HLL net profit rises 15% despite cost pressures

Its net sales rose 14 per cent to Rs 2,732 crore from Rs 2,401 crore a year earlier. The results beat market forecasts of a net profit of Rs 318 crore on sales of Rs 2691 crore for the quarter. HLL shares moved up by 2.5 per cent to Rs 161.40 on the BSE on Monday.

Higher prices for fuel and key raw materials like soda ash have weighed on its margins, while high fuel costs may also be squeezing consumers into switching to lower-priced brands. ‘‘We have only partly neutralised higher costs through cost management and increased product prices,’’ said Finance Director D Sundaram.

‘‘Cost pressures are an industry-wide phenomenon, and we have seen higher costs from increased advertising and promotional expenses, besides high fuel prices,’’ he said. HLL is expected to see 2005 net profit rise 14.5 per cent to Rs 1,250 crore, according to estimates.

HLL’s third-quarter revenues from home and personal care rose 16 per cent from a year ago, and revenues from foods – a renewed area of focus – rose 15 per cent.

But the company’s advertising and promotion costs, nudged up by competition, rose 22 per cent.

In the coming quarters, HLL is set to benefit from higher product prices, fiscal benefits for plants in poor states, and better rural sales as a good monsoon puts more cash in farmers’ pockets.