News: Hindustan Lever Q1 net jumps 77 pct
(RTR 28/04/2006) Mumbai - India's top consumer goods maker, Hindustan Lever Ltd., on Friday posted a 77 percent jump in quarterly profit, boosted by a one-time gain, but its shares fell as the underlying result missed forecasts.
Lever, maker of Lux soap and Surf detergent, is expected to benefit from recent tax cuts on ice cream and processed foods. But high oil prices could raise the cost of packaging and making detergents, while competition will force higher spending on advertising, analysts say.
"We will continue to judiciously use the levers of pricing, cost management and brand investment to sustain profitable growth," Chairman Harish Manwani said.
Lever, 52-percent owned by Anglo-Dutch Unilever Plc, said net profit rose to 4.43 billion rupees ($98 million) in the first quarter to March from 2.5 billion rupees a year earlier. Net sales rose 12 percent to 27.98 billion rupees.
The profit included a one-time gain of 2 billion rupees from the sale of its Nihar hair oil to Marico.
A Reuters poll of 10 brokerages had forecast an average net profit of 3.24 billion rupees and sales of 28.45 billion rupees.
Lever's full-year profit is forecast to rise 14 percent to 16.1 billion rupees, according to Reuters Estimates.
Its shares fell nearly 6 percent to 271 rupees before recovering in a weak Mumbai market. At 0839 GMT, they were down 2 percent at 281.50 rupees.
"There are some concerns about raw-material prices in the medium-term, but if underlying volume growth is good, much of it will be offset," said Hemant Patel at Enam Securities.
"The overall market also appears to be growing, so we are unlikely to see much competitive pressure," he said.
Shares in Hindustan Lever, valued at nearly $14 billion, had risen 38 percent during the January-March quarter, beating a 34.2 percent gain for the sector index and a 20 percent rise for the BSE index.
CORE FOCUS
Lever reported its first profit rise in more than a year in the April-June quarter of 2005, after a bruising price war with Procter & Gamble in detergents and shampoos.
Since then, Lever has raised product prices, relaunched brands, hived off some non-core businesses, and benefited from tax changes that have prevented smaller firms from undercutting and fiscal incentives for manufacturing plants in poor states.
Lever's first-quarter revenues from home and personal care -- which make up nearly two-thirds of its sales -- rose 20 percent from a year ago, and revenues from foods rose 11 percent.
Its advertising and promotion costs, pushed higher by competition, rose 45 percent on the year.
"The overall product mix was richer, in favour of higher-margin personal care products," Finance Director D. Sundaram told reporters.
"But cost pressure from high crude oil prices remains. There is a clear upward revision in transportation costs and we will continue to invest in our brands by way of advertising," he said.
Lever's "portfolio rationalisation" is complete, he said, except for a leather unit the company has said it will sell.
Besides competition from Colgate-Palmolive (India), Dabur, Godrej Consumer Products and Marico, tobacco heavyweight ITC Ltd. has also entered food and personal care, and will soon make home care products.
Meanwhile Lever, which expects the consumer goods market to expand 2.5 times over the next 10 years from $9.2 billion, is testing a water purifier in south India, a chain of ayurvedic spas and direct selling networks in rural and urban areas.
Lever, maker of Lux soap and Surf detergent, is expected to benefit from recent tax cuts on ice cream and processed foods. But high oil prices could raise the cost of packaging and making detergents, while competition will force higher spending on advertising, analysts say.
"We will continue to judiciously use the levers of pricing, cost management and brand investment to sustain profitable growth," Chairman Harish Manwani said.
Lever, 52-percent owned by Anglo-Dutch Unilever Plc, said net profit rose to 4.43 billion rupees ($98 million) in the first quarter to March from 2.5 billion rupees a year earlier. Net sales rose 12 percent to 27.98 billion rupees.
The profit included a one-time gain of 2 billion rupees from the sale of its Nihar hair oil to Marico.
A Reuters poll of 10 brokerages had forecast an average net profit of 3.24 billion rupees and sales of 28.45 billion rupees.
Lever's full-year profit is forecast to rise 14 percent to 16.1 billion rupees, according to Reuters Estimates.
Its shares fell nearly 6 percent to 271 rupees before recovering in a weak Mumbai market. At 0839 GMT, they were down 2 percent at 281.50 rupees.
"There are some concerns about raw-material prices in the medium-term, but if underlying volume growth is good, much of it will be offset," said Hemant Patel at Enam Securities.
"The overall market also appears to be growing, so we are unlikely to see much competitive pressure," he said.
Shares in Hindustan Lever, valued at nearly $14 billion, had risen 38 percent during the January-March quarter, beating a 34.2 percent gain for the sector index and a 20 percent rise for the BSE index.
CORE FOCUS
Lever reported its first profit rise in more than a year in the April-June quarter of 2005, after a bruising price war with Procter & Gamble in detergents and shampoos.
Since then, Lever has raised product prices, relaunched brands, hived off some non-core businesses, and benefited from tax changes that have prevented smaller firms from undercutting and fiscal incentives for manufacturing plants in poor states.
Lever's first-quarter revenues from home and personal care -- which make up nearly two-thirds of its sales -- rose 20 percent from a year ago, and revenues from foods rose 11 percent.
Its advertising and promotion costs, pushed higher by competition, rose 45 percent on the year.
"The overall product mix was richer, in favour of higher-margin personal care products," Finance Director D. Sundaram told reporters.
"But cost pressure from high crude oil prices remains. There is a clear upward revision in transportation costs and we will continue to invest in our brands by way of advertising," he said.
Lever's "portfolio rationalisation" is complete, he said, except for a leather unit the company has said it will sell.
Besides competition from Colgate-Palmolive (India), Dabur, Godrej Consumer Products and Marico, tobacco heavyweight ITC Ltd. has also entered food and personal care, and will soon make home care products.
Meanwhile Lever, which expects the consumer goods market to expand 2.5 times over the next 10 years from $9.2 billion, is testing a water purifier in south India, a chain of ayurvedic spas and direct selling networks in rural and urban areas.
posted by InCar Group Press Room at 11:47
0 Comments:
Post a Comment
<< Home