Hindustan Unilever reports higher Q1 profit on volume growth

India’s Hindustan Unilever (HUL) posted a higher first-quarter profit on Tuesday as price cuts boosted volumes, while a revival of the company’s key home care business indicated a gradual recovery in rural demand.

HUL, a unit of UK’s Unilever reported a 2.7% rise in profit to 25.38 billion rupees ($303.23 million) for the quarter ended June 30, slightly higher than analysts’ estimate of 25.31 billion rupees, per LSEG data.

Indian consumer goods makers’ sales began to rise in the quarter ended March, with rural growth outpacing that of urban areas for the first time in five quarters.

Easing commodity prices have also aided volume growth for consumer goods firms. Indeed, HUL, which passed on lower commodity costs to consumers in the form of price cuts, said it fuelled a 4% rise in underlying volumes during the quarter.

Urban markets contribute 60% to HUL’s sales, while rural comprises the rest.

HUL’s sales rose 1.6% to 151.66 billion rupees during the first quarter, aided by 4.6% growth in its key home care segment, which includes products like Cif, Vim and Surf Excel.

Peers Marico and Dabur reported a pick up in quarterly revenue as demand improved gradually. Rival Nestle India, which makes Maggi instant noodles, and tobacco giant ITC are yet to report June-quarter results.

HUL’s shares closed 1.1% higher on Tuesday, while consumer goods stocks ended 2.7% higher, after the government earmarked funds for the agriculture and allied sectors and for rural spending, a key market for Indian consumer goods makers.