UN Unilever NV

Hindustan Unilever Ltd. (500696.BY), India's largest consumer goods maker by sales, Tuesday beat market estimates with a 21% jump in net profit for the quarter through March amid strong momentum in sales.

The Unilever PLC (UL) unit has a vast distribution network to sell its products like the popular Lux soap and Lipton tea to hundreds of thousands of supermarkets as well as tiny shops across the subcontinent. Thus, its sales volume trend is widely seen as a proxy for the strength of local consumer demand.

The Mumbai-based company had seen sales volume growth slow a tad in the October-December quarter when Indian shoppers, spooked by a slowdown in the local economy and uncertainty stemming from global problems such as the euro-zone debt crisis, postponed purchases of discretionary items like skin creams and deodorants.

Consumers good makers like Hindustan Unilever are also facing the challenge of guarding their profitability by raising product prices to pass on high commodity costs without driving away price-conscious customers amid cut-throat competition.

Local sales volume growth rose in the just-ended quarter to 10.1% from 9.1% in the preceding three months.

"Through the period of last year, when the Indian economy has been through a difficult ride, consumer demand had remained resilient," Chief Executive Nitin Paranjpe told reporters.

However, volatility in input costs and intense competition are expected to continue going ahead, Paranjpe said.

Hindustan Unilever's quarterly net profit rose to INR6.87 billion from INR5.69 billion a year earlier, beating the INR6.47 billion average of estimates in a Dow Jones Newswires poll of 16 analysts.

Overall sales, which includes both domestic and overseas sales, grew 16% to INR56.60 billion from INR48.94 billion.

Hindustan Unilever has raised prices to offset higher costs of crude oil-based inputs and the recent move by the federal government to raise factory-gate taxes.

The price hikes and some cost savings helped Hindustan Unilever grow its profit margin before interest and tax by 170 basis points from a year earlier.

Hindustan Unilever's financial performance mirrored the strong showing of rivals like Godrej Consumer Products Ltd. (532424.BY) and Dabur India Ltd. (500096.BY), which reported robust sales Monday.

Personal products sales for the just-ended quarter increased 17% to INR17.11 billion compared with 14% growth in the December quarter and 18% in the September quarter.

Sales at its soaps and detergents segment--accounting for 49% of overall revenue--rose 28% to INR28.34 billion.

-By Rumman Ahmed, Dow Jones Newswires; 91-9845104173; rumman.ahmed@dowjones.com

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