Adopt sustainable biz models: Unilever global chief to India Inc

Mumbai, Oct 30 (IANS) Rapid globalisation and the resulting inter-dependence of financial markets, technology and economic systems have made the world more complex to manage and now is the time for India Inc to embrace sustainable business models, a top official said here Wednesday.

"Never before have we seen such rapid explosions in the global population, shifts in economic power or resulting pressures on natural resources with enormous swings in currencies, raw material costs and climate becoming the norm," said Unilever Global CEO Paul Polman.

He said the digital revolution will continue to change lives and business at an increasingly fast pace and many struggle with this 'new normal' with the average tenure of a CEO now less than four years and those of politicians even shorter.

Polman was addressing the day-long Indian Society of Advertisers Global CEO Conference on Navigating VUCA (volatile, uncertain, complex and ambiguous).

He urged India Inc to embrace sustainable business models, be intuitive, explore new markets and pare unnecessary costs.

"All of us need to be net contributors to society, offer more than we take from the society. We cannot afford any more global warming, let people go hungry or allow people to work for abysmally low fees. Capitalism needs to evolve," Polman emphasised, advising how business leaders could navigate through tough economic situations.

Other top corporate heads like Tata Sons' R. Gopalakrishnan, Cadbury India's Manu Anand and Tata Motors' Ravi Kant, Hero Motocorp's Pawan Munjal, Vodafone India's Marten Pieters, Facebook India head Kirthiga Reddy, Raymond Lifestyle Business' Sanjay Behl, MCCS India's Ashok Venkatramani, ISA Chairman and HUL executive director Hemant Bakshi, Exchange4media Group's Anurag Batra and Indian Society of Advertisers' (ISA) treasurer Paulomi Dhawan were among other prominent speakers at the conference.

The ISA is the peak national body for advertisers since more than six decades and represents organisations involved in Indian advertising, marketing and media industries.

ISA members constitute more than two-thirds of India's national non-government ad spends and aims to protect consumers by ensuring that advertising and marketing communications are conducted responsibly besides safeguarding rights of its members to communicate freely with their customers.

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Weak consumer demand mars Hindustan Unilever Q2 earnings

By Nandita Bose

MUMBAI (Reuters) - Sales growth at Hindustan Unilever slowed for the sixth straight quarter between July and September and India's largest consumer goods maker said weak consumer demand would continue to drag until well into next year.

The company's fiscal second quarter results came after parent Anglo-Dutch consumer conglomerate Unilever warned in September that a slowdown in markets such as India had accelerated.

"The slowdown in business environment has continued in this quarter both in terms of volume and value growth," Chief Financial Officer R. Sridhar told reporters at an earnings press conference late on Saturday. "In particular, premium segments and discretionary categories are much more under pressure."

Sales volumes in the September quarter grew 5 percent, in line with market estimates of about 4-5 percent growth but slower than the 7 percent growth logged a year before.

India's economy is facing its worst downturn since 1991. That has hit discretionary consumer spending, leaving HUL's volume growth stagnant at around 5 percent for the past two quarters.

HUL said the slowdown in sales growth could last until next March although it is hopeful of a pick-up in the medium- to long-term as consumer demand improves.

HUL, which manufactures detergent brand Rin and Dove soap, said its net profit in the September quarter rose an annual 13.2 percent to 9.14 billion rupees. Net sales rose 9.6 percent year-on-year, to 67.47 billion rupees.

Analysts had on average estimated a net profit of 8.7 billion rupees on sales of 67.1 billion rupees, according to Thomson Reuters Starmine Estimates.

Rising inflation and meager urban salary increases have reduced incomes in Asia's third-largest economy and heated up the competition in the $13 billion consumer goods sector.

Hindustan Unilever faces a difficult choice between raising prices and retaining market share, as high promotional expenditure pinches margins and higher prices hurt volumes.

"The input cost environment was volatile this quarter due to a sharp depreciation of the rupee," said Sridhar.

The rupee fell as much as 20 percent against the dollar between May and August, which the company reckons will have a greater impact on its December quarter earnings.

Despite the weakness of its Indian business for the past few quarters, Unilever in April pumped in $5 billion to raise its stake in Hindustan Unilever, banking on the country's long-term growth.

