Financial Daily from THE HINDU group of publications
Friday, Oct 29, 2004
Corporate Results - Personal Products
HLL posts lower net at Rs 324 cr
Mumbai , Oct. 28
HINDUSTAN Lever Ltd (HLL) on Thursday reported a lower net profit of Rs 324.32 crore for the quarter ended September 30, 2004, as against the previous corresponding period's Rs 443.22 crore.
The company's net sales amounted to Rs 2,401.14 crore (Rs 2,482.97 crore for the year ago period).
Revenue for its domestic FMCG business dipped marginally to Rs 2,056.06 crore (Rs 2,062.78 crore), while receipts from other businesses (plantations, raw material and chemical sales) declined to Rs 49.43 crore (Rs 80.50 crore). Exports were, however, higher at Rs 295.65 crore (Rs 288.05 crore).
Other income fell to Rs 85.68 crore (Rs 111.72 crore), as did the profit before interest and taxation to Rs 334.91 crore (Rs 482.68 crore). The latter was attributed to strategic pricing in laundry and shampoos (which affected margins), enhanced brand investments and lower results in foods.
Asked about the price war in the fabric wash segment, Mr D. Sundaram, Director (Finance), HLL, said margins continued to be very poor. However, despite the impact from fabric wash, the soaps and detergents category margin for the September quarter had stayed more or less on par with that of the June quarter.
In its official statement, HLL said the results for the quarter were not comparable to those of the previous period to the extent of sale of the company's edible oils and fats business effective August 29, 2003. Adjusting for it, net sales for the September quarter '04 is Rs 2,401.14 crore (Rs 2,431.33 crore), profit before interest and tax Rs 334.91 crore (Rs 481.39 crore), and profit after tax Rs 282.47 crore (Rs 407.15 crore).
Exceptional items for the just-ended quarter at Rs 41.85 crore included Rs 71.99 crore from profit on disposal of land. On the other hand, there was an outgo of Rs 38.23 crore by way of voluntary separation schemes.
HLL's domestic HPC business grew to Rs 1,683.85 crore (Rs 1,639.43 crore), but its domestic foods business including ice cream declined to Rs 372.21 crore (Rs 423.35 crore). HPC volumes grew by 6 per cent on the back of enhanced brand investments, while sales value grew by 2.7 per cent due to price reductions earlier this year. Advertising spend in HPC was stepped up by 27 per cent.
"It really means that we continue to invest in brand equity to build brand for the longer term. There is a clear investment message in these results, for securing and driving long-term value creation. We are not pulling money to economise and show some profit," Mr Sundaram said.
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