HUL sales, factory output 40% of daily run rate due to disruptions

MUMBAI: Hindustan Unilever, the country’s biggest consumer goods firm, said average daily sales and factory output have tumbled to about 40% of its usual run rate thanks to labour shortages and transport disruptions in the midst of the Covid-19 lockdown. The exact impact on consumer demand is difficult to ascertain at this point, the company said.

Supply chains across the country have been hit since the middle of March at least.

HUL sales plummeted in the last week of March compared to its daily run-rate, said a spokesperson, who pegged it at a low single-digit percentage value.

‘Supply Chain Partners Impacted’

“Availability of manpower for our factories, distribution centres as well as for vehicles and trucks, continues to be the biggest challenge,” the person said. “This continues to impact our wider supply chain partners too. Additionally, due to restricted capacity at the main ports in India, both for sea as well as air freight, we are facing supply constraints for import of materials for which we do not have the possibility of a locally produced alternative.”

A three-week lockdown imposed across the country on March 25 is scheduled to end on April 14 but some states have asked for it to be extended as they seek to control the outbreak.

The local unit of the Anglo-Dutch company controls more than 10-12% of India’s fast-moving consumer goods (FMCG) market and is seen as a proxy for consumer sentiment in the country. ET reported Wednesday that a sharp rise in the stock price this year helped HUL become one of the top 15 global consumer staple stocks by market capitalisation as a flight to safety has prompted investors to seek defensive bets. However, the stock fell 3.5% to Rs 2,372.90 on the BSE Thursday.

Consumers have been stocking up on groceries and staples as they fear supplies may run out. On the other hand, makers of essentials and packaged food have seen big production cuts and supply disruptions after factories were closed in several places by law enforcement authorities. The latter also prevented the movement of trucks, halting supplies of raw materials and finished goods. In towns where factories are still running, police have restricted the movement of employees while many have refused to come to work for fear of catching the disease or have gone back home to their villages and towns.

“We are hopeful that the authorities will take more steps to facilitate the inter and intra-state movement of trucks, unlock capacity for movement of goods at sea and airports and ease restrictions on movement of people working in essential goods factories and distribution centres,” said the spokesperson.

HUL, which makes items that straddle the personal, home and food segments, said it would be important to meet demand from consumers for products that are critical under the current circumstances such as hand washes, sanitisers, floor cleaners and hygiene products.