 "HUL Q3 results: Profit up marginally at Rs 2,519 cr amid low rural demand")
Hindustan Unilever (HUL), the Indian arm of UK's Unilever, posted a smaller-than-expected increase in quarterly profit on Friday as demand in the country's rural regions remained low partly due to a delayed winter.
Consumer goods giants, including HUL peers Nestle India and Britannia Industries, have been struggling with a spending pullback at a time when prices of various essentials such as vegetables and dairy have shot up.
The operating environment remains challenging due to a subdued festive season, uneven monsoon and delayed winter, with economic recovery in urban areas outpacing rural, HUL said in an investor presentation.
The company's quarterly sales of products slipped marginally to Rs 14,928 crore, with underlying sales growth in its home care business, which accounts for 36% of its revenue and houses Surf Excel and Comfort brands, falling 1%.
The Dove soapmaker's profit climbed 0.6% to Rs 2,519 crore ($303.30 million) for the quarter ended Dec. 31 but missed average analysts' estimate of Rs 2,680 crore, according to LSEG data.
The profit miss came as HUL cut prices of several products, including detergents and household care products, amid easing commodity prices and stiff competition.
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"Competitive intensity (is) likely to stay high," HUL said, indicating easing commodity prices are allowing smaller rivals to better compete with deep-pocketed consumer goods conglomerates.
Rural income growth would determine the pace of recovery, HUL said, adding it is "cautiously optimistic in the near term."
The Sunsilk shampoo maker was the first major consumer goods manufacturer to report results for the December quarter, with many analysts tipping HUL and Godrej Consumer Products to be among the worst performers.
HUL shares, which rose 4% in 2023, closed 0.7% higher ahead of the results.