Date:01/08/2006 URL: http://www.thehindu.com/2006/08/01/stories/2006080102261600.htm

Business

HLL Q2 net up 35 p.c.

Special Correspondent

Declares interim dividend of Rs. 3

BANGALORE: The net profit of Hindustan Lever Ltd. (HLL) surged by 35.1 per cent to Rs. 380.69 crore during the second quarter (April-June) of the current fiscal from Rs. 281.65 crore in the same period a year ago, as strong volume growth in home and personal care business helped offset rising crude oil costs and higher advertisement and promotion expenses to face competition.

The board of directors has declared an interim dividend of Rs. 3 per equity share of Re. 1 each.

Net sales rose by 8.7 per cent during the quarter to Rs. 3,083.23 crore from Rs. 2,836.32 crore. The home and personal care (HPC) business grew by 13.9 per cent during the quarter with all categories posting double-digit growths. The food business rose by 3.9 per cent, though the beverages segment was hit by the sluggish tea market.

The growth in the urban market was 8 per cent during the quarter, while rural areas grew by 14 per cent. " We managed to improve our margins by about 140 basis points despite rising oil costs and higher advertisement and promotion expenses.

With rural growth picking up, this augurs very well for our business,'' Harish Manwani, Chairman, HLL, told reporters here on Sunday.

HLL said that it would resort to cost savings and hinted at hiking prices to meet cost pressures in the coming months.

"Continued cost pressures from input and freight escalation remain a challenge. We will have to resort to cost savings and judicious price increases to help mitigate cost pressures,'' D. Sundaram, Chief Financial Officer, said.

The HLL chief said the company would focus on innovation on core categories and business, both brand innovation and process innovation, to make sure it remained cost effective and competitive.