 "Graeme Pitkethly CFO, Unilever")
Unilever, one of the world’s largest fast-moving consumer goods (FMCG) companies and the parent firm of Hindustan Unilever (HUL), expects a possible decline in prices of products in a few categories in India on the back of softening commodity prices and increasing local competition.
“A couple of our categories in India, such as fabric cleaning and skin cleansing, are very heavily correlated to the underlying commodity prices, and local competition has also entered the market. We have to simply adjust pricing there in order to maintain competitiveness and our volume position,” Graeme Pitkethly, chief financial officer of Unilever, told investors on Thursday after the firm’s September-quarter earnings.
The Unilever management also pointed out that India’s FMCG market was seeing a gradual recovery with growth led by urban areas, while rural areas continued to remain subdued. (With inputs from Reuters)
Due to the re-entry of smaller players in the country, it has seen some increased media intensity.
“Our performance in India remains competitive, with price and volume both positive,” Pitkethly said.
Unilever’s new Chief Executive Hein Schumacher on Thursday laid out long-awaited plans to simplify the business after admitting it had underperformed in recent years.
Schumacher, who took up the role in July, said the company would now focus on 30 key brands which account for 70 per cent of its sales. It will focus on improving its gross margin and not undertake any major or transformational acquisitions, he said.
“Our performance in recent years has not matched our potential. The quality of our growth, productivity and returns have all under-delivered,” Schumacher said.
Unilever reported a 5.2 per cent rise in underlying sales, meeting analysts’ average forecast, a company-provided consensus showed. Underlying price growth for the third quarter was 5.8 per cent while underlying volumes were down 0.6 per cent.
Last week, HUL reported a net profit of Rs 2,656 crore for the September quarter, down 0.3 per cent from Rs 2,665 crore posted a year ago. Revenue, on the other hand, rose 3.1 per cent year-on-year (Y-o-Y) to Rs 15,364 crore. The maker of Tin detergents also registered a volume growth of 2 per cent during the quarter.
The management of HUL had said the company had reduced product prices over the past 8-9 months following a correction in the prices of commodities used by HUL in three-fourths of its business — home care and personal care.
“We are taking prices down as we’ve been doing over the past 8-9 months, and the transition from high to low prices in the market takes time. Volume recovery will be gradual, which is exactly what we are seeing now,” Rohit Jawa, chief executive officer and managing director of HUL, said last week.
Jawa has also said that the company continues to witness pressures at the mass end.
(With inputs from Reuters)
