Hindustan Unilever sees sales increase but demand remains weak

The Fair & Lovely skin cream maker has reported a 4% increase in its Q1 net profit at Rs1,057 crore ($175.9 million) and a 15% year-on-year increase in after-tax profit at Rs1,020 crore for the quarter.

However, with household spending suffering as high inflation eclipses city salary rises and a recent drought reduces rural income, the market remains a tough one for the leading consumer goods firms.

Challenging environment​

The consumer goods sector in Asia's third-largest economy is worth about $13 billion according to analysts, but consumers have been "pessimistic" for 33 months, showed a June survey by ZyFin Research.

"The environment continues to be tough and both volume and value growth metrics are not showing substantial signs of improvement,"​ HUL Chief Financial Officer PB Balaji said in a conference call. "Discretionary categories continue to be under pressure.”​

Growth​

There was positive news when looking at the segment breakdown for the company, as all displayed double digit growth, while domestic consumer business increased 13%.

''We continue to grow ahead of our markets and have delivered another quarter of strong top and bottom-line performance,”​ says Harish Manwani, chairman of HUL.

“While we are seeing headwinds on market growth, consumer spending and inflation, we remain focused on managing the business for long term competitive and profitable growth and implementing our strategy with even greater rigor.” ​

The soaps and detergents division recorded double-digit growth with a step-up in price growth as judicious pricing actions were taken to manage input cost inflation.

Personal products also recorded strong growth in a challenging environment, while colour cosmetics maintained its high growth momentum across product lines, with Lakme continuing to strengthen its position in premium make-up driven by exciting and contemporary innovations.