Moneycontrol BureauRising input costs and consequent jump in skincare product prices translated into weak sales numbers for the third quarter for global MNC Unilever, much in line with analysts’ expectations. A post-result presentation by parent Unilever Plc cautioned there could be one more quarter of pain.
India’s largest consumer goods company by sales saw a sequential increase in key inputs like crude oil, light liquid paraffin, and copra. On a year-on-year basis, though, these prices were lower, an article in Mint today said quoting a Reliance Securities’ note.
Also, inputs for some other products like palm fatty acid distillate used to make soaps increased by 30 percent YoY, while milk prices were higher by 14 percent.
As the impact of a favourable monsoon and Pay Commission hikes is yet to play out into increased demand, analysts expect muted volume growth of 3 percent for the ongoing quarter -- an extension of the tepid growth in last 14 quarters with mid-single-digit numbers.
The performance over these past quarters looks particularly interesting, considering analysts had predicted moderating growth when Unilever increased stake in its Indian arm to over 67 percent through an open offer.The stake increase by the parent was seen as a major bet on the India story by the UK-based parent, though there were concerns over higher royalty payments and tax increases, which analysts said could weigh on earnings growth for at least two years since.
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