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Home / Business News / Hindustan Unilever’s profit beats estimates as demand revives

Hindustan Unilever’s profit beats estimates as demand revives

Hindustan Unilever Ltd., Asia’s biggest maker of personal care products by market value, reported a 8.6% gain in profit, exceeding analysts’ estimates as demand recovered in India.

business Updated: Oct 20, 2020, 15:46 IST
Bloomberg | Posted by Srivatsan K C
Bloomberg | Posted by Srivatsan K C
In picture - Hindustan Unilever Limited building in Haryana.
In picture - Hindustan Unilever Limited building in Haryana.(Mint)

Hindustan Unilever Ltd., Asia’s biggest maker of personal care products by market value, reported a 8.6% gain in profit, exceeding analysts’ estimates as demand recovered in India following the world’s biggest lockdown.

Net income at the local unit of Unilever NV rose to 20.1 billion rupees ($273 million) in the quarter ended Sept. 30, the company said in a filing to exchanges. That compares with a 19.1 billion rupees profit forecast by analysts surveyed by Bloomberg. Revenue rose 16% to 112.8 billion rupees while the volume growth was a mere 3%.

Many global economies are seeing a rapid revival in consumer demand. US retail sales rose in September at the fastest pace in three months, with China also seeing a rebound. Good monsoon rains and resumption of business activity following the world’s biggest lockdown helped Hindustan Unilever, which sells its products through 8 million outlets in India. The maker of Dove soap and Surf detergent also benefited from the integration of GlaxoSmithKline Plc’s local consumer business in April.

“Over the past few months, there has been a steady improvement in the overall economic activity,” Jefferies India Pvt. analysts led by Vivek Maheshwari wrote in a report on Thursday. “With further improvement in macro, we expect that there should be an improvement in HUL’s earnings.”

The optimism is yet to translate into gains for investors. Hindustan Unilever’s shares have added 8.1% since Prime Minister Narendra Modi first imposed the lockdown in March, underperforming the S&P BSE Sensex’s 52% advance in the period.

Britannia Industries Ltd., India’s biggest maker of packaged food, on Monday reported a lower-than-estimated 23% jump in profit from the year ago period, while sales rose 12% to 34.2 billion rupees.

“We got our full range of products to the market,” in the quarter, Varun Berry, managing director at Britannia said in a statement. The company “inched closer to normalcy in advertisement & promotions.”

Still, India’s economic growth forecast was slashed further by the International Monetary Fund this month. Gross domestic product will shrink 10.3% in the fiscal year to March 2021, the Washington-based lender said.

“The underlying weakness in the labor market is worrying,” Sonal Varma, chief economist for India and Asia, ex-Japan at Nomura Holding Inc. in Singapore said in a report. “It reflects continued pressure on household incomes, which can be a medium-term headwind for consumer demand.”

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