Hindustan Unilever profits down due to price cuts on soaps & detergents
Posted on: 15/Oct/2015 4:18:39 PM
India`s largest consumer goods firm, Hindustan Unilever Ltd (HLL.NS), has informed that its profits for the 2nd quarter got dragged down. This was primarily due to price cuts for key products including soaps and detergents.
The Indian unit of the Anglo-Dutch consumer group Unilever Plc had slashed prices for items like its Lux soap mainly because of reduced demand in rural India. The sales of these products accounts for nearly half its revenue.
The strategy of price reduction helped sales volumes to be up by 7% and revenues up by 5%. However, it hit the bottom line. With recent trends, the company does not see a substantial step up in rural growth compared with what we have had in the past.
HUL is considered to be the barometer of Indian consumer sentiment. It has been under pressure in recent quarters. Demand from India`s villages contributes about 35 percent to its total sales, but a weak monsoon and rising food prices have squeezed households.
However, the company expects future growth to be driven by volume, as raw materials have become cheaper in recent months. The maker of Lipton Tea and Dove shampoos posted a quarterly net profit of Rs. 9.62 billion.
This is down as compared to the figure of Rs. 9.88 billion a year earlier. Net sales climbed to Rs. 78.20 billion. According to Thomson Reuters data, analysts on average were expecting a profit of 10.43 billion rupees.
