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Unilever’s Indian subsidiary posted a better-than-expected third quarter growth, chiefly driven by value rather than volume.
Hindustan Unilever (HUL), the maker of brands such as Dove, Lux and Knorr, had increased prices by around 14 per cent in most of its high volume categories such as soaps and detergents to improve margins as volume growth continued to slow since the beginning of 2013. In the third quarter, the company increased the prices by 3-4 per cent compared to 5.4 per cent last year.
HUL’s Chief Financial Officer R. Sridhar, said, “In a very challenging market, we have delivered 10 per cent growth in our consumer business and margins have also expanded. Our underlying volume growth was 4 per cent, which clearly reflects the slowdown we are seeing in the broader market. Overall, consumer goods market have been slowing down all through 2013 and December quarter was also a quarter of slow growth from market perspective. The trend might continue for another two-three quarters.” In the coming quarters, most of the FMCG firms, including HUL, are likely to see muted growth.
“HUL is very optimistic about the outlook and opportunity as the level of per capita consumption is still very low across most of the product categories,” he added. On Unilever CEO Paul Polman hinting at likely cost cutting measures , Sridhar said, “it is just about being more efficient in times when market growth is slower and how you ruthlessly go ahead.”
Exceptional items The Indian unit of the Anglo-Dutch FMCG maker reported a 9.4 per cent growth in profit after tax before exceptional items at ₹955 crore as against ₹873 crore December 2012 quarter. Including exceptional items net profit grew 22 per cent. The company’s total income was in line with market expectations, riding on the domestic consumer business, which grew 10 per cent.
During the quarter, the company’s soaps and detergents business delivered healthy growth, driven by Dove, Pears, Lifebuoy and Breeze. The laundry segment’s growth was led by sale of premium products such as Excel Matic and Surf Excel Easy.
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