Weak rural demand hurts Hindustan Unilever Q3 profit

MUMBAI (Reuters) - India's largest consumer goods firm, Hindustan Unilever Ltd, said on Friday its third-quarter profit slumped 22 percent, missing analysts' estimates, as weak demand in rural India continued to hurt sales.

The Indian unit of Anglo-Dutch consumer group Unilever reported October-December earnings of 9.71 billion rupees ($143.49 million), well below the 12.52 billion rupees posted during the same period a year ago. Analysts polled by Thomson Reuters had expected 10.56 billion rupees.

One-off income from the sale of properties had helped HUL's income in the same quarter a year ago, the company said in a statement.

Volumes in the December quarter grew about 6 percent, nearly in line with analysts' expectations.

HUL's sales, seen as a barometer of Indian consumer sentiment, have been hit in recent months due to weak demand from rural India, which is facing the second straight year of drought. About 35 percent of HUL's revenue comes from India's villages.

The situation is expected to continue this year, and experts believe villages are likely to face a sharp spike in food prices as a result.

While raw material costs have fallen over the past year, demand hasn't kept pace, and households have been squeezed. HUL has therefore been forced to cut prices on key products.

HUL's shares fell as much as 6 percent soon after the results were disclosed. They were trading down 2 percent at 0946 GMT, while the broader market was down 1 percent.

($1 = 67.6700 Indian rupees)

(Reporting by Zeba Siddiqui in Mumbai; Editing by Sunil Nair)