“Input cost inflation-particularly in palm oil, coffee, wheat, and cocoa-is expected to drive price increases, thereby supporting top line growth. The operating environment remains challenging, as companies face stiff competition from regional players, the increasing presence of D2C brands, and inventory liquidation pressures in general trade channels,” it had said. Rohit Jawa, CEO and MD of HUL said while absolute volume tonnage grew in mid-single digit, it was partially offset by a negative mix. The maker of popular brands like Dove and Surf Excel expects the first half of financial year 2026 to be better than second half of FY25.
Suresh Narayanan, Chairman and MD of Nestlé India, stated, “I am pleased to report that this quarter we saw double-digit growth in beverages and confectionery, with 3 out of 4 product groups delivering healthy growth. Our domestic sales crossed `5,235 crore mark, highest ever in any quarter, supported by volume growth.”
The maker of Maggi said it is investing about `6,500 crore during 2020-25 to develop new capabilities and capacity. “The Odisha factory, our 10th citadel of growth, is being set up with an initial investment of approximately `900 crore, in its first phase, to manufacture products from our foods (Prepared Dishes and Cooking Aids) portfolio,” said Narayanan.