2nd UPDATE: Hindustan Unilever 4Q Net Profit Jumps 47%
25 Mai 2010 - 5:34PM
Dow Jones News
Hindustan Unilever Ltd. (500696.BY) Tuesday reported a
better-than-expected 47% jump in fiscal fourth-quarter net profit
as the largest Indian consumer-products maker by sales benefited
from one-time gains.
The company said it will take all steps to retain market share,
indicating the company's profitability would continue to be under
pressure going forward as it is facing intense competition in its
core soaps and detergent segment.
"The market will remain competitive" and "we will take all the
right steps in order to ensure that we hold on to our competitive
position," Chief Executive Nitin Paranjpe told reporters.
Net profit for the three months through March rose to INR5.81
billion from INR3.95 billion a year earlier, while Sales rose 8.2%
to INR43.16 billion from INR39.88 billion.
The average of estimates in a Dow Jones Newswires poll of 12
analysts was for a net profit of INR4.66 billion on sales of
INR42.75 billion.
Results for the last quarter were helped by an exceptional gain
of INR1.43 billion, primarily related to sale of long-term
investments. The year-earlier quarter had an exceptional loss of
INR1.07 billion.
The quarter also had an extraordinary gain of INR521.1 million
related to a write-back of certain provisions made earlier.
The company reported an 11% expansion in sales volume at its
local consumer-goods business, supporting expectations of a rebound
in demand for its products such as soap bars and detergent packs.
It had reported a 4% decline in sales volume in the comparable
quarter last year.
Local consumer-goods sales, however, rose just 7.8% to INR40.06
billion, indicating a hit from price cuts and promotional
offers.
Hindustan Unilever's sales have been under pressure as consumers
have been buying fewer soap bars and detergent packs from the
company, switching to cheaper offerings from rivals such as Godrej
Consumer Products Ltd. and Procter & Gamble Co.'s (PG) India
unit.
The company said the quarter saw sales volume growth in soaps in
both the premium and low-cost segments.
However, the growth in volume has come at the cost of lower
profitability as it cut prices, stepped up advertising and
aggressively promoted brands.
Profit margin before interest, tax and depreciation fell 130
basis points from a year earlier, Chief Financial Officer R.
Sridhar told reporters.
Hindustan Unilever's expenses in the quarter jumped 9.5% to
INR38.35 billion. This was led primarily by a 39% jump in
advertising and promotion costs to INR6.27 billion.
Sales of soap brands such as Lifebuoy, Lux, Dove and Rexona and
detergent brands like Wheel, Surf Excel and Rin fell 1.9% to
INR19.78 billion. This soaps and detergents segment contributed 45%
of its sales.
Sales of personal-care products including Axe deodorant and
Pepsodent toothpaste grew 19% to INR12.55 billion.
-By Rumman Ahmed, Dow Jones Newswires; 91-9845104173;
rumman.ahmed@dowjones.com
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