Volume Growth In India Yet To Recover, Says Unilever
Unilever is “cautiously optimistic” for the near term and “very positive” on the medium and long term prospects.
Global fast-moving consumer goods major Unilever said volume growth in India, its second biggest market after the U.S., is not yet back at historic levels following demonetisation and implementation of the Goods and Services Tax.
Its Indian arm Hindustan Unilever Ltd. has seen an improvement in volume post the implementation of GST but price growth in India was lower as the benefits of lower taxes were passed on to the consumer, Andrew Stephen, Unilever’s head of investor relations said in a statement released yesterday. The maker of Lux soap and Dove shampoo is “cautiously optimistic” for the near term and “very positive” on the medium and long term prospects.
Our business was able to start invoicing immediately without any problems. However, while some of our customers coped well with the change, others had more difficulty and only recently returned to a more normal buying pattern.Andrew Stephen, Head-Investor Relations, Unilever
Last quarter, the company said tax benefits from the introduction of GST in India will be passed on to consumers with an impact of around 28 to 30 basis points on price in the second half, at the global level.
Only a part of the sales decline seen between April and June as a result of GST was recovered in the third quarter, Stephen added. During the quarter ended June, HUL had posted a 6 percent sales growth with flat volume growth as traders cut stock ahead of the new indirect tax regime.
In an investor presentation filed with stock exchanges recently, HUL said its rural sales in India have yet to recover, attributing the challenging environment to a subdued consumer market, demonetisation, GST and volatile raw material costs. In its analyst call, Unilever pointed to easing commodity cost pressures.
While maintaining its forecast for full-year underlying sales growth of 3-5 percent, Unilever CEO Paul Polman said, “Conditions in our developed markets remain challenging, we are starting to see signs of improvement in some of our biggest emerging markets including India and China. The company posted a 2.6 percent underlying sales growth during the third quarter.