Financial Daily from THE HINDU group of publications
Wednesday, Jan 23, 2002
Corporate Results - Personal Products
HLL ends year with 25 pc rise in net
Mr M.S. Banga, Chairman, HLL, and Mr D. Sundaram, Finance Director, at a news conference in Mumbai on Tuesday.
MUMBAI, Jan. 22
FMCG major Hindustan Lever Ltd (HLL) has ended the year 2001 with a 25.3 per cent increase in net profit at Rs 1,641.31 crore, compared to Rs 1,310.09 crore in 2000.
Excluding exceptional item of Rs 100.36 crore, HLL's net profit for the year has risen by 17.6 per cent to Rs 1,540.95 crore. Net sales during the year grew by 3.5 per cent to Rs 10,972 crore, primarily led by a 6.5 per cent growth in power brands, according to Mr D. Sundaram, Director (Finance).
During the year, operating margin improved to 16.1 per cent from 14.8 per cent.
``We relentlessly pursued our strategy of focusing on growing our power brands in the face of intense competition, a depressed economy and declining market,'' Mr M.S. Banga, Chairman, said.
The company's board has recommended a final dividend of Rs 2.50 per share, taking the total dividend to Rs 5 per share for 2001.
According to Mr Banga, the increase in profit was a result of a combination of various factors including focus on right profit brands and cost reduction. ``There is absolutely no end to reduction in supply chain costs.''
Other income edged up to Rs 381.79 crore (Rs 345.07 crore) mainly on efficient treasury management, Mr Sundaram said.
Total expenditure stood at Rs 9,257.92 crore (Rs 9139.68 crore). Depreciation was Rs 144.66 crore (Rs 130.94 crore) and interest accounted for Rs 7.74 crore (Rs 13.15 crore).
During the quarter ended December, sales grew by 4.3 per cent to Rs 2,763 crore, with power brands growing at 8.2 per cent. Net profit was Rs 436.38 crore (Rs 429.58 crore).
During the year, the company's advertising and promotion spend was up by 18 per cent at Rs 824 crore, 90 per cent of which was spent on 30 power brands.
``We will continue to put disproportionate amount of money in promoting these power brands,'' Mr Banga said.
The year also saw a growth of seven per cent in home and personal care products.
Despite strong growth by Breeze and reversal of Lifebuoy's decline, overall personal wash sales were marginally lower. Wheel grew by 18 per cent, emerging as the number one brand in laundry.
Sales of soaps, detergents and scourers dipped to Rs 4,094 crore (Rs 4,214 crore), while personal products sales rose to Rs 2,259 crore (Rs 1,833 crore).
Beverages fell marginally to Rs 1,921 crore (Rs 1,987 crore). In the segment, coffee gained while tea declined. However, the Taj Mahal brand of tea recorded a growth of six per cent. In coffee, Bru grew by 15 per cent in a market which fell by three per cent.
The sales of branded staple foods stood at Rs 243 crore (Rs 269 crore). The growth was led by Modern Foods, which grew by 60 per cent, and Dalda.
Ice-cream and frozen desserts sales were Rs 156 crore (Rs 164 crore). The ice-cream business continued to make losses. Group exports declined by five per cent to Rs 1,829 crore.
During the year, the company's capex was Rs 160 crore, mainly in setting up seven new factories.
HLL also recorded an exceptional income of Rs 100 crore. The company made Rs 143 crore profit on the divestment of Quest and Animal Feeds business and Rs 17 crore profit on disposal of nickel catalyst and adhesives business, and earned Rs 28 crore on one-off reduction in tax liability arising from amalgamation of IBL.
However, it also provided Rs 11 crore for fixed asset write-off with respect to Thermometer and Rs 19 crore to an unviable manufacturing facility in Punjab in the culinary business.
HLL also set apart Rs 43 crore for fixed asset write-off in the ice-cream business and Rs 63 crore for additional liability with respect to employees' retirement benefits. Business restructuring costs amounted to Rs 48.04 crore.
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