Is growth trend slackening for the FMCG major?

Ahead of its April-June earnings, which saw India’s leading FMCG major report a 23% y-o-y fall in net profit numbers at Rs.10.2 billion as against Rs.13.31 billion for the quarter ended June 30, 2012, Hindustan Unilever announced major management changes to its top-deck executive leadership. Sanjiv Mehta who is currently heading the company’s Middle-East and North Africa operation will replace Nitin Paranjpe as HUL MD and CEO from October 1. Paranjpe will join the leadership executive team of parent Unilever and will be the Global Head of its Home Care business. Meanwhile, HUL’s results for the June quarter came as a disappointment on almost all key financial parameters. Sales grew just 7% (the weakest pace since December 2009) to Rs.66.87 billion compared to the corresponding period in the previous year with 4% underlying volume growth, below market estimates of about 6% growth and slower than the 9% growth logged in the same-year ago period. Sales of personal care products like creams and lotions rose a mere 2% and was dragged down by a muted show by Fair & Lovely, one of the largest brands in HUL’s personal care portfolio. The food business grew 5%, as consumer demand waned. The results for the quarter underscore a warning by its parent that growth in emerging markets is no longer immune to the global economic weakness.