Hind Lever net slips 27%

The dip in profit was largely due to the price war in the laundry and shampoo segments.

Hindustan Lever today reported a 26.9 per cent fall in its net profit at Rs 324.32 crore for the quarter ended September 2004, compared with Rs 443.22 crore in the corresponding period last year.

In the third quarter (Hindustan Lever's financials are based on a calendar year), net sales dropped 3.3 per cent to Rs 2,401.14 crore. A part of the decline in sales was because last year's results included the edible oils and fats business, which was later hived off.

The decline in net profit was largely on account of the ongoing price war in the laundry and shampoo segments.

Hindustan Lever's operating margin fell by more than 5 percentage points to 14.1 per cent.

However, the 26.9 per cent fall in net profit was lower than the 45.8 per cent drop in the April-June quarter. As a result of this, the Hindustan Lever scrip rose around 4 per cent to Rs 125 in a relief rally on the National Stock Exchange.

Asked how much longer Hindustan Lever's results would continue to tumble, Hindustan Lever Vice-Chairman MK Sharma said: "Let me be blunt. Ask P&G."

In the last 12 months, a rejuvenated Procter & Gamble slashed the prices of its detergents and shampoos.

In the soaps and detergents segment, profits fell by 35.4 per cent but the revenue rose marginally by 3.79 per cent.

The personal products segment, which has partly been buffeted by the price war in shampoos, saw the profit margin decline by 1.5 percentage points, while sales were flat at Rs 291 crore.

Hindustan Lever has managed to maintain its market share in the laundry business at around 25.5 per cent. In the shampoo segment, it increased its market share to 51.7 per cent in the last quarter, compared with 49.4 per cent in the April-June quarter.

The company's processed food business reported a significant drop in performance with revenue falling 38 per cent.