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Journalism of Courage
Fast-Moving Consumer Goods (FMCG) major Hindustan Lever (HLL) has witnessed a sharp drop in its June 2004 quarter profit after tax (PAT) by 43 per cent year-on-year to Rs 256.4 crore. Operating profit is down 35 per cent to Rs 331.2 crore. The processed foods segment has posted a loss of Rs 27.4 crore, while the profit in soaps & detergent business is down by 41 per cent. Exports have declined by 66 per cent.
HLL chairman M.S. Banga said at an analysts’ meet on Thursday: ‘‘In a highly competitive scenario, we have held volume market shares, particularly in laundry and shampoo. Competitive pricing and higher brand support have impacted on our profits. The increase in advertising and promotion expenditure by Rs 60 crore comes at the right time, since there is competition as well as opportunity at the moment. Meanwhile, we will continue our plans and growth initiatives irrespective of the monsoon’’.
The results disappointed the stockmarket deeply, with the HLL stock fell sharply by 3 per cent to close at Rs 118.2 at The Stock Exchange, Mumbai (BSE). The stock, in fact, hit a low of Rs 116 after the results were announced.
Net sales have posted a marginal decline of 5 per cent to Rs 2572 crore. The two main heads of business, home & personal care (HPC) and foods, posted 0.5 per cent and 10 per cent decrease in revenues, respectively. Processed foods revenue decreased by 53 per cent to Rs 82 crore, while soaps & detergents and beverage businesses registered marginal decline in revenues.
The interest expense has increased from Rs 1.3 crore to Rs 31.8 crore in June 2004 quarter. Staff costs have increased by 9 per cent to Rs 171.3 crore.
