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Unilever flags pricing pressure in India as inflation eases

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Global consumer goods major Unilever says the India market, its second-largest in the world, may see a deflation in pricing within skincare and fabric cleansing, as commodity inflation moderates. The India unit of the London-headquartered company reported a flat price-led growth last week for the September quarter as it cut product prices within laundry and personal care to shore up sales growth. Volume growth at 2% for the period was the lowest in six quarters.

Addressing investors on Thursday, Unilever’s outgoing CFO Greame Pitkethly said that a few categories in India were dependent on commodity prices.

Unilever named a new chief financial officer Fernando Fernandez on Thursday and replaced division heads as new chief executive officer Hein Schumacher promised to revive a company whose ability to win market share dropped to a record low.

The Dutch executive said Unilever will focus investment on its top 30 brands, which represent around three-quarters of revenue, to drive growth, while paring back other parts of its portfolio.

Schumacher also ruled out any major acquisitions and maintained the company’s long-term sales guidance as he spends more on marketing to restore competitiveness. The new approach marks a departure from the strategy of previous CEO Alan Jope, who was criticised for a failed effort to buy GSK Plc’s former consumer health business. Jope also emphasised the social purpose of Unilever’s brands, which some investors said came at the expense of profitability.

As far as India goes, Pitkethly, who will step down from the CFO role on December 31, said that urban areas remained resilient, while rural areas continued to remain subdued. A gradual recovery in rural growth was likely in the Indian market, he said, even as media intensity had increased with the resurgence of small players.

According to Hindustan Unilver‘s (HUL’s) latest investor presentation, the market value growth of regional players over the last three months was 1.4 times that of large brands in tea, and within detergents, regional brands gained six times faster in the same period.

The growing pressure from small brands has prompted HUL to bring its focus on its ‘Winning in Many Indias’ strategy, which classifies India into 15 consumer clusters. The company is also focusing its attention on its 19 core brands to arrest market share loss notably at the mass end of its portfolio.

US Stocks: Wall Street ends higher, gains driven by banks, healthcare

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Wall Street‘s main indexes posted gains on Thursday mainly lifted by financial institutions and healthcare companies, as investors digested hawkish remarks from policymakers that cemented bets of a large interest rate hike later this month. Indexes bounced back and forth in a choppy trading as concerns over Federal Reserve’s next steps to tame a surging inflation remain.

“There’s just a lot of uncertainty and I think people aren’t going to really make up their minds for longer than five minutes or five seconds, you know, until there’s a little bit more clarity or light at the end of the tunnel,” said Grace Lee, an equity income senior portfolio manager at Boston-based Columbia Threadneedle Investments.

Also read| IndiGo, Vodafone Idea, Jet Airways, Future Lifestyle, Adani Group stocks in focus on September 9, 2022

Federal Reserve Chair Jerome Powell said the central bank is “strongly committed” to bringing inflation down and needs to keep going until it gets the job done.

Chicago Fed President Charles Evans joined his fellow policymakers in saying that reining in inflation is “job one. “Investors are also awaiting the U.S. August inflation report next week for fresh clues on whether the Federal Reserve will hike rates by half or three-quarters of a percentage point at the next policy meeting due Sept. 20-21.

Also read| Share Market LIVE: Nifty, Sensex stare at positive start; ECB raises rates by an unprecedented 75 bps

Worries over aggressive monetary tightening across the globe stalled equity markets on Thursday after the European Central Bank hiked interest rates by an unprecedented 75 basis points and signaled further hikes. Meanwhile, data showed the number of Americans filing new claims for unemployment benefits fell last week to a three-month low, underscoring the robustness of the labor market even as the Fed raises interest rates.

With increasing odds of another outsized rate hike, both the rate-sensitive S&P 500 bank index and the S&P 500 healthcare sector rose 2.8% and 1.8%, respectively. The healthcare sector was boosted by news that Regeneron Pharmaceuticals Inc’s anti-blindness treatment Eylea was shown to work as well when given at a higher dose at a longer interval between injections. The drugmaker’s shares jumped 18.8%.

“People are embracing safety. Healthcare is a very safe sector and it’s still fairly cheap, the same way with the broader financial sector,” said Lee.The Dow Jones Industrial Average rose 193.24 points, or 0.61%, to 31,774.52, the S&P 500 gained 26.31 points, or 0.66%, to 4,006.18 and the Nasdaq Composite added 70.23 points, or 0.6%, to 11,862.13.

GameStop Corp surged 7.4% after the video game retailer reported a smaller-than-expected quarterly loss.American Eagle Outfitters Inc tumbled 8.7% after the apparel maker missed second-quarter profit estimates and said it would pause quarterly dividend as it fortifies its finances against a hit from inflation.Volume on U.S. exchanges was 10.19 billion shares, compared with the 10.37 billion average for the full session over the last 20 trading days.

On Wednesday, Wall Street’s main indexes climbed the most in about a month as bond yields retreated after a recent surge that was driven by expectations of higher interest rates. Still, the benchmark S&P 500 is down over 16% year-to-date. Advancing issues outnumbered declining ones on the NYSE by a 1.34-to-1 ratio; on Nasdaq, a 1.48-to-1 ratio favored advancers. The S&P 500 posted 7 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 37 new highs and 153 new lows.