Hindustan Lever Ltd (HLL) has reported a lower net profit in the first quarter ended March 2003, but managed to break the jinx with regard to its topline growth by announcing a 1.2 per cent increase in total sales. HLL has been reporting a decline in sales over the last four successive quarters. The topline growth has come on the back of a strong volume growth in home and personal care business.HLL reported a 10.6 per cent fall in net profit at Rs 382.92 crore in the first quarter as against Rs 428.54 crore in the same quarter last year, which is not comparable due to an exceptional item of Rs 74.72 crore towards the sale of its seeds business with effect from April 2002.However, on a comparable basis, net profit before exceptional items has risen 8.2 per cent, the company said. Operating profit of Rs 416.00 crore for the quarter recorded an increase of 9.1 per cent over the corresponding quarter of 2002.Sales of continuing businesses grew by 2.9 per cent. This was achieved despite business operations being adversely affected by the uncertainty associated with VAT. EPS on an annualised basis were lower at Rs 6.96 as compared with Rs 7.79. The expenditure on advertising and promotion has slipped to Rs 209.64 crore as against Rs 224.86 crore last year. “In HPC, we have used aggressive pricing and higher media spends in order to stimulate volume growth. It is very encouraging to see overall volumes up by 11 per cent, led by a 41 per cent growth in hair, 27 per cent in skin, 16 per cent in oral and 5 per cent in laundry. This has taken up overall sales growth to 8 per cent for our power brands, making it the fourth consecutive quarter of growth in the face of depressed markets,” said HLL chairman M S Banga. “This strategy may well have an impact on operating profit in the very short term” he said.“ In our foods business too, we have introduced several new products with healthy gross margins,” Banga added.Industry analysts said the MNC’s performance has been commendable. The HLL scrip on Wednesday opened at Rs 141.50 on the BSE and touched a high of Rs 148.50 and an intra-day low of Rs 139.25 before closing at Rs 147.75, a gain of Rs Rs 6.25. Personal wash grew by 9 per cent, led by a 36 per cent growth in Lifebuoy and a 21 per cent growth in Pears. In fabric wash, the Wheel and Surf franchises grew by 7 per cent and 6 per cent, respectively.In personal products, its skin brands grew strongly, leading to a skin category sales growth of 23 per cent. In oral care, toothpaste sales turned around. Hair volumes were up by 40 per cent, while sales were flat on account of aggressive pricing. Overall personal products recorded a 16 per cent growth.Unfavourable commodity prices and competition from loose tea continued to impact beverages sales. The company has taken several initiatives to get back to growth path, such as Three Roses and Taaza, which have recorded double digit growth.
