HUL net profit beats f'cast, sees demand staying weak

MUMBAI Mon Apr 28, 2014 5:24pm IST

1 of 2. A salesman takes a bottle of Hindustan Unilever Limited (HUL) Dove shampoo from a shelf at a shop in Mumbai April 30, 2013.

Credit: Reuters/Danish Siddiqui/Files

Related Topics

Stocks

   

MUMBAI (Reuters) - Sales growth at Hindustan Unilever (HLL.NS) stayed muted for the eighth straight quarter, hurt by a sluggish economy, and India's largest consumer goods maker said it did not expect a demand recovery in the near-term.

The company's results came after parent Anglo-Dutch consumer group Unilever Plc (ULVR.L) (UNc.AS), which generates more than half of its revenue in developing markets, said emerging markets sales rose 6.6 percent, slower than the 8.4 percent growth in the fourth quarter.

"The pace of growth in the market is slow and there is a high level of inflation hurting consumer wallets," R. Sridhar, chief financial officer said on a conference call.

"It will be difficult to say when will there be an improvement in consumer sentiment but we are hoping it is going to be sooner rather than later," he said.

A normal monsoon, key to rural demand, and pre-election spending on consumer goods to woo voters in Asia's third-largest economy, failed to lift consumer spending as surging commodity prices and meagre salary increases weighed on incomes

. "The performance is deteriorating every quarter and it is causing more worry than it typically should because it's two years in a row with no recovery in sight, said G. Chokkalingam, founder of research and fund advisory company Equinomics.

Hindustan Unilever (HUL), which manufactures Fair & Lovely fairness cream and Sunsilk shampoo, said net profit for the quarter grew 11 percent to 8.7 billion rupees ($143.4 million). Net sales rose 8.9 percent year-on-year to 69.4 billion rupees.

Analysts on an average estimated a net profit of 8.5 billion rupees on sales of 70 billion rupees, according to Thomson Reuters Starmine Estimates.

Overall sales volumes in the March quarter grew 3 percent, below market estimates of 5 percent growth and lower than the 6 percent growth logged a year ago.

The personal care segment, which grew 8 percent, saw demand for skin, oral and hair care products slow further after growing 12 percent in the previous quarter and 12.7 percent in the same period a year earlier.

The company trades at 32.2 times its 12-month forward earnings, compared with 27.7 times for ITC Ltd (ITC.NS) and 29.7 times for Godrej Consumer (GOCP.NS), according to Thomson Reuters Starmine Smart Estimate.

Out of the 41 analysts covering the stock, 19 had a 'sell' rating along with six 'strong sell', while 13 had 'hold' recommendations along with two 'buy' and one 'strong buy'.

Shares of the company have risen 1.8 percent so far this year, compared with a 4 percent increase in the BSE FMCG index.

($1=60.6550 rupees)

(Reporting by Nandita Bose; Editing by Gopakumar Warrier and Mark Potter)

FILED UNDER:
We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/
Comments (1)
MACHGREAT wrote:
Wii it close its business from India like other companies such as Wall Mart?

Apr 28, 2014 6:29pm IST  --  Report as abuse
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Adani Project

Adani Project

Australia approves Adani's $16 bln Carmichael coal project  Full Article 

India-U.S. Talks

India-U.S. Talks

Kerry to woo Modi's India, but quick progress unlikely  Full Article 

Argentina Debt Default

Argentina Debt Default

Insight - Jaded Argentines brace for looming debt default   Full Article 

Anti-trust Probe

Anti-trust Probe

Microsoft targeted in apparent Chinese anti-trust probe  Full Article 

Mideast Conflict

Mideast Conflict

Israel strikes house of Hamas Gaza leader, digs in for long fight  Full Article 

Stiff Competition

Stiff Competition

China brands beat global rivals with tea toothpaste & pickled plums  Full Article 

Rising From Ashes

Rising From Ashes

With PlayStation network, Sony goes back to the future in search of revival  Full Article 

Reuters India Mobile

Reuters India Mobile

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