NEW DELHI—Hindustan Unilever Ltd., India's largest
consumer-products maker, said Tuesday that its first-quarter net
profit was almost flat as higher taxes and weak sales weighed on
its earnings.
Net profit for the Indian arm of Unilever PLC inched 0.1% higher
to 10.59 billion rupees ($166 million) for the three months ended
June 30, compared with 10.57 billion rupees a year earlier. Sales
rose a lower-than-expected 5% to 79.73 billion rupees from 75.71
billion rupees a year earlier.
The maker of Dove soap and Axe deodorant has been affected by a
dip in consumer confidence in India in recent quarters, as shoppers
have been reluctant to open their wallets to buy the company's many
soaps, soups and shampoos. Sales figures from Hindustan Unilever
are widely seen as an indicator of demand in the world's
second-most populous nation.
Investors had hoped for a rise in consumer spending and a
revival of demand after India's Prime Minister Narendra Modi,
elected in May last year, reinvigorated corporate sentiment with
promises to roll out business-friendly policies. Hindustan
Unilever's earnings suggest the enthusiasm has yet to trickle down
to India's billions of shoppers.
Sales volume at the company rose 6% in the first quarter, in
line with analysts' expectations, but far from indicating a revival
was under way. Chairman Harish Manwani described consumer
confidence as "subdued" in a post-earnings release.
While the company benefited from lower prices of raw materials
and oil, higher taxes announced in India's most-recent federal
budget hit profits.
Mr. Manwani said growth over the next few quarters will depend
on a pickup in rural demand. The company sells its products through
tens of millions of mom-and-pop shops in rural India, a market
which accounts for about half of the company's sales.
Write to Preetika Rana at preetika.rana@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires