The Hindu Business Line : Premium products lift Hindustan Unilever

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Launch of Kissan Amaze, brain-food for school going children
Extending reach of water purifier Pure It
Looking for a buyer for marine products and leather biz

Paul Noronha

Better show: Mr Harish Manwani, Chairman, Hindustan Unilever Ltd, with Mr D. Sundaram, Director of Finance & Information Technology, at a press conference in Mumbai on Wednesday. The company has reported a 23.5 per cent increase in its net profit for the quarter ended December 31, 2007 at Rs 631.44 crore (Rs 511.18 crore).

Mumbai, Feb. 13 Helped by price increases and robust sales of its premium products, consumer goods-maker Hindustan Unilever Ltd (HUL) reported a 23.5 per cent increase in its net profit for the quarter ended December 31, 2007 to touch Rs 631.44 crore, as against Rs 511.18 crore during the year-ago period.

The net profit includes exceptional items worth Rs 77.45 crore during the quarter, as against Rs 27.75 crore in the corresponding quarter of the previous year. The exceptional items for the quarter included a profit from sale of property (Rs 47.78 crore) and reduction in liability for retirement benefits arising from impact of revised interest rates and lower annuity costs (Rs 41.57 crore).

The company’s net sales grew by 16.8 per cent at Rs 3,687.40 crore, as compared to Rs 3156.10 crore in the year-ago quarter.

HUL’s home and personal care business grew at 18.4 per cent, with growth emanating from its soaps and detergents, apart from personal products. “Soaps grew on the back of notable performances by Lux and Lifebuoy,” Mr D. Sundaram, director (Finance), told reporters here.

In beverages, its tea growth was driven by the premium brands, while coffee had another good quarter with Bru growing strongly. For the whole year ended December 31, 2007, HUL’s net profit stood at Rs 1,925.47 crore, as against Rs 1,855 crore in the previous year. Its annual sales touched Rs 13,717 crore (Rs 12,103 crore).

Mr Harish Manwani, Chairman of the company, said: “Personal products business registered robust growth in the December quarter and we are encouraged by the response to our premium brands, particularly the Ponds top-end range and Dove hair care. We recognise the challenge of inflationary pressures and, in a competitive context, sustaining cost leadership across the extended supply chain continues to be a key priority.”

The company had to tackle rise in input costs, especially vegetable fat that goes into soap production. “Cost savings mitigated the impact of escalating costs. These savings combined with selective price increases boost the gross margin,” according to Mr Sundaram.

Dividend

The board of directors, which met today, has proposed a final dividend of Rs 3 per share of Re 1 each. This along with the interim dividend of Rs 3 per share and the Platinum Jubilee dividend of Rs 3 per share, amounts to a total dividend of Rs 9 per share for 2007.

HUL is planning to focus on its new offering, Kissan Amaze, claimed to be India’s first specifically designed brain-food for school going children. Currently being test marketed in Tamil Nadu and Karnataka, the product will soon be launched at the national level. It is available in three product formats — Bars, Bites and Milk Mixes — containing Omega 3 and Omega 6 fatty acids, which are vital for better functioning of the brain.

HUL will also be extending the reach of its Pure It, water purifier, which has now been extended to 210 towns covering ten States.

Mr Sundaram said the company intended to withdraw from its marine products and leather businesses. The company was looking for a buyer of these two businesses.