By Gurdev Singh Virk and Ashutosh Joshi
MUMBAI--Hindustan Unilever Ltd. (500696.BY), India's largest
consumer-goods company by revenue, Monday posted a
better-than-expected 15% increase in its fourth-quarter net profit,
helped by strong sales of its products that include Lux soap and
Lipton tea.
For the three months through March, the local unit of Unilever
PLC (ULVR.LN) posted a net profit of 7.87 billion rupees ($145.1
million), compared with 6.87 billion rupees a year earlier. The
average of estimates in a poll of 10 analysts was 7.50 billion
rupees.
Net sales rose 12.5% to 63.67 billion rupees. Sales volume, or
the quantity of goods sold, increased 6% from a year earlier,
faster than the preceding quarter's 5% growth.
The volume growth comes despite a slowdown in India's
economy--gross domestic product is estimated to have grown 5% in
the fiscal year ended on March, the slowest in a decade. The
slowdown has hurt consumers' discretionary spending--such as on
packaged foods and personal-care products which companies like
Hindustan Unilever sell.
V. Srinivasan, an analyst at Mumbai-based Angel Broking, said
Hindustan Unilever's volume growth picked up pace as the company
passed on some benefits of a fall in raw-material costs to
customers through price cuts. Higher advertisement and publicity
expenditure also helped sales growth, he added.
The company's strong performance surprised the market. Its
shares ended 7% up at 497.60 rupees on the Bombay Stock Exchange,
outperforming a 0.5% gain in the benchmark index.
"While there are near-term concerns around slowing market growth
and inflationary pressures on consumers, we are confident of the
medium- to long-term growth prospects of the FMCG [fast-moving
consumer goods] sector," Chairman Harish Manwani said in a
statement.
Sales of personal-care products such as shampoo and skin-care
creams, increased 12% to 18.31 billion rupees in the past quarter.
Sales at the soaps and detergents segment--which accounts for half
its overall sales--rose 13% to 31.91 billion rupees.
Mr. Srinivasan, the Angel Broking analyst, has a "neutral"
rating on the shares of Hindustan Unilever. According to him, the
stock is unlikely to see any major gain in the near future as it is
already trading close to its three-month high.
Write to Ashutosh Joshi at ashutosh.joshi@dowjones.com and
Gurdev Singh Virk at Gurdev.singh@dowjones.com
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