HUL Says There Is Stress In The Short Term
HUL reiterates demand is improving gradually.
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Hindustan Unilever Ltd., India’s largest consumer goods maker, said stress triggered by the note ban, a new nationwide tax and higher commodity costs continues to pose challenges even as demand improves slowly.
There is stress in the short term, the company said in an investor presentation uploaded on stock exchanges. Yet, there is a gradual improvement and rural demand no longer lags urban consumption.
The maker of Lux soaps and Wheel detergent, after its earnings for the quarter ended December, said the improvement is expected to sustain as trade conditions normalise. It beat estimates as volumes rose 11 percent.
Demand slowed after Prime Minister Narendra Modi outlawed 86 percent of currency in circulation in November 2016. Even as the economy was recovering, the government rolled out the Goods and Services Tax. That disrupted supply chains and slowed manufacturing growth. Volatile commodity prices are an added challenge.
“There are early signs of commodity cost inflation and we will further sharpen our focus on cost effectiveness programs and manage our business dynamically for competitiveness and sustained profitability,” HUL Chairman Harish Manwani had said in a statement accompanying its earnings filing.
The company remained positive on the medium-term outlook despite rising input costs. Even its parent Unilever Plc told investors after announcing its September-December results that the situation in India was getting better.