HLL sales fall 7.2%, scrip near 4-year low

India’s largest fast-moving consumer company Hindustan Lever on Friday disappointed investors with a fall in sales and only a marginal growth in profits for the third quarter ended September 2002. The HLL scrip touched a 4-year low on the Bombay Stock Exchange before closing down by as much as four per cent at Rs 160.95—a near four-year low—after its third-quarter earnings fell short of estimates. The stock, which contributes more than 15 per cent to the benchmark BSE index dropped to its lowest intra-day level since December 1998 soon after the results.

Free fall of Sensex continues

MUMBAI: Stock markets fell further as selling pressure continued on Friday, sending many stocks to levels not seen in the last one year. The benchmark Sensex fell by another 33 points on BSE on sustained sell-off by investors who were disappointed over third quarter working results announced by Hindustan Lever. Reliance, Dr Reddy’s and others logged a new 52-week low while MTNL touched near nine-year low due to selling pressure. Foreign institutional investors which have been net sellers during the week, made fairly heavy sales in key counters along with domestic funds which seemed to be booking profits at the prevailing price levels. The sentiment was partly affected by the overnight slide in New York stocks with the Dow Jones Industrial Average and the Nasdaq Composite Index falling by about 177 points and 22 points respectively. Sensex opened moderately lower at 2,903.96 and gradually moved downwards to a low of 2,855.90 before closing at 2,875.53 from yesterday’s close of 2,908.05, netting a loss of 32.52 points or 1.12 per cent. The broad-based bse-100 index also dipped by 16.60 points to 1432.56. (ENS) Story continues below this ad

Earlier in the day, the company announced that its net sales in the period under review decreased by 7.2 per cent to Rs 2,367.46 crore as against Rs 2,551.40 crore in Q3 of last year. The company posted a 3.53 per cent rise in net profit at Rs 413.29 crore for the third quarter as compared to Rs 399.17 crore in same period of previous fiscal.

The company depends on rural demand to boost sales, but rural incomes are likely to drop this year because the annual monsoon was the worst in 15 years. Its shares have dropped more than 25 per cent from the beginning of 2002 to Thursday’s close, compared with a nearly 11-per cent fall in the same period.

HLL chairman M.S. Banga said, “Our home and personal care power brands have grown by 6.8 per cent despite a declining market. Lifebuoy, Lux, Wheel, Fair & Lovely, Ponds, Pears and Lakme, all have recorded double digit growth. We achieved this through innovation and activation programs backed by a 24 per cent increase in brand support, especially media. Gross margins have moved up by 3.5 per cent in beverages, 3.3 per cent in foods and 16 per cent in ice-cream.” HLL said markets for many of the key categories continued to decline in value during Q3. Sales in beverage business were under pressure due to low commodity process and intense competition from local players.

HLL finance director D. Sundaram said exports during Q3 declined to Rs 280.12 crore (Rs 419.96 crore) as the company discontinued traded exports in line with the strategy. However, continuing exports grew by 2.5 per cent. Domestic fast moving consumer goods sales in Q3 and nine months stood at Rs 2,047.55 crore (Rs 2,065.72 crore) and Rs 6,301.36 crore (Rs 6,341.70 crore) respectively. The company had also booked a loss of Rs 6.84 crore from the sale of its mushrooms business this year, and stopped traded exports — or exports of goods it does not itself make — resulting in a fall in sales, he said. The company’s tea business had been hit by lower prices.

Analysts said the company was affected by both poor sales growth and fierce competition.