With more than 400 brands focused on health and wellbeing, no company touches so many people’s lives in so many different ways. The global consumer giant Unilever in India has enjoyed a place in the consumer products category that was unmatched for decades with sales that skyrocketed on various brands that were built on trust and credibility among the population.
It is a fact that the present demonetisation, GST introduction, tough competition and varied economic dependability have reduced the sales considerably when compared to the past. Unilever chief financial officer (CFO) Graeme Pitkethly vies over the sales that have been low for a while now. Forget the competition; this is one brand that has been handed down the generations with no replacement. It is this trust that has put the brand up front in the market.
“India has been managing its way through the disruptions from demonetisation and the new goods and services tax,” says the CFO while attending an investor call. “While it’s not yet back to historic levels of growth, we are cautiously optimistic for the near term and very positive for the medium and longer terms.”
During the quarter end of June, Indian unit Hindustan Unilever Ltd (HUL) posted a 6% sales growth. They pointed that the volume stayed flat due to a destocking by the trade and a reduced buy rate from one of its largest customers — the Canteen Stores Department (CSD), who supplies for the armed service personals across the country.
The maker of Rin detergent and Lux soap said it passed on the benefits of the tax change to consumers and its business was able to start GST invoicing immediately without any issues. “However, while some of our customers coped well with the change, others had more difficulty and only recently returned to a more normal buying pattern,” Andrew Stephen, Unilever’s vice president for investor relations said on the call. “As a result, we have only recovered part of the shortfall from the second quarter.”
Bank of America-Merrill Lynch expects Hindustan Unilever to post 5% volume growth with 8% revenue growth while operating margins could widen by 150 basis points (1.5 percentage point) in the September quarter. The company will announce earnings on October 25.
The company said last month that it had made intense preparations for a smooth transition to GST and that resulted in share increases in a big part of the business. Unilever, which also owns Lipton tea and Bru coffee, said its Indian unit was now the largest tea maker in the country, ahead of Tata Global Beverages. “Tea continued to grow in mid-single digits and we have taken share leadership in India, the largest tea market in the world,” Stephen said.
Source: Economic Times