Lever, the country''s largest FMCG company, has reported
excellent results for the second quarter ended June
2006. The company had struggled to achieve sales growth
and sustain operating margins in the face of stiff competition,
which triggered price wars in key product segments.
quarterly results confirm that price realisations have
improved and the company''s strategy of focussing on
key products is paying off.
the quarter ended 30 June, 2006, HLL has reported a
35.13 per cent rise in net profits to Rs380.59 crore
from Rs281.65 crore for the corresponding quarter of
previous year. Net sales increased 8.71 per cent to
Rs3,083.23 crore from Rs2,836.32 crore for the prior
FMCG business recorded a growth of 12.15 per cent in
net sales over the previous year quarter. Within FMCG,
the home and personal care (HPC) segment continued to
be the growth driver with sales growth of 13.92 per
cent. Performance of the foods division continued to
be below par with sales growth of just 3.84 per cent,
though the company said some of the branded foods recorded
double-digit sales growth.
HPC sales contributed 74.16 per cent of total sales
while 14.41 came from foods. Exports went up 1.93 per
cent during the quarter and contributed 10.66 per cent
of total sales.
and detergent sales increased 13.07 per cent over the
previous year quarter while personal products sales
increased by 13.28 per cent. Sales of beverages declined
3.74 per cent during the quarter, mostly because of
sluggish tea sales, while processed foods sales improved
considerably by 24.18 per cent. Ice creams were the
best performing product segment with a sales growth
of 34.28 per cent over the previous year quarter, though
on a small base.
product segments, except chemicals and plantations,
were profitable during the quarter. Even processed foods,
which had reported a loss during the previous year quarter,
profits, excluding other income, increased 19.94 per
cent over the previous year quarter. Operating margins
as a percentage of net sales improved to 13.45 per cent
from 12.19 per cent for the corresponding quarter of
previous year on improved realisations and tighter control
of goods sold, including cost of material inputs and
manufacturing costs, increased by a modest 4.21 per
cent. The company increased its spending on advertising,
which went up by 20.48 per cent. Staff costs recorded
a negligible growth of 0.6 per cent while other operating
expenses went up 11.45 per cent.
charges declined 5.59 per cent over the previous year
quarter. Interest expenses, which are negligible as
a percentage of total costs, declined to Rs3.43 crore
from Rs5.55 crore.
income for the quarter went up by 2.57 per cent over
the corresponding quarter of previous year.
Manwani, chairman of HLL, said, "We continue to
be encouraged by the growth in our markets, particularly
with rural markets gaining momentum. Our strong portfolio
of brands across price-points is helping us to sustain
growth momentum across a large spectrum of our categories.
We remain focused on driving cost
efficiencies and in appropriately investing behind our
brands. Cost inflation on the back of rising crude prices
remains a challenge and is being rigorously addressed
within the business."