Mumbai, July 21 (IANS): Subdued demand and higher taxes resulted in FMCG major Hindustan Unilever Ltd (HUL) posting a flat net profit in the first quarter of 2015-16.

Net profit of the company stood at Rs.1,059.14 crore - a minimal 0.2 percent increase compared to Rs.1,056.85 crore posted in the corresponding timeframe in last fiscal year.

The net earning of the company, however, increased by over five percent at Rs.8,105.13 crore in the quarter under review compared to Rs.7,716.34 crore last year.

The company, in a statement said during the quarter, domestic consumer business grew at five percent with six percent underlying volume growth.

"The growth in the quarter was impacted by the phasing out of excise duty incentives and price de-growth, as the benefit of lower commodity costs was passed on to consumers," it said.

Its soaps and detergents business registered healthy volume growth which was offset by price deflation while the personal products division underwent strong growth.

"Input costs were benign resulting in a 380 bps reduction in cost of goods sold. Overall competitive intensity remained high across categoriesa Profit before interest and tax grew by 15 percent and the margin improved by 140 bps, it said in the statement.

The statement said the skin care portfolio delivered broad based volume led growth across Fair and Lovely, Pond's, Lakme and Vaseline.

Its tea division also delivered double digit growth with healthy volumes led by Red Label and "another strong quarter on Lipton Green Tea".

The packaged foods segment also underwent the seventh successive quarter of double digit growth.

"With the near term outlook largely dependent on pickup in Rural markets and commodity costs expected to remain benign with little or no price growth across select categories, our focus will be to drive market development and simultaneously deliver cost efficiencies to sustain profitable volume led growth," said company's chairman Harish Manwani.