Unilever Says India Market Conditions Worsened In July To September Quarter
Unilever resorted to price hikes in India in the July-September period.
Unilever Plc said market conditions in India worsened in the July to September quarter, and that it resorted to price hikes to manage higher commodity prices.
The rural market and volume growth came under pressure in the quarter, the Anglo-Dutch company’s management said in a conference call after announcing earnings.
Unilever reported a decline in volumes for the first time in over a year, and revenue growth slowed to 3.2 percent.
Analysts say the impact of good monsoon will only be seen in the second half of the current financial year and the July-September quarter will continue to be weak due to weak rural demand.
We expect HUL to report 5 percent volume growth in the second quarter. We also expect 200 basis point contraction in margins on a quarter-on-quarter basis due to a huge surge in palm oil prices. Good monsoon coupled with government’s thrust on rural consumption will fetch results in the second half of FY 17.Sanjay Manyal, Senior Research Analyst, ICICI.direct.com
Rural demand continued to remain under pressure in the second quarter and saw some recovery in the last leg of the quarter. The full benefit of good monsoon will be seen from the second half of the current financial year. The company has taken strategic price hikes to combat rising commodity costs. We also expect margins to remain stable due to judicious expenditure on advertising and promotions in the quarter.Ruchita Maheshwari, Senior Research Analyst, IIFL Wealth Management
HUL’s July Warning
Hindustan Unilever Ltd. Chairman Harish Manwani had warned that growth was likely to remain muted in the near-term, in the July 18 press briefing on the company’s April to June quarter earnings.
The Indian arm of the Unilever had reported 4 percent growth in volumes and 9.8 percent growth in profit in the quarter. Sales had increased 3.6 percent, while operating margins stood at 20.5 percent.