HUL shares hit 52-week high on decision to review ice-cream biz strategy

Hindustan Unilever’s (HUL) shares surged 3.5% to hit a new 52-week high of ₹2,937.50 after the FMCG company’s announcement that it will review its ice-cream business strategy.

At the time of reporting, HUL shares were trading at ₹2,925.85 on the BSE, marking a 3.08% rise from the previous close of ₹2,838.45. The stock opened higher today at ₹2,840.70, in sync with the strong broader market. The company’s market cap stands at ₹6,87,137.96 crore. Over the past month, the stock has climbed 6.44%, surged 22.96% in the last six months, and gained 10.15% year-to-date (YTD).

In a recent exchange filing, HUL announced that during a board meeting on September 6, the directors discussed future directions for the ice-cream segment. This review follows Unilever PLC's earlier announcement about separating its global ice cream business.

“The Board of Directors of Hindustan Unilever Limited (“HUL”, “the Company”) at its meeting, discussed the way forward for its Ice cream business,” HUL states in a release.

The board has decided to form a committee of independent directors to thoroughly assess the ice-cream business’s prospects and provide recommendations. They have also approved exploring potential structural and alternative options. Once the independent committee submits its recommendations, the audit committee and board will review and make final decisions in upcoming meetings.

In its annual report, HUL noted that the FMCG sector faced challenges in FY 2023-24 due to unpredictable weather affecting agricultural output and consumer sentiment. Although inflation has eased slightly, recovery in volumes has been gradual, particularly in rural areas, due to previous years of high inflation affecting disposable income. Conversely, urban and premium segments have shown more resilience.

Unilever, the parent company of HUL, revealed on March 19 its intention to separate its global ice cream business across various jurisdictions. The company also planned to spin off the ice cream division from its core operations to accelerate growth and enhance profit margins.

On the same day, Unilever, the manufacturer of Magnum ice cream, announced that it would lay off 7,500 employees worldwide as part of its productivity program. The London-listed company also projected that the full separation of the ice cream business would be finalised by the end of 2025.

HUL posted a 2.2% increase in consolidated net profit for the June quarter of FY25, reaching ₹2,612 crore, compared to ₹2,556 crore in the same quarter last year.

Revenue from product sales saw a slight growth of 1.68%, totalling ₹15,497 crore, up from ₹15,240 crore in the corresponding period of the previous year. Total expenses for the June quarter FY25 rose by 1.8% year-on-year to ₹12,385 crore, compared to ₹12,167 crore in the same period last year.