Unilever's India arm profit drops

AAP

India's biggest consumer goods maker Hindustan Unilever, the local arm of food giant Anglo-Dutch Unilever, has reported a 23 per cent slide in quarterly net profit and voiced worries about weak market growth.

Net profit fell to 10.19 billion rupees ($A187.18 million) in the three months to June from 13.31 billion rupees a year earlier, which was higher due to a one-time gain from the sale of property - broadly in line with market estimates.

Sales in the financial first quarter rose just seven per cent to 66.87 billion rupees after climbing 14 per cent in the same quarter the previous year, the company - which sells brands such as skin fairness cream Fair and Lovely, Dove products and Lux soaps - announced on Friday.

Concern about Hindustan Unilever (HUL) sales growth, which are watched by analysts as an indicator of overall Indian consumer demand, sent the company's shares down 3.38 per cent to 663.3 rupees.

HUL chairman Harish Manwani said there were "near-term concerns about slow market growth".

The earnings come at a time when economic growth in India is at its slowest in a decade and demand for consumer goods sluggish as people cut down on discretionary spending amid high inflation.

This month, Unilever announced it had paid $US3.2 billion ($A3.48 billion) for an additional 14.8 per cent stake in its Indian subsidiary as part of its strategy of expanding in emerging markets.

Unilever now owns 67.28 per cent of HUL, up from an earlier 52.48 per cent. India is Unilever's third-largest market.

HUL has a huge distribution network stretching across thousands of supermarkets and small retailers in India.

The company said that sales of personal care products edged up much lower than the normal two per cent in the quarter, soaps and detergents rose eight per cent while food items increased 12.5 per cent.

Source: http://www.businessspectator.com.au/news/2013/7/27/manufacturing/unilevers-india-arm-profit-drops

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