The personal care industry recorded a revenue growth of 2.1 per cent in the December quarter of 2019-20, registering the slowest growth in the past ten quarters. This was a sharp drop from the revenue growth of 10.9 per cent in the year-ago quarter. The second quarter of the current fiscal had recorded an increase of 5.5 per cent. The bottom-line numbers were a disappointment too with a single-digit growth of 8.8 per cent after an average growth of 14.4 per cent in the previous three quarters, although the net profit grew 7.9 per cent in December quarter of 2018.
The slower growth of both headline numbers dented the net profit margins of this space, which declined 164 basis points from 17.8 per cent in Q2FY20 to 16.2 per cent in Q3FY20.
Due to a low consumption growth, the personal care industry's sales decelerated in the quarter. Barring a few companies in the industry, most companies reported either a single digit rise or a fall in their revenues in the said quarter on year-on-year basis. According to CMIE database, Hindustan Unilever (HUL) registered a net sales growth of 2.6 per cent for the December quarter of FY20 compared to 6.6 per cent in the September quarter of FY20. Dabur India posted revenue (net sales) growth of 5 per cent. Colgate-Palmolive (India) reported a rise of 4.4 per cent while Emami saw a decline of 1.4 per cent on y-o-y basis.
Due to a low consumption demand in the economy, manufacturers were discouraged to produce more. This is reflected in the industry's fall in production on y-o-y basis in the December quarter of FY20 for most of the product categories.
Production of soaps and toothpaste slipped a little over 4 per cent each. The production of hair dye and hair oil fell by around 45 per cent and nearly 10 per cent, respectively.
This deceleration is due to a slowdown in consumption. The weak consumption was a result of low consumer spending in the country.