Business Daily from THE HINDU group of publications
Monday, Jul 30, 2007
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Business Daily from THE HINDU group of publications Monday, Jul 30, 2007 ePaper |
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Financial Performance Corporate Results - Personal Products
Tackling inflation: Mr Harish Manwani (right), Chairman, Hindustan Unilever Ltd, and Mr D. Sundaram, Director (Finance &IT), announcing the company’s results in Mumbai on Sunday.
Our Bureau Mumbai, July 29 Strong sales growth across all business segments has helped Hindustan Unilever (HUL) record 30 per cent increase in net profit (before exceptional items) for the second quarter ended June against the corresponding previous period. The company has proposed an interim dividend of Rs 3 per share of Re 1 each. Profit for the period under review rose to Rs 471.91 crore (Rs 379.26 crore), while net sales grew by 12.9 per cent to Rs 3,481.40 crore (Rs 3,083.23 crore). The increase in net profit was primarily due to rise in sales of soaps and detergents by 14.4 per cent to Rs 1,668.70 crore (Rs 1,455.92 crore). The segment generated a surplus of Rs 268.37 crore (Rs 208.42 crore), an increase of almost 30 per cent. Sales revenue from personal products also increased, from Rs 846.72 crore to Rs 897.77 crore. However, within the segment, the skincare category was impacted due to planned reduction in stocks in the distribution pipeline in preparation for the relaunch of the Fair & Lovely brand. Speaking to newspersons, Mr Harish Manwani, Chairman, said that margins in the soaps and detergents business continue to be under pressure. “There have been cost and competitive pressures in the laundry business,” he added. “The challenge of inflationary pressure continues and will be met through a combination of selective price increases and cost leadership across the extended supply chain.” Processed foods including popular brands such as Knorr and Kissan registered 38 per cent sales growth to Rs 133.41 crore (Rs 97.26 crore). Sales of beverages grew 21 per cent to Rs 363.29 crore (Rs 300.55 crore), while ice creams posted 24 per cent growth to Rs 62.17 crore (Rs 50.50 crore). The company’s advertising and promotional spends during the quarter fell to Rs 336.04 crore (Rs 345.27 crore). Mr D. Sundaram, Director (Finance & IT), said: “We have been phasing our advertising spends depending on the launches and relaunches of brands. The advertising spends have not been linear for the company.” Buyback at 17% premium
Meanwhile, the board of directors has approved a share buyback scheme at a maximum price of Rs 230 per share. On the NSE on Friday, HUL shares fell 9.8 per cent to close at Rs 195.90. The ‘ceiling’ price thus represents a premium of roughly 17 per cent over the closing price. HUL has also said that that it would operate the buyback scheme through open market purchases at the BSE and the NSE, involving a commitment of resources up to a maximum of Rs 630 crore. The sum represents 25 per cent of the total paid-up capital and free reserves as per the latest audited balance sheet on December 31, 2006. The company would be seeking shareholder approval through a postal ballot for this purpose. The buyback would result in the promoter stake going up marginally, as they would not be offering their shares under the scheme. However, HUL clarified that a rise in the Unilever Group’s stake would depend on the prevailing market prices at which buyback is put through. It expects the rise in stake be marginal – 0.6-0.7 percentage points. Minority shareholders currently own a little over 100 crore shares. The target amount of Rs 630 crore would be exhausted in the purchase of close to three crore shares, assuming that the buyback occurs at close to the target price.
Related Stories: More Stories on : Financial Performance | Personal Products | Hindustan Unilever Ltd
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