Mumbai: Hindustan Unilever saw its quarterly net profit dip 1.8% on slow volume growth from a year earlier and higher advertising and promotional expenses aimed at battling competition and protecting its market share.
The unit of Anglo-Dutch group Unilever Plc reported net profit of Rs533 crore ($114 million) for the June quarter, slightly below StarMine SmartEstimates of Rs540 crore.
Revenue rose about 7% to Rs4,794 crore, as sales volume rose 11%.
“Though there has been pick-up in demand, the volume growth is slower than in 2009,” chief financial officer R Sridhar told reporters in a conference call.
He said that competition in the consumer goods sector had intensified and the company had geared up to defend its leadership position.
“The competitive intensity will continue for some more time. India is one of the few markets seeing attractive growth. More players will want to establish their presence in the country,” Sridhar said.
Advertising and promotional expenses of the company rose by a third during the quarter to Rs750 crore.
Competition is heating up in the Indian consumable products sector estimated at $76 billion.
In the personal products category, the company’s popular Fair & Lovely is facing intense competition from L’Oreal’s skin lightening cream and other local brands like Emami’s Fair & Handsome.
Lever’s Pepsodent and Close Up is also facing the heat from Colgate in the toothpaste category.
In the foods category, both ITC and Godrej Consumer Products are stepping up their presence.
With about 40% of its revenue already coming from the rural sector, the company is pushing its growth in the rural areas by setting up more stores, Sridhar said.
Shares in Hindustan Unilever were up 0.06% at Rs262.65 at 1:50 pm, while the BSE index Sensex was up 0.6%.
Its shares have fallen 1.2% so far this year, lagging the sector index which has risen 15.3% while the Sensex has risen about 4%.