Lever profit falls for 6th quarter in a row

Net profit down 32%; EPS stood at Rs 6; Net sales up 0.7%.

Hindustan Lever Ltd (HLL) today reported a 32.55 per cent drop in net profit, after accounting for exceptional items, to Rs 333.67 crore for the quarter ended December 2004. This is the sixth consecutive quarter in which HLL has reported a decline in net profits.

The HLL board today proposed a final dividend of Rs 2.50 per equity share of Re 1 each, amounting to 250 per cent, subject to shareholders' approval. Thus, the total 500 per cent payout for 2004 is marginally lower than the 550 per cent dividend paid out in 2003. 
 

HLL's financials
Rs crore	Quarter ended
	Dec 2003	Dec 2004
Net sales	2,583.48	2,600.83
Domestic	2,202.70	2,225.26
Exports	311.62	320.22
Others	69.16	55.35
Other income	101.05	91.55
Profit before tax	646.08	446.07
Net profit	494.72	333.67
EPS (Rs)	8.99	6.06

HLL's earnings per share (EPS) stood at Rs 6.06 for the quarter ended December 2004, on an annualised basis, compared with Rs 8.99 in the corresponding quarter of 2003.

Net profit, before accounting for exceptional items, fell a sharper 36.4 per cent for the quarter ended December 31, 2004 at Rs 357.51 crore from Rs 562.33 crore in the corresponding quarter of the previous year.

Net sales during the period went up by 0.7 per cent to Rs 2,600.83 crore from Rs 2,583.48 crore.

The marginal rise in net sales reverses declining trend in the topline in the last four quarters. Speaking on HLL's plans, chairman MS Banga said, "There would be price increases to partly offset the increasing input costs, like we have done recently in the detergents business." The immediate agenda ahead is to drive volume growth, followed by value and then profits, Banga added.

During the 2004 accounting year, net profit after tax but before exceptional items declined by 33.53 per cent to Rs 1,199.29 crore from Rs 1,804.33 crore in 2003.

After providing for exceptional items, net profit dropped by 32.42 per cent from Rs 1,771.79 crore to Rs 1,197.36 crore. Net sales declined by 2.08 per cent to Rs 9,926.95 crore in 2004 from Rs 10,138.35 crore in 2003.

Annualised earnings per share (EPS) at the end of 2004 stood at Rs 5.44 as against the previous year's Rs 8.05.

The HLL stock today closed at Rs 155.30, 0.84 per cent higher than yesterday's close.

Profit before interest and taxation stood at Rs 429.82 crore at the end of the fourth quarter, a 32 per cent decline from the corresponding previous period's Rs 632.38 crore mainly "due to competitive pricing in laundry and shampoo, enhanced brand investments and lower results in foods" the company said.

HLL Chairman MS Banga said in a media statement the company would "resolutely focus on growing the topline" in 2005, adding that HLL would mitigate rising input costs through aggressive cost savings and judicious price increases.

He said the company had strengthened its leadership position, especially in the hair and laundry businesses, through strategic brand investments "backed by innovation and activation."

He also said the company's focus on beverage brands, namely Brooke Bond and Lipton, had started delivering results. "In the foods business, we have largely completed our restructuring and the portfolio is now focused for growth." he added.

The value and volume of the laundry business grew by 8 per cent, while the beverages business increased by 7 per cent in value terms. The home product category grew by 5 per cent in volume and 3.4 per cent in value.

Shampoo volumes grew in the high double digits (28.8 per cent) for the third consecutive quarter. The company spent 25 per cent more in advertising in home product category to build brand equity.