(Bloomberg) -- Hindustan Unilever Ltd.’s shares slipped after the quarterly profit of India’s biggest household-products maker missed estimates amid a lingering spell of weak consumer demand.
The Indian unit of Unilever Plc posted a net income of 26.1 billion rupees ($310 million) in the three months ended Sept. 30, down 4% from a year ago, according to an exchange filing Wednesday that came after the close of market hours. That fell short of the average analysts’ estimate of 27.06 billion rupees in profit.
Hindustan Unilever’s shares declined as much as 7.3% — the most since March 2020 — during Mumbai trading on Thursday, pushing this year’s fall to 7%. It is among the worst performers on the benchmark S&P BSE Sensex, which has climbed almost 11%. The parent’s shares closed 2.2% lower in London on Wednesday after the Indian unit’s earnings.
Revenue for the company, regarded as a bellwether for local market sentiment, rose 1.9% to 153.2 billion rupees during the period but also missed estimates. Total costs rose 2.9% to 122.7 billion rupees.
Volume growth came in at 3% in the quarter versus 2% a year ago. It announced a dividend per share of 29 rupees.
The profit miss comes amid a downturn in sales of everything from snacks and coffee to cars in India. The seller of Dove soap to Knorr soup is betting on demand in India’s rural areas outpacing urban centers to help support sales. Rural incomes are expected to have improved on the back of ample monsoon in the past few months.
Rural areas make up a third of its business, while urban India contributes the rest, Chief Financial Officer Ritesh Tiwari said in a media call after the earnings.
‘Remain Watchful’
In the September quarter, consumer goods’ “demand witnessed moderating growth in urban markets while rural continued to recover gradually,” Rohit Jawa, Hindustan Unilever’s managing director said in a post-earnings statement. “We remain watchful of gradual recovery in consumer demand.”
While its home care and beauty & wellbeing business expanded with single-digit growth, its personal care and food business declined. Demand recovery will take “a few quarters,” Tiwari said.
Hindustan Unilever will be carving out its ice cream business as part of a portfolio restructuring, the company said in a separate filing Wednesday. This aligns with the parent Unilever’s plans to separate its global ice cream business across jurisdictions.
This portfolio restructuring will enable the company “to sharpen focus on the core business and further strengthen its play in trending demand spaces such as beauty, foods, health and wellbeing,” the Indian unit said in a statement. The firm will decide the mode of separation by the end of this year, it said.
(Updates with share price reaction in the third paragraph.)
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