Unilever India signals more price hikes as commodity inflation persists
- Tata Consumer, home to brands such as Tetley and Organic India, warns of more price hikes
Hindustan Unilever on Tuesday signalled more selective price hikes to offset persistent commodity inflation, joining other consumer goods peers as the Middle East conflict keeps input costs elevated.
Shares fell as much as around 7% after the domestic unit of Britain’s Unilever, home to brands including Dove and Surf Excel, said its profit fell 4% to 26.31 billion rupees ($274.92 million) in the first quarter ended June 30.
The U.S.-Israel war on Iran has saddled corporations worldwide with higher energy, freight and commodity costs, squeezing margins and prompting price increases for everything from packaged foods to tyres.
On Friday, Tata Consumer, home to brands such as Tetley and Organic India, warned of more price hikes.
Hindustan Unilever, too, said inflationary pressures will continue in the short-term as commodity volatility persists.
“We have only passed half of the inflation in pricing in the June quarter … we will continue to take some calibrated measured steps on pricing,” CFO Niranjan Gupta said on a media call.
Hindustan Unilever raised prices by 5% in the June quarter, while underlying volumes also climbed 5%, helping the Pears soapmaker post a 10% rise in sales from continuing operations to 165.14 billion rupees.
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“This growth has come at the cost of stressed margins … which has led to markets reacting negatively,” Akshay D’Souza, an independent consumer goods consultant, said, adding elevated palm oil prices keep margins under pressure.
The Pepsodent toothpaste maker’s standalone core earnings margin contracted 40 basis points to 22.8%, although it maintained its medium-term forecast for consolidated core earnings margin of 22.5% to 23.5%.
The stock, the biggest loser on the benchmark Nifty 50 index , was last down 6.7% at 2,028.20 rupees.
Even as margins are under stress, CEO Priya Nair said Hindustan Unilever would focus on volume-led growth.
“If it comes to choices, our choices are clear,” Nair said.
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