Valued at $21.5 billion, Hindustan Unilever also makes Fair and Lovely skin cream, Clinic Plus shampoo and Lipton tea.

Higher promotional spending drove up sales in the personal care segment by 12 percent year-on-year, while the company's food business grew an annual 9 percent.

Promotional spending during the quarter grew 24 percent on year to 9.54 billion rupees.

Shares of the company have risen 13 percent so far this year, compared with a 16 percent increase in the consumer sector index <.bsefmcg> of the Mumbai stock exchange.

The stock has the fourth highest forward 12-month price-to-earnings ratio of 34.4 among top consumer product companies in the world, according to Thomson Reuters Starmine data.

(Additional reporting by Patturaja Murugaboopathy in Bangalore; Editing by Rajesh Kumar Singh and Catherine Evans)

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Unilever hit by sliding emerging market currencies; India onion prices weigh

By Martinne Geller

LONDON (Reuters) - Unilever Plc reported slower sales growth after demand for its consumer goods was hit by the devaluation of a handful of emerging market currencies and other factors such as rising onion prices in India.

"This is a soft quarter without a shadow of a doubt," Chief Financial Officer Jean Marc Huet told Reuters in an interview On Thursday.

The Anglo-Dutch maker of Ben & Jerry's ice cream, Lipton tea and Dove soap posted a 3.2 percent sales increase in the third quarter, down from 5 percent in the second.

It had already warned in September that a slowdown in markets such as Indonesia, Brazil and India had accelerated and it expected quarterly underlying sales growth of only 3 percent to 3.5 percent.

Unilever generates more than half its annual sales from developing and emerging markets, where sales rose 5.9 percent in the quarter - down from 10.3 percent in the previous three months but still stronger than the slight decline seen in developed markets.

Turnover fell 6.5 percent to 12.5 billion euros, hurt by an 8.5 percent hit from foreign exchange rates.

"The reality is that the global economy is not in as good shape as some would like to make out," Chief Executive Paul Polman said on a conference call. "I believe we have to calibrate our expectations a little more as we navigate these choppy waters."

Polman added that in three decades operating in emerging markets, he had never seen such large declines in so many currencies at the same time.

"Whilst we normally can deal with one or another and compensate for that globally, this really came as a shock to the global economy in total," he said.

Uncertainty over when the U.S. Federal Reserve will scale back its bond-buying stimulus led to sharp falls in currencies such as the Indian rupee and the Brazilian real between May and September.

The drops were compounded, Polman said, by other factors including a government abolition of fuel subsidies in Indonesia and a more than trebling in the price of onions in India - a staple cooking ingredient - that further weighed on consumers' buying power.

CROSSING CATEGORIES

Unilever's performance looks relatively weak compared with peers such as Nestle , the world's biggest foods group, which said last week competitive pricing helped it lift sales growth in spite of tough conditions in emerging markets and Europe.

Reckitt Benckiser earlier this week reported higher-than-expected sales and raised its outlook.

Huet said Unilever's business crosses so many categories, including basics like shampoo and food used by people at all levels of the economy, while Reckitt's goods - like dishwasher detergent and headache tablets - appealed to higher-income consumers more immune to economic volatility.

Unilever's currency hedges typically give it a window of three to six months, during which time it can work to raise prices in local markets hurt by devaluations. Selective increases are expected to help in the coming quarters, it said.

For the full year, currency should hurt sales by about 6 percent and profit by about 7 percent, Huet said.

In North America, third-quarter sales volume fell due to a decision to stop selling some low-margin ice cream products and continued weakness of the company's margarine business.

Also, Unilever's market share in the high-margin personal care business was hurt by promotions by rival Procter & Gamble , whose Pantene and Herbal Essences shampoos compete with Unilever's Tresemme.

The company said it expects sales growth to improve in the fourth quarter, helped by new products such as Vaseline body sprays in Europe and Tony & Guy hair products in the United States. Still, Polman said developed markets like the United States were not recovering as fast as expected.

Following the divestiture of some less-profitable brands including Skippy peanut butter and Wishbone salad dressings, Polman said there were some small businesses left to sell but he declined to name them.

"It's better to announce the sale than to preannounce the intention," Polman said.

Unilever shares were up 0.7 percent in London at 1045 GMT.

(Reporting by Martinne Geller in London; Editing by David Goodman and Jane Merriman)

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