Unilever, the multinational FMCG firm, is focusing on driving competitive volume growth in the Indian market and expects a price reduction in its products “if current commodity prices persist.”
In its earnings statement on Thursday, Unilever reported that its India business, Hindustan Unilever Limited (HUL), experienced mid-single digit growth in the December quarter. This growth, driven by volume, was facilitated by reduced input costs, leading to negative pricing during the fourth quarter.
“We are focused on driving competitive volume growth while pricing is expected to remain marginally negative if current commodity prices persist,” it said.
In the Indian market, Unilever’s sales were flat in the fourth quarter as pricing turned negative, mainly driven by price reductions in fabric cleaning and skin cleansing bars due to commodity movements.
This also impacted Unilever’s overall fabric cleaning segment, which was negative in the December quarter, as the “pricing reflects commodity deflation, particularly in India,” it added.
Additionally, in 2023, the company received a tax refund of 0.4 billion euros from India.
The company adheres to a fiscal year running from January to December.
In terms of volume, India stands as the largest market for the Anglo-Dutch FMCG major firm.
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In 2023, the company recorded a turnover of 59.6 billion euros. Its underlying sales growth for the full year reached 7%, driven by a 0.2% increase in volume and a 6.8% rise in prices.
During the December quarter, Unilever’s turnover reached 14.2 billion euros, marking a 4.7% increase.
Its Asia Pacific Africa Zone, which consists of large markets such as India and China, contributed 44% of the group turnover in 2023. It posted an underlying sales growth of 6.5% with price growth of 5.3% and volume growth of 1.1%.
China grew low single-digit in a deflationary market with low consumer confidence.
In the fourth quarter, sales in Indonesia experienced a double-digit decline as consumers steered clear of multinational company brands due to the geopolitical tensions in the Middle East.
Unilever CEO Hein Schumacher said, “Today’s results show an improving financial performance, with the return to volume growth and margins rebuilding. However, our competitiveness remains disappointing and overall performance needs to improve. We are working to address this by improving our execution to unlock Unilever’s full potential.”
Regarding the outlook, Unilever stated that it anticipates underlying sales growth (USG) for 2024 to fall within their multi-year range of 3-5%, with a focus on achieving a more balanced distribution between volume and price.
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“We anticipate a modest improvement in underlying operating margin for the full year. We will deliver this through gross margin expansion, driven by a step-up in productivity and net material inflation back to more normal levels,” it said.
Last month, HUL reported a marginal increase of 1.08% in its consolidated net profit, amounting to INR 2,508 crore for the December quarter.
During the quarter, its revenue from product sales saw a slight decrease, amounting to INR 15,259 crore, compared to INR 15,314 crore in the corresponding period last year.
