July 28 (Reuters) - Hindustan Unilever reported a 4% fall in quarterly profit on Tuesday as higher raw material costs and expenses, partly linked to the Middle East war, squeezed margins, sending its shares down as much as 5%.
The domestic unit of Britain's Unilever, home to brands such as Dove and Surf Excel, said its profit fell to 26.31 billion rupees ($274.92 million) in the first quarter ended June 30.
Improving rural demand and a growing appetite for premium brands have supported India's consumer goods sector, although the Middle East war has pushed up raw material costs, denting profit margins across companies.
"Commodity volatility persists, with inflationary pressures expected to continue in the short-term," Hindustan Unilever said, while also citing "geopolitical uncertainty" during the April-June quarter.
Shares were last down 4.3% at 2,082 rupees, with the stock being the biggest loser on the benchmark Nifty 50 index in morning trading.
Standalone core earnings margin contracted by 40 basis points to 22.8% year on year, though the Pepsodent toothpaste maker maintained its forecast for consolidated core earnings margin of 22.5% to 23.5% over the medium term.
Sales climbed 10% to 165.14 billion rupees, driven by a 5% increase in underlying volumes on resilient demand for consumer packaged goods.
"Despite global geopolitical volatility, the Indian economy demonstrated resilience ... The underlying demand environment remained stable during the quarter," CEO and Managing Director Priya Nair said in a statement.
Last week, Nestle India posted a 48% surge in quarterly profit, while Tata Consumer Products reported an estimates-topping 28% growth on steady demand for packaged foods and beverages.
($1 = 95.7000 Indian rupees)
Reporting by Praveen Paramasivam in Chennai; Editing by Sonia Cheema
Source: Reuters