Fast moving consumer goods player Hindustan Unilever Ltd. (HUL) on Saturday reported a drop of 21.6 per cent in its net profit at Rs. 429 crore for the quarter ended September 30, 2009, against Rs. 546.60 crore in the corresponding quarter in the previous year. This followed mark-to-market (MTM) losses and the company’s restructuring costs.
Excluding the MTM charge on forex exposures, the net profit (before exceptional items) grew by 14.4 per cent at Rs. 651.52 crore (Rs. 560.1 crore). The decline in net profit is due to the exceptional gains from property disposal in the previous year (Rs. 109 crore) and the exceptional charge due to provision related to settlement reached with erstwhile workers of a closed Mumbai unit at Rs. 166.02 crore (Rs. 22 crore).
Higher ad spend
Net sales were up at Rs. 4,228 crore (Rs. 4,029 crore) and the board of the company has declared an interim dividend of Rs. 3 a share of face value Re 1. Exports dropped to Rs. 226.34 crore (Rs. 295 crore). The company increased spending on advertisements and promotions (A&P) by 38 per cent to Rs. 571 crore.
The operating margin improved by 1.4 per cent to 14.3 per cent through a combination of carry forward impact of pricing, improved product mix, step-up in cost saving programmes and better operating leverage. The profit before interest and tax was up 16.5 per cent at Rs. 605.72 crore (Rs. 520.10 crore).
Addressing the media here, HUL Managing Director Nitin Paranjpe said, “in the last few months, the primary focus was to get our volumes back on track and while three-fourths of our business have come back on track with improvement in product quality and pricing issues being addressed, the one-fourth which concerns us relating to detergent powder, mass laundry bars and personal wash have been acted on and we should see a favourable impact in the next two quarters.”
Developing the market
HUL Chairman Harish Manwani said, “we sustained good growth momentum in the domestic consumer business, driven by high quality innovations and sharper in market execution. Personal products and foods business continue to deliver strong growth across all our key brands.
“n soaps and detergents, we are actively strengthening our full portfolio and improving our competitiveness in the mass segment. We remain determined to profitably grow volumes and further strengthen our market leadership across categories. Market development is as important to us as development of market share.”