Hindustan Unilever warns of pressure on margins; the rural slowdown persists

A pedestrian walks past the head office of Hindustan Unilever Limited (HUL) in Mumbai January 19, 2015. REUTERS/Danish Siddiqui

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BENGALURU, Jan 20 (Reuters) – Hindustan Unilever (HLL.NS), India’s biggest maker of consumer goods, said sales in its segments that make ice cream and beauty products returned to before the pandemic, but warned that high raw material costs and inflation could pressure margins in the near term.

Consumer goods makers had expected buying to pick up as pandemic restrictions eased, but high inflation has limited consumers’ purchasing power and piled pressure on businesses already struggling with the pandemic. rising raw materials and shipping costs.

HUL said it would continue with calibrated price increases in line with moves by its consumer goods peers.

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While the company gained market share in both urban and rural markets during the quarter, it said demand from rural India had eased, calling for an extension of some support measures the government had. extended at the start of the pandemic.

The company, which has more than 50 brands in India ranging from breakfast to personal care products, said sales in its beauty and personal care segment rose 6.9%, while that of home care jumped 23%, pushing total sales up 10.4% to $129 billion. rupees.

Calibrated price increases in the homecare and skincare portfolios helped offset significant input cost inflation, the company said.

HUL, the Indian unit of British consumer goods giant Unilever (ULVR.L), posted a profit of 22.43 billion rupees ($301.01 million) for the three months ended December 31, down from 19 .21 billion rupees a year earlier.

Consumption in the out-of-home and discretionary categories has returned and started to grow above pre-pandemic levels, chief financial officer Ritesh Tiwari told reporters on a post-earnings call.

HUL’s earnings before interest, taxes, depreciation and amortization, a key measure of profitability, was 25.4% in the third quarter, above analysts’ estimates of 24.69%.

($1 = 74.5160 Indian rupees)

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Reporting by Chandini Monnappa in Bangalore; Editing by Subhranshu Sahu and Maju Samuel

Our standards: The Thomson Reuters Trust Principles.

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