Unilever posts strong sales growth in Q3, thanks to Indian market

The world’s second-largest consumer goods company, Unilever, said on Thursday its Indian market delivered strong volume growth in the third quarter, even as most other regions depended largely on price hikes to shore up sales.

The commentary comes as Indian subsidiary (HUL) delivers its fourth straight quarter of double-digit volume growth for the July-September period. Last week, HUL said it had delivered a 10 per cent volume growth for the three months ended September 30, ahead of Street estimates, which had pegged volume growth in the region of 7-9 per cent for the quarter.

ALSO READ: Hindustan Unilever, Nestle give Rs 1.75 bn to govt’s consumer welfare fund

On Thursday, Unilever said its overall sales growth for the July-September period was 3.8 per cent, led by higher prices in most categories across countries, India being the exception. Had Argentina’s pricing growth also been factored in, then overall sales growth for the quarter would have been 4.5 per cent, the company said. Argentina’s price-led growth was excluded due to hyperinflation in that market, Unilever said.

The Asia, Africa, Middle East (West Asia), Turkey, Russia, Ukraine, and Belarus (Asia/AMET/RUB) region, which includes the Indian market, reported an overall sales growth of 6.6 per cent, led by a 4.3 per cent volume growth and 2.2 per cent price-led growth for the period under review.

The other Unilever regions of The Americas and Europe reported only a 0.2 per cent and 1.9 per cent volume growth for the third quarter.

ALSO READ: In a haste to go Dutch, Unilever misjudged concerns in Brexit-bound UK

Paul Polman, chief executive officer at Unilever, said the Indian market continued to perform well one year after the goods and services tax (GST) was introduced.

“We are able to increase prices (in most markets), maintaining good volume growth (in countries such as India). We are also accelerating growth in theAsia/AMET/RUB region and our focus on building our business for the long term continues,” he said.

HUL’s Chairman and Managing Director Sanjiv Mehta had said last week the company had gained from the price and grammage changes it had undertaken following introduction of GST in July and rate revisions that were made by the GST Council in November.

“The 10 per cent volume growth is ahead of the industry volume growth of 7 per cent for the quarter (July-September),” he said. “This growth reflects the work we’ve done in passing on GST benefits to consumers, with price hikes at 2-3 per cent only (during the quarter), mainly due to commodity inflation.”


Analysts point to growing commodity and currency volatility as a key challenge for consumer goods companies, including Unilever, since the danger of volume growth taking a hit will increase as price hikes kick in aggressively to protect margins.

Unilever’s results are already beginning to show this trend. Q3 volume growth of 4.3 per cent reported by Asia/AMET/RUB came in tad lower than the 5.6 per cent volume growth reported by the region in the April-June quarter.

ALSO READ: Paswan wants FMCG firms to ‘voluntarily’ label products in local languages

India remains key to this region and the Unilever universe as a whole. HUL is the second-largest market for Unilever after the US, contributing 10 per cent to overall sales. Contribution to sales from India, said experts, will go up as per-capita consumption of consumer staples (FMCG) rises. “While per-capita consumption of FMCG currently stands at $29 in India, there is potential for it to increase as penetration of products go up as well as disposable incomes improve,” Mehta said.

“The distribution push into rural areas, for instance, will aid in terms of improving penetration and sales in the coming years,” he said.

HUL’s overall retail reach for its products stands at 7 million, which is the highest for any company in the domestic consumer goods market, experts said. In the last few years, the firm has aggressively pushed its retail reach in rural areas, they added.

Source link

Social Media Auto Publish Powered By : XYZScripts.com