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HLL Q1 net drops 15 per cent; stock bashed four per cent
EPP News Bureau - New Delhi
India’s largest fast moving consumer goods (FMCG) company Hindustan Lever
Ltd (HLL) reported a 15.13 per cent drop in net profit for the first quarter
ended March 31, 2005 to Rs 250.25 crore against Rs 294.88 crore in the corresponding
quarter of the previous year.
HLL has, however, managed to arrest the story of either a stagnant or declining
topline. The company has reported a 6.88 per cent growth in topline for the
quarter ended March 31, 2005 - the highest quarterly growth in over two years.
HLL’s continuing businesses grew to Rs 2,506.38 crore for the quarter ended
March 31, 2005 against Rs 2,345.16 crore in the corresponding period of the
previous quarter.
Other income rose 4.61 per cent to Rs 74.64 crore against Rs 71.35 crore. Gross
profits declined 21.50 per cent to Rs 313.55 crore from Rs 399.47 crore. HLL’s
topline growth is historic of sorts as due to strong competitive pressures topline
growth had declined. Further, the topline growth has been across segments. A
bullish HLL chairman MS Banga said, ‘‘We are confident of delivering
robust growth.’’ The HLL stock, however, got a clear thumbs-down from
the market, which was dismayed at the decline in net profits.
The stock opened at The Stock Exchange, Mumbai (BSE) at Rs 145, which was the
intra-day high too, touched an intra-day low of Rs 135.65 and closed at Rs 137.70,
down 3.97 per cent from the previous day’s close of Rs 143.40.
Speaking about the previous quarter’s results, Banga said, ‘‘Home
and personal care (HPC) growth has accelerated strongly, reflecting the success
of our competitive strategy and brand investments. We have grown very strongly
in the most competitive categories of hair and laundry. On the cost front, the
hardening of commodity prices presents an important challenge. We expect to
grow our margins through judicious price increases and aggressive cost savings.’’
HLL managing director (HPC) Arun Adhikari said, ‘‘The strategy was
to first go for volume growth, then value growth and finally profit growth.
We are now in the second leg of the strategy.’’
HPC sales grew by 9.6 per cent to Rs 1,724.38 crore against Rs 1,572.81 crore
while volume growth was 6.6 per cent. Investment in brand building continued
with advertising spends going up 12 per cent in HPC. The laundry business grew
13 per cent in value and 10 per cent in volume.
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