Form of words:
Mumbai: Hindustan Unilever Ltd, the Indian arm of global consumer goods titan, posted a quarterly profit in line with market estimates, fueled by a macroeconomic recovery, capped by warnings of inflationary challenges ahead.
Net income for the Mumbai-based unit of Unilever Plc. It rose 9% to $21.9 billion ($291 million) in the quarter ended Sept. 30, according to an exchange filing on Tuesday. This roughly matches analysts’ average forecast of Rs 22 billion in a Bloomberg poll. Revenue jumped 11% to Rs 125.2 billion from the year-ago period, while costs jumped 12%.
Lockdown-weary Indians finally started pulling out from the unprecedented rise in raw material prices for the maker of Dove Soap and Lipton Tea, benefiting from a rebounding economy. Company management indicated that these inflation rates are likely to persist, scaring investors.
“The quarter witnessed a gradual improvement in business conditions, however remained challenging with unprecedented levels of input cost inflation and consumer sentiments,” Chairman and Managing Director Sanjiv Mehta said in a statement. “We haven’t seen inflation like this for many years,” he later told reporters on a media call.
Shares of Hindustan Unilever slipped around 4% in Mumbai trading – the highest since early May – marking this year’s climb of 6.3% and under the performance of the benchmark S&P BSE Sensex gauge, which has climbed nearly 30% in 2021 .
Read also: Hindustan Unilever’s profit up 41% in early 2021 on buying spree
energy expenditure
Higher inflation is “bound to continue” as energy and commodity costs rise, its chief financial officer Ritesh Tiwari said on the call. “It will remain firm,” he said, adding that freight rates have “increased manifold.”
In July, the original group warning That the cost of the raw materials going into shampoo, detergent and ice cream was rising at the fastest pace in more than a decade, forcing Unilever to lower profitability targets.
“Calibrated value addition and laser sharp focus on savings have helped us protect our business model,” Mehta said in the statement.
While higher input prices are eating into its margins, Hindustan Unilever has benefited from a rebounding local economy and easing of movement restrictions as daily Covid infections fell to less than a tenth of the fresh cases reported in early May Is. The company reported “high double-digit growth” in skin care and cosmetics as mobility improved.
Read also: Hindustan Unilever sees biggest revenue growth since 2011 on rural demand
some cheer
The coming festive season can also bring some happiness. Retailers in India anticipate rising demand in the coming weeks, which could boost the consumer goods sector. companies are adding staff In warehouses as well as in their delivery hubs, Indians celebrate their first Diwali next month – the Hindu festival of lights – as the country’s two massive Covid outbreaks have confined millions to their homes.
RBI expects months-long festive season Cylinder Urban demand from the second half of the financial year to March 2022, while rural demand is likely to see a strong monsoon and record foodgrain production.
India’s finance minister told Bloomberg on Sunday that the country has no hurry To reduce the covid-era incentives.
But that isn’t immediately reassuring for Hindustan Unilever investors. Kranti Bathini, a strategist at Mumbai-based consultancy Wealthmills Securities Pvt Ltd, said on the latest quarterly earnings, apart from profit-booking in the market, “there are concerns over margins and rising cost costs.”—bloomberg
Read also: Profits jump for Indian consumer goods giant despite lockdown as people stock up on essentials
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