'Rural recovery adding to positivity in India market', says Graeme Pitkethly

economictimes.indiatimes.com:

Unilever global chief financial officer Graeme Pitkethly said it can see reason for positivity in India, including recovery in villages over the past quarter, while signalling possible price cuts in the core categories of soaps and detergents to accelerate growth. «The market in India continues to grow in value, and volumes are also now recovering with rural volumes moderately positive over the last three months,» Pitkethly told analysts during first-quarter earnings call at the parent of Hindustan Unilever (HUL), India's biggest consumer goods company.

«We are seeing the return of smaller players in the Indian market and a tick up in media intensity, which are further signs of recovery.» India, where sales grew 9.1% during the first half of the calendar year, is Unilever's second biggest market after the US in terms of revenue. Rural market volume, which had been in double-digit decline, turned positive in the June quarter compared with a contraction in the year earlier.

Market growth on a two-year compounded annual growth rate (CAGR) basis, is still down marginally, with rural volume falling 4%, HUL said, citing Nielsen data. Fabric cleaning and skin cleansing, which together account for 40% of Hindustan Unilever's business, have seen moderating input costs over the past few months, led by falling palm and crude oil prices.

That could see prices following. «There is a lot of local competition in these segments and pricing is very directly connected to commodity price and as commodity falls, we expect pricing to have to adjust downwards.

It may go flat and it may go negative,» Pitkethly said. During the quarter ended June, HUL saw volumes halve to 3% and said volume recovery could take at least two-three quarters after