July 26 (Bloomberg) -- Hindustan Unilever Ltd., the Indian unit of the world’s second-biggest consumer-goods company, reported the slowest sales growth in more than three years as India’s economy weakened. The stock fell the most since 2009.
Sales rose 7 percent in the quarter ended June, the weakest pace since December 2009, according to exchange filings.
India’s economy grew at its slowest pace in a decade last fiscal year and that has led to softer consumer demand for the company’s premium soaps and shampoos, said Nitin Mathur, consumer analyst at Espirito Santo Investment Bank. Sales volume at the seller of Dove soap and Surf detergent rose 4 percent in the quarter, compared to 9 percent growth in the same period last year.
“The volumes fell to the lower end of the street expectations, and that’s not good by any standards,” Mumbai-based Mathur said in a telephone interview. “Growth rates are tapering sharply in personal care products.”
Sales of personal care products like creams and lotions rose 2 percent to 18.8 billion rupees.
The lesser-than-expected sales growth was largely a result of a “sharp decline” in demand for its Fair & Lovely fairness cream, Chief Financial Officer Sridhar Ramamurthy said in a conference call today. “There are near-term challenges in the Indian FMCG market with respect to slowing growth of the market and volatility.’’
Chief Executive Officer Nitin Paranjpe will move to parent Unilever on Oct. 1 to become president of its global home care businesses, according to an e-mailed statement today. Sanjiv Mehta, who is chairman of North Africa and Middle East operations for parent Unilever, will take his place. The move is in keeping with a broader trend of senior management at the company moving to the parent and vice versa.
“Our tradition has always been that different people come in and build the business,” Harish Manwani, chief operating officer of Unilever, told reporters in Mumbai.
Hindustan Unilever’s shares traded 3.9 percent lower at 661.45 rupees at 2:20 p.m. in Mumbai trading today. It earlier fell as much as 5.9 percent, headed for the biggest decline since July 2009.
Net income fell to 10.2 billion rupees ($173 million) in the three months ended June from 13.3 billion rupees a year earlier, the Mumbai-based company said in a statement today. Earnings for the same period last year were higher due to a one-time gain from the sale of some properties.
The company’s domestic business grew at 7 percent, the slowest pace since Dec. 2009, according to exchange filings.
Parent Unilever, the world’s second-biggest consumer-goods maker, yesterday reported quarterly sales that missed estimates and said growth is slowing in emerging markets while conditions remain difficult in the U.S. and Europe.
In India, Unilever sees “an overall slowdown of the market, as well as the consumer, and in our business to a certain extent,” Chief Financial Officer Jean-Marc Huet said.
To contact the reporter on this story: Adi Narayan in Mumbai at firstname.lastname@example.org
To contact the editor responsible for this story: Stephanie Wong at email@example.com