P&G Hygiene and Healthcare Limited has reported 4th quarter and full year 2005-06 which are in line with market expectations. The company's bottom line growth was helped by a reduction in operating costs and higher other income.
The results are not strictly comparable as the company transferred its detergent manufacturing business to an unlisted group company with effect from 1 October, 2005.
For the 4th quarter ended 30 June, 2006, P&G India has reported a net profit of Rs46.56 crore – an increase of 21.38 per cent over Rs38.36 crore reported for the same quarter of previous year. Total sales revenues declined 34.23 per cent to Rs112.9 crore from Rs171.66 crore.
Operating profits, excluding other income, remained unchanged as compared to the previous year quarter. Operating margins as a percentage of net sales improved substantially to 22.52 per cent from 14.84 per cent for the previous year quarter.
Input costs declined 58.63 per cent over the previous year quarter, much sharper than the decline in sales revenues. Advertising costs declined 25.05 per cent while royalty expenses increased 22.87 per cent. Staff costs went down by 12.93 per cent and other expenses were lower by 20.73 per cent.
Depreciation charges more than halved while tax provisions for the quarter went up by 21.57 per cent. A 26.87 per cent increase in other income to Rs42.97 crore from Rs33.87 crore for the previous year quarter helped the bottom line growth considerably.
For the financial year 2005-06 ended 30 June, 2006, the company has reported a net profit of Rs139.51 crore – an increase of 11.96 per cent over the previous year. Full year sales revenues have declined 17.26 per cent to Rs566.73 crore from Rs684.92 crore.
The company realised Rs2.61 crore in profits from sales of property and Rs4.72 crore from transfer of the detergent manufacturing business during 2005-06. Adjusted for these one-time realisations, full year net profits increased 15.54 per cent to Rs132.18 crore from Rs114.4 crore.
Operating profits, excluding other income, for the full year have declined marginally by 2.74 per cent. Operating margins as a percentage of net sales have improved to 22.9 per cent from 19.48 per cent for the previous year.
Cost of material inputs and manufacturing costs declined 38.93 per cent. Advertising expenses declined 7.24 per cent while royalty expenses went up by 37.45 per cent. Staff costs declined 9.82 per cent and other operating expenses were higher by 8.33 per cent.
Depreciation costs for the full year declined 36.13 per cent while tax provisions increased marginally by 1.22 per cent. Other income was higher by 37.88 per cent at Rs64.28 crore as compared to Rs46.62 crore for the previous year.
After the divestment of detergent manufacturing business, the company is focussing on the health and hygiene products segment. The core business reported a sales growth of 20.78 per cent for the 4th quarter and 17.93 per cent for the full year.
The company is investing Rs56 crore to expand capacity at its feminine hygiene plant in Goa and a new healthcare plant in the state of Himachal Pradesh.
"Our strong 18 per cent sales growth of the core businesses for both the full year and last quarter, keeps us in the league of India's fastest growing FMCG companies. Our focus on driving superior quality and value, product innovations, insightful marketing programs, strong trade plans, and expanded distribution have also helped us stay market leaders in the categories we compete in", Bharat Patel, chairman of P&G India said.