By Ashutosh Joshi
MUMBAI--Shares of Hindustan Unilever Ltd. (500696.BY) fell
Friday after investors found the April-June results of India's top
consumer-goods maker by revenue disappointing, as sales growth
signaled weakening spending by consumers.
The company named Sanjiv Mehta to replace Chief Executive Nitin
Paranjpe who would take over as parent Unilever PLC's (ULVR.LN)
president of home-care business on Oct. 1. Mr. Mehta is currently
chairman of Unilever's business in North Africa and the Middle
East.
Net profit fell more than 23% to 10.19 billion rupees ($172.7
million), but that was because a property sale had boosted its
year-earlier profit. Its operating profit, which excludes the
impact of last year's property sale and other income, finance cost
and taxes, rose 12%.
Sales rose 7.0% to 66.87 billion rupees--the company's first
singe-digit sales growth in three years.
An analyst said its sales volume in the personal-care segment
that comprises products such as Fair & Lovely beauty cream grew
a tepid 2% in the past quarter. This segment usually forms a fourth
of the company's overall sales, while soaps and detergents
contribute nearly half its sales.
The performance of this segment is a clear sign that
discretionary spending is weakening, said the analyst, indicating
the impact of India's slow economic growth on consumers' shopping
habits. He didn't want to be named.
Hindustan Unilever said Fair & Lovely sales were impacted
partly by challenging market conditions. "Plans are underway to
step up the growth momentum," it said in a news release.
Hindustan Unilever sells products that include Lux and Lifebuoy
soaps and Lipton tea through hundreds of thousands of shops across
India, and its sales trend is widely seen as a proxy for the
strength of consumer demand.
Overseas investors have largely preferred consumer goods stocks
in India over those of sectors such as banking and automobiles on
expectations that despite the tepid growth of the economy, the
country's consumption growth would remain strong. India's gross
domestic product growth dropped to a decade low of 5% in the
financial year ended March 2013.
Hindustan Unilever's shares fell as much as 5.7% after the
results, and closed 3.4% down at 663.30 rupees on the Bombay Stock
Exchange on a day the benchmark index fell 0.3%.
Write to Ashutosh Joshi at ashutosh.joshi@dowjones.com
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