Hindustan Unilever Ltd. (HUL), the fast moving consumer goods (FMCG) giant, reported a 1.8 per cent dip in its net profit for the first quarter of 2010-11 at Rs. 533.21 crore (Rs. 543.20 crore) on a 7 per cent higher sales of Rs. 4,794 crore (Rs. 4,476 crore).
During the period, FMCG sales grew by 6.7 per cent with a 5.2 per cent growth in Home & Personal Care (HPC) and 13.4 per cent growth in Foods. The company's operating profit was down 6.7 per cent at Rs. 627.44 crore (Rs. 672.54 crore). The profit after tax from ordinary activities before exceptional items was down 8.3 per cent at Rs. 512.40 crore (Rs. 558.60 crore). The exceptional items include Rs. 18.50 crore (Rs. 5.20 crore) on sale of properties, Rs. 4.41 crore (nil) profit on sale of long term trade investment, and Rs. 4.40 crore (Rs. 2.42 crore) on restructuring costs. For HUL, cost savings programmes and buying efficiencies continued to deliver strongly, reducing goods sold by 60 basis points. Advertising & Promotion investments were stepped up by 310 basis points to 5.7 per cent of sales, behind brand building, defending leadership positions and building new categories. Consequently, operating margins were lower by 190 basis points at 13.96 per cent. According to Harish Manwani, Chairman, HUL, “Despite an intensely competitive environment, we have sustained double-digit volume growth. We continue to invest fully to defend our strong leadership positions and build competitive growth momentum through bigger and better innovations. We are simultaneously leading market development of emerging categories and strengthening organisational capabilities to win with consumers, channels and segments of the future.”
