HUL quarterly sales growth slows, no immediate recovery

MUMBAI Mon Jan 27, 2014 4:40pm IST

Sachets of shampoo by Sunsilk, a Hindustan Unilever Limited (HUL) brand, hang on display at a shop in the old quarters of Delhi May 13, 2013. REUTERS/Mansi Thapliyal/Files

Sachets of shampoo by Sunsilk, a Hindustan Unilever Limited (HUL) brand, hang on display at a shop in the old quarters of Delhi May 13, 2013.

Credit: Reuters/Mansi Thapliyal/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Hindustan Unilever (HLL.NS), India's largest consumer goods maker, expects sales growth to remain muted for the next few quarters at least, stymied by a sluggish economy which led to its seventh consecutive quarter of weaker sales.

The slowdown in sales intensified in the quarter ending December 31, as demand from rural India, which accounts for nearly half of the company's sales, fell. Demand in urban areas was also lower as customers spent less in a weakening economy, the company said.

"Market growth continued to be slow and as we stand today, in the near term, we can expect to see a few more quarters of slow growth," Chief Financial Officer R. Sridhar told a conference call after the company announced its third-quarter earnings on Monday.

Overall sales volumes in the December quarter grew 4 percent, in line with market estimates of 4-5 percent growth but lower than the 5 percent growth logged a year ago.

India's economy has been hit by slowing private consumption as well as declining capital investment and public spending, leading to the slowest growth in a decade for the fiscal year that ended in March.

Hindustan Unilever (HUL) is majority owned by Anglo-Dutch firm Unilever Plc (ULVR.L) (UNc.AS), which this month said it would remain focused on emerging markets even though economic weakness in India and Indonesia last year had hurt its performance.

Unilever generates more than half of its sales in emerging and developing markets.

HUL faces the difficult choice of raising prices or retaining market share, as high promotional expenditure pinches margins and higher prices hurt volumes.

Higher promotional spending pushed up sales in the personal care segment by 12 percent year-on-year, while the company's food business grew an annual 13 percent.

HUL, which manufactures detergent brand Rin and Dove soap, said its net profit in the December quarter rose 22 percent to 10.6 billion rupees aided by a one-time gain. Profit before exceptional items grew a conservative 9 percent.

Net sales rose 9.5 percent year-on-year, to 70.4 billion rupees.

Analysts had on average estimated a net profit of 9.3 billion rupees on sales of 71.3 billion rupees, according to Thomson Reuters Starmine Estimates.

A sharp depreciation in the rupee between May and August last year impacted the company's December quarter earnings, Sridhar said.

Valued at $19.5 billion, Hindustan Unilever also makes Fair and Lovely skin cream, Clinic Plus shampoo and Lipton tea.

Shares of the company have remained flat with a 0.8 percent drop so far this year, in line with a 0.6 percent fall in the consumer sector index of the Mumbai stock exchange.

The company trades at 31.5 times its 12-month forward earnings, compared with 25.9 times for ITC Ltd ITC.NS, 35.4 times for Nestle and 24.8 times for Godrej Consumer, Thomson Reuters Starmine Smart Estimate showed.

(Editing by Miral Fahmy)

FILED UNDER:
  • Most Popular
  • Most Shared

DEFENCE

REUTERS SHOWCASE

Power Theft

Power Theft

India to invest $4 billion to tackle power theft  Full Article 

Debt Funds

Debt Funds

India monitors foreign flows into debt funds, may tighten rules  Full Article 

Bulgari Back in India

Bulgari Back in India

CEO: we shouldn’t have left India so we’re back  Full Article 

 Hindu "Modi-fication"

Hindu "Modi-fication"

Fears grow about Hindu "Modi-fication" of education  Full Article 

Weak Credit

Weak Credit

Hard to hit tax revenue target, credit weak - Jaitley  Full Article 

China Rate Cut

China Rate Cut

China surprises with interest rate cut to spur growth  Full Article 

Gold Imports

Gold Imports

RBI cautious on response to gold import surge  Full Article 

Economic Corridor

Economic Corridor

China commits $45.6 billion for economic corridor with Pakistan  Full Article 

Overseas Funds

Overseas Funds

RBI says overseas borrowed funds can be parked with banks in India  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage