Hindustan Lever Q3 net up 16 p.c.

By Our Staff Correspondent

MUMBAI, OCT. 13. Hindustan Lever has announced a net profit of Rs. 331 crores for the quarter ended September 30, 2000, an increase of 16.1 per cent over the corresponding period of the previous year. Net sales were marginally higher at Rs. 2,462 crores against Rs. 2,452 crores.

Net sales for the first nine months ended September 30 were up 4.1 per cent at Rs. 7,956 crores with the profit before tax at Rs. 1,145 crores and the profit after tax at Rs. 881 crores, up 19.7 per cent and 21.5 per cent respectively.

For the quarter under review, operating margins were up 15.4 per cent (13.9 per cent) largely due to improved product mix and reduction in material and supply chain costs.

Commenting on the quarter's results, Mr. M. S. Banga, chairman, HLL, said, ``This quarter saw a slowing of market growth and intense competition in certain categories. Prices were held reflecting commodity trends. Support investments in media and market/consumer activities were stepped up to lead market development and address competitive issues. Product mix, continued focus on cost and supply chain efficiencies led to margin improvement and overall profit growth.''

According to the company, in personal wash, the premium portfolio recorded a growth of eight per cent. However, overall volumes declined due to loss of two per cent share in the low price segment. Fabric wash registered a sales growth of seven per cent led by a significant growth in premium powders. Oral care sales grew by two per cent reversing the declining trend of the previous two quarters. Skin care sales grew by 4 per cent but below the market due to competition from emerging players in the fairness segment. Marginal decline in hair care in the quarter is due to phasing of marketing activities. However, the cumulative sales growth remains healthy. Deodorants registered an impressive growth of 30 per cent while household care business grew by 10 per cent.

Tea sales declined by ten per cent due to a planned rationalisation of the low priced portfolio. Sales realisation per kg of tea improved despite a sharp fall in basic commodity price. Aggressive investments were made in market building through trade and consumer focussed activities in branded staples and culinary product categories. Volumes in these two categories grew by 20 per cent and 27 per cent respectively. Oils and fats business recorded a significant growth of 16 per cent in volume, though lower commodity oil prices neutralised most of these gains.

Several market initiatives are being executed by the company to lead market growth in all categories and regain share loss in personal wash, skin and tea.

Group exports registered a healthy growth of 18 per cent with a 36 per cent growth in core categories of HPC and beverages. Exports of surimi products (marine) doubled.

The growth in other income of which half comprises dividend from subsidiaries and other operating income, at 17.6 per cent is lower than the earlier quarters largely due to provision for `market to market' reduction in the value of securities arising from the movement in interest rates. In addition, the figure for September quarter 1999 included a one time profit of Rs. 5.2 crores on the disposal of the dairy business.The results for the quarter include packet tea exports business of Lipton India Exports Ltd., a wholly owned subsidiary, which has been integrated with HLL, effective April 1, 2000. On the other hand, animal feeds business was transferred from HLL to Gold Mohur Foods and Feeds, another subsidiary, effective from the same date. The results for the quarter are also not comparable with the previous year to the extent of sale of the dairy business from HLL to Nutricia in September 1999, and the amalgamation of Industrial Perfumes with HLL, effected in December quarter 1999.

In addition, the results of the quarter include an estimated business restructuring cost of Rs. 22.5 crores charged in the quarter as compared to Rs. 17 crores in the same quarter last year. Based on the actual expenditure, the difference, if any, will be accounted in the fourth quarter.

If the above transfer/sale and restructuring are excluded, profit after tax for September quarter would reflect a growth of 12.1 per cent over the corresponding period of the previous year as compared to 16.1 per cent shown in the results above. Similarly, the profit after tax for the first nine months would reflect a growth of 16.5 per cent compared to 21.5 per cent shown in the results above. The impact on sales growth rate, both for September quarter and the first nine months is however, not material.

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