Sales growth at Hindustan Unilever stayed muted for the eighth straight quarter, hurt by a sluggish economy, and India's largest consumer goods maker said it did not expect a demand recovery in the near-term.
The company's results came after parent Anglo-Dutch consumer group Unilever Plc, which generates more than half of its revenue in developing markets, said emerging markets sales rose 6.6 per cent, slower than the 8.4 per cent growth in the fourth quarter.
"The pace of growth in the market is slow and there is a high level of inflation hurting consumer wallets," R. Sridhar, chief financial officer said on a conference call.
"It will be difficult to say when will there be an improvement in consumer sentiment but we are hoping it is going to be sooner rather than later," he said.
A normal monsoon, key to rural demand, and pre-election spending on consumer goods to woo voters in Asia's third-largest economy, failed to lift consumer spending as surging commodity prices and meagre salary increases weighed on incomes.
"The performance is deteriorating every quarter and it is causing more worry than it typically should because it's two years in a row with no recovery in sight, said G. Chokkalingam, founder of research and fund advisory company Equinomics.
Hindustan Unilever (HUL), which manufactures Fair & Lovely fairness cream and Sunsilk shampoo, said net profit for the quarter grew 11 per cent to Rs 872 crore. Net sales rose 8.9 per cent year-on-year to Rs 6,940 crore.
Analysts on an average estimated a net profit of Rs 850 crore on sales of Rs 7,000 crore, according to Thomson Reuters Starmine Estimates.
The personal care segment, which grew 8 per cent, saw demand for skin, oral and hair care products slow further after growing 12 per cent in the previous quarter and 12.7 per cent in the same period a year earlier.
The company trades at 32.2 times its 12-month forward earnings, compared with 27.7 times for ITC and 29.7 times for Godrej Consumer, according to Thomson Reuters Starmine Smart Estimate.
Out of the 41 analysts covering the stock, 19 had a 'sell' rating along with six 'strong sell', while 13 had 'hold' recommendations along with two 'buy' and one 'strong buy'.
Copyright Thomson Reuters 2014