HUL grows slowest in Q3 since demonetisation

Hindustan Unilever Ltd., India’s biggest pure-play consumer company by market value, reported 4 per cent sales growth in the third quarter, its slowest expansion since demonetisation three years ago, pointing to continued stress on demand in Asia’s third biggest economy.

Net profit rose 12 per cent to Rs 1,616 crore in the three months ended December from Rs 1,444 crore a year earlier, HUL said in a statement on Friday.

The local unit of the Anglo-Dutch company, for long considered a good proxy for consumer sentiment across the country’s socio-economic spectrum, said weather disruption, continuing liquidity issues, food inflation and weaker consumer sentiment across urban and rural markets affected growth.

“If you ask me, has the tide turnedRs In the December quarter, there was no evidence of that and the market growth was lower than the September quarter. Is the government cognizant of the challengesRs Absolutely, yes. And the challenge is real, too,” chairman Sanjiv Mehta said. “But we are still growing and not in negative territory.”

Over the past two years, rural demand, which accounts for about a third of the market and had been outpacing urban sales, was hit by lower farm incomes and liquidity constraints. Rural markets grew 5.2 per cent during the December quarter compared with 7.4 per cent for urban centres, according to Nielsen.

“As a country, we should not beat down consumer confidence. It is not a doomsday scenario. The government is conscious and I hope they will take steps to put more money in the hands of consumers. Even if in the short term, they have to loosen the fiscal deficit to do it,” Mehta said.

Domestic consumer sales rose to Rs 9,696 crore. The maker of Rin detergent and Lux soaps saw a volume growth increase of 5 per cent. Volume indicates the number of products that customers put in their shopping carts. A year ago, sales had grown 13 per cent in value and 10 per cent by volume.

HUL’s beauty and personal care business, which accounts for almost half of its overall sales, declined 3 per cent to Rs 4,412 crore, impacted by a delayed winter and a 6-7 per cent price reduction in soaps.

Source:- Economic Times