Consumer goods major Unilever hopes to put the focus back on its foods and refreshment business in India after the segment reported a 2% decline in underlying sales growth in Q2, led by downtrading in tea and subdued demand in nutritional drinks. Volume growth declined in low single digits as food inflationary pressures grow, the company said.
Speaking to analysts on Thursday, Unilever CEO Hein Schumacher said the company was keen to expand its India food business. “It is an area of focus for us as we remain determined to grow our food business in India. We are focusing harder and more behind core pillars — condiments, cooking aids and food solutions,”he said of his priorities for the future within foods.
Shares of Unilever were up 3.25% on the London Stock Exchange on Thursday after falling 2.7% on Wednesday after disappointing earnings from India and Indonesia units. Together, India (11%) and Indonesia (4%) contribute to 15% of Unilever’s overall sales.
In India, HUL’s shares declined on Thursday on the BSE, closing nearly 6% down at Rs 2,502.95 apiece, after missing profit and revenue estimates for Q2FY25.
Constituting 25% of HUL’s annual sales of nearly Rs 60,000 crore, food and refreshments includes brands such as Kissan, Knorr, Hellman’s, Horlicks, Boost, Brooke Bond, Bru and Lipton. Ice-creams, which is part of food and refreshments portfolio, constituting 3% of HUL’s turnover, will be separated, the company said on Wednesday.
“How the separation will be done will be decided by an independent committee by the end of the current financial year,” Fernando Fernandez, CFO, Unilever, told investors. Unilever is hiving off its ice-cream business in almost 57 countries, including India, he said.
On Wednesday, HUL’s CFO Ritesh Tiwari had indicated that the company would consider a demerger or an outright sale as part of the separation exercise for ice-creams.
Rohit Jawa, CEO & MD of HUL, said the decision to separate the ice-cream business was driven by its limited synergies with the overall business of HUL.
“Ice-cream is a high growth, but equally high investment and low-margin business for us. With the brand and technology owned by Unilever, HUL would have to spend money to develop local capabilities if it decided to keep the business,” Jawa said.
That was clearly not the priority for the company, he said.
From: financialexpress
Financial News
