The Hindu Business Line : HLL net falls 4 pc in Q2

HINDUSTAN Lever Ltd (HLL) today reported a 4.12 per cent decline in net profit at Rs 447.34 crore for its second quarter (Q2) ended June 30, 2002, as against the previous corresponding Rs 466.59 crore.

However, when exceptional item of Rs 46.87 crore, profit on sale of the industrial and institutional business of Diversey Lever Group, is excluded the net profit at Rs 400.47 crore is higher by 15.5 per cent from the year-ago's Rs 346.73 crore.

The company's Q2 topline slipped by 8.86 per cent to Rs 2671.57 crore (Rs 2931.25 crore).

Mr M.S. Banga, Chairman, HLL, stressed at a press briefing that the company's topline should be seen in fresh light as Rs 300 crore-worth of business had been divested or discontinued. Much of planned restructuring stood effected, Mr D. Sundaram, Director (Finance), HLL, said.

"There are early signs of revival in rural demand. However, economic outlook hinges on monsoon, agricultural production, agricultural product prices and acceleration in infrastructure development,'' Mr Sundaram said.

The board has recommended a dividend of Rs 2.50 per share (250 per cent).

For the first half of 2002, the company's net profit rose by 8.7 per cent to Rs 875.88 crore (Rs 805.77 crore) while net sales dipped by nine per cent to Rs 5,052.23 crore (Rs 5,573.76 crore).

Besides other income dipping in line with lower interest rate regime, the second quarter exceptional items fetched less compared to the year ago Rs 119.86-crore gained on sale of HLL's Quest business.

According to an official statement, comparable Q2 figures after adjustments would be net sales of Rs 2,667.77 crore (Rs 2,819.7 crore), PBIT of Rs 464.28 crore (Rs 354.93 crore) and a net profit of Rs 400.17 crore (Rs 327.73 crore).

Total cash generation in the first half of 2002-2003 was Rs 1,335 crore (Rs 1,074 crore).

The 24 per cent growth in Q2 operating profits was attributed to the 5.1 per cent sales growth in HLL's home and personal care (HPC) power brands and sustained initiatives in managing costs. Additionally, focus on improved profitability in the foods business delivered gross margin increases of 670 basis points, 65 basis points in foods and 1300 basis points in ice-cream.

"We feel we are exactly on track in terms of delivery, strategy and growth,'' Mr Banga said of HPC power brands.

On HLL's ice-cream business that returned profit for the first time, he said, "Our strategy is right for sure. We expect this year to be significantly better for ice-creams.''

Later at an analysts meet, he said, "What we are going through right now is a transformation of HLL.''

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