Jan 22 (Reuters) - Consumer goods maker Hindustan Unilever said on Wednesday it would buy the 'Minimalist' skin care brand and projected near-term margins at the lower end of its forecast range as it grapples with slowing urban demand.
This is Hindustan Unilever's latest investment in the beauty space as the conglomerate bets on Indian consumers splurging on skin and hair care.
The maker of soap brands 'Dove' and 'Pears' said it will buy a 90.5% stake in Uprising Science, which operates under the brand 'Minimalist', valuing the latter at 29.55 billion rupees ($342.3 million), including debt.
The deal for Uprising Science, which reported a revenue of 3.47 billion rupees in the 2024 financial year, will close in the April-June quarter, according to Hindustan Unilever, which is the Indian unit of UK's Unilever.
The acquisition will contribute less than 1% to the firm's total revenue, said Amit Purohit, equity analyst at Elara Capital.
"It is not significant enough to move the needle but it's a step in the right direction."
Separately, the 'Clinic Plus' shampoo maker forecast near-term margins at the lower end of its previous forecast range of 23%-24% as subdued urban demand outweighed a revival in rural demand and as commodity costs rose.
Hindustan Unilever's third-quarter core profit margin shrank 20 basis points to 23.5% year on year.
"(Consumer goods) demand trends remained subdued with continued moderation in urban growth while rural sustained its gradual recovery," said CEO Rohit Jawa.
Hindustan Unilever gets roughly 60% of its overall sales from urban markets.
It posted a 0.2% increase in its profit before exceptional items and tax to 34.69 billion rupees for third quarter ended Dec. 31.
Revenue rose 2% to 151.95 billion rupees on demand recovery in rural India and price hikes. But sales volume was flat due to declines in the food and beverage and personal care segments.
($1 = 86.3180 Indian rupees)
Reporting by Ananta Agarwal and Manvi Pant in Bengaluru and Praveen Paramasivam in Chennai; Editing by Sonia Cheema
Source: Reuters