HUL earnings show rural demand strain

As inflation cools, HUL expects gradual uptick in rural demand

- Suneera Tandon & Gaurav Laghate

Hindustan Unilever Ltd (HUL), India's largest household goods maker, reported a 9.6% increase in March quarter profit, missing analysts' estimates, as inflationary pressures dampened demand, particularly in rural areas.

Net profit climbed to ₹2,552 crore for the three months ended 31 March from ₹2,327 crore a year earlier, the company said in a statement to the stock exchanges on Thursday. Sales rose 10.6% to ₹14,893 crore from ₹13,462 crore a year earlier, while costs rose 11% to ₹11,710 crore. A Bloomberg survey of analysts expected the company to report a profit of ₹2,605 crore. Surging inflation has cooled consumer demand in India, with rural areas and low-income groups more vulnerable to price hikes. HUL, however, expects volume growth to rebound as commodity prices soften and consumption habits adapt to higher costs.

The company reported 4% underlying volume growth and a 7.5% value growth for the March quarter, although volume growth slowed slightly from the preceding quarter. HUL’s performance is viewed as a barometer for the broader Indian consumer sentiment.

On rural demand, Sanjiv Mehta, managing director and chief executive, said markets are showing signs of improvement. “It’s indicating that the depth of negative volume has reduced," he said.