Unilever India’s profit misses estimates on weak demand, subdued festival season

BLOOMBERG

Indian consumer goods giant Hindustan Unilever Ltd posted disappointing quarterly profit as it struggled with weak demand, a subdued festival season and competitors tearing into the firm’s market share.
The Mumbai-based unit of Unilever Plc reported a 0.4% rise in net income to 25.2 billion rupees ($303 million) for the quarter through December compared with the same period a year ago, according to an exchange filing. That undershot the average analyst estimate of 26.98 billion rupees based on a survey compiled by Bloomberg. India’s largest staple goods company is seen as the bellwether for consumer demand with its household products sold in every nook and corner of the country.
In a presentation, the maker of Surf detergent and Magnum ice cream pointed to an uneven economic recovery and delayed winter in India, with tepid demand in the vast rural hinterland contrasting to more affluent urban customers buying up premium goods.
Jefferies analysts called the results “weak” after revenue fell 0.4% to 149.3 billion rupees compared to the same period last year. Total costs increased 0.3% to 120.1 billion rupees.
Volume growth eased to 2%, compared with 5% a year ago, while the cost of raw materials fell marginally.

‘Gradual Recovery’
“Looking forward we expect gradual recovery in market demand to continue aided by increased government spending, recovery in winter crop sowing and better crop realisation,” Chief Executive Officer Rohit Jawa said in a statement. “Rural income growths and winter crop yields are key factors that will determine the pace of recovery.”
Over the last nine months, the company introduced several new premium products, including Lakme cosmetics, which Jawa said were a hit with customers.
“India is upgrading across all levels of the income,” he told reporters on Friday. “We see this as a secular trend in the years to come.”
Jawa added that Hindustan Unilever is working on reshaping its food and beverages business, while investments in new beauty and personal care products will continue as competition remains intense with commodity prices easing.