Hindustan Unilever expects its volumes to recover gradually

economictimes.indiatimes.com:

Hindustan Unilever, India's biggest consumer goods company, said volume recovery could take at least 2-3 quarters even as it has slashed prices, increased grammages and hiked ad spends over the past two quarters. «Typically this takes two to three quarters for the whole thing to stabilise. When we do price cuts and price changes, it goes to trade which has high price inventory, and they liquidate that first and it goes to consumers.

Consumers also have pantry stock at home which is typically at a higher price point bought earlier,» Ritesh Tiwari, chief financial officer at HUL said during its earnings investor call. «And when that inventory clears up, they tend to start experiencing lower price products. And we expect them to start changing their behaviour and start to consume more.» During the quarter ended June, HUL volume or products that consumers purchase grew 3%, half compared to a year ago period.

The maker of Rin and Dove said if commodity inflation remains at current level, growth over the next few quarters will be entirely volume led with pricing growth either flat or declining. HUL-its presence in a range of daily consumption items such as soaps, shampoos and food makes it a proxy for consumer sentiment--said the recent fall in key raw material prices — crude and palm oil would help further drive the overall volume growth of the company. «We are, at the moment, specifically focused on driving competitive volume growth.

That at one level is the topline job and at the bottom line, we do have the tailwind of reducing commodity costs. Some of that we are passing in higher A&P investments,» said Rohit Jawa, managing director at HUL. Rural market volume, which was declining in double-digit, turned positive during