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Mumbai : There could be a change in FMCG-major Hindustan Unilever's (HUL) pricing strategy in the second half of this calendar year, if Unilever chairman Paul Polman's forecast is anything to go by.
Polman, who had done away with the practice of giving guidance on financials when he took over as chairman a year ago, indicated at the 2009 results briefing in London that product prices could see a modest rise in the second half of 2010. Unilever's Indian subsidiary, which usually picks up the cues on pricing from its parent company, could thus be expected to take a call on price increases by June-July.
According to reports, Polman expects commodity costs to be higher by 2-3% in 2010 compared with 2009. He, however, expects prices to remain flat in the first half of the year. HUL had cut prices and increased grammage to improve its volume growth in 2009. The company was prompted to do so after it faced pressure on growing volumes, especially in soaps and detergents, after having raised prices in 2008.
The price drops in 2009, which was followed by one in January 2010, were assisted by falling input costs. However, this strategy impacted HUL's growth in topline and bottom-line. The company's objective in 2009 was to bring its volume growth back on track. The objective was met in the December quarter of 2009, when HUL posted a 4.6% growth in turnover, which was almost entirely driven by volumes. While commodity prices remained benign in 2009, signs of rising costs are visible.
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