Note ban, crisis in Brazil impacted Unilever's sales growth

Unilever reported sales growth of 3.7% for year 2016

Demonetisation of higher currency notes in India along with economic crisis in Brazil adversely impacted FMCG major Unilever's sales growth in 2016.

The company on Thursday reported sales growth of 3.7 per cent for the year 2016 and blamed demonetisation in the Indian market and economic crisis in Brazil for slower growth.

Commenting on the results, Unilever CEO Paul Polman said: "We have delivered another good all-round performance despite severe economic disruptions, particularly in India and Brazil, two of our largest markets.

This further demonstrates the progress we have made in transforming Unilever into a more resilient business.

We have again grown ahead of our markets, driven by strong innovations that support our category strategies".

Unilever said the economic crisis in Brazil and removal of Rs 500 and Rs 1,000 notes from circulation in India presented significant additional headwinds.

The company also said emerging markets reported underlying sales growth 6.5 per cent in 2016.

Earlier this week, Unilever's India operations, Hindustan Unilever Ltd (HUL) reported 6.82 per cent increase in standalone net profit to Rs 1,037.93 crore for the third quarter of current fiscal on account of strong exceptional income.

Hindustan Unilever Ltd (HUL) had posted net profit of Rs 971.66 crore in the October-December quarter of last fiscal.

Its exceptional income in the third quarter of 2016-17 was Rs 153.05 crore, as against exceptional expense of Rs 79.61 crore it had incurred in the same period of 2015-16.

Impact of demonetisation led of decline in HUL's total income from operations by 0.79 per cent to Rs 8,317.94 crore in the quarter under review, compared with Rs 8,384. 68 crore in the same period of last fiscal.

In a conference call, HUL Chief Financial Officer PB Balaji said due to impact of demonetisation consumers' purchase basket size reduced and frequency in shop visits decreased.

"There was varied impact across market and we expect a gradual improvement in the market in line with the liquidity improvement.

South and West regions of the country were least impacted while North and Central were the most," Balaji added.

He said the company extended credit to its trade partners after demonetisation to help tide over liquidity crunch.

It, however, did not hold back any planned investment or launches during the quarter.