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HLL's net profit in 1999 up 23 pc at Rs 7.24 billion

Shares of Hindustan Lever Limited, the fast moving consumer goods major, surged 4.6 per cent on Wednesday afternoon after the company announced a higher net profit for the third quarter of 1999 ended September 30.

The shares were up by Rs 110 at Rs 2,390 rupees at the Bombay Stock Exchange.

HLL has reported a 27.7 per cent increase in net profit at Rs 2.85 billion in the third quarter of 1999 and 23 per cent increase at Rs 7.24 billion in the first nine months of the year.

Turnover during the third quarter rose by 7 per cent to Rs 24.51 billion. The domestic home and personal care business and the food categories recorded significant volume growth with the exception of tea and ice-cream business.

The company, however, continued to focus on costs and margin improvements. The oils and fats business, while registering volume growth, has been severely impacted by the sharp fall in commodity prices of oils affecting the value realisation.

During the quarter, the estimate of business restructuring costs has been revised to Rs 1 billion against the estimate of Rs 1.16 billion as at the end of June 1999. Accordingly, restructuring costs charged to the results of the first nine months are Rs 750 million of which Rs 170 million have been charged in the third quarter results.

The disposal of the dairy business which was approved by the shareholders in July this year, has been completed in September. HLL also signed a technical collaboration agreement with its parent company Unilever with effect from September 1 and the charge for royalty for the quarter ended September 30, is Rs 49 million.

Commenting on the results, HLL chairman K B Dadiseth said that the domestic market for HLL's portfolio continued to be affected by consumer downtrading, impacting the unit value realisation.

Exports continued to be under pressure in the context of difficult international trading conditions particularly in Russia, Dadiseth added.

The company said in a statement that sales of its domestic home and personal care products business grew by 12.7 percent in the third quarter of 1999 while food categories grew by 15.4 per cent.

HLL, a subsidiary of Anglo-Dutch conglomerate Unilever Plc, said its tea business showed no sales growth while the oils and fats business and exports were under pressure during the quarter.

"The domestic home and personal care business comprising soaps, detergents, household care and personal products, continued its strong volume growth and achieved a 12.7 per cent sales increase in the third quarter," the company said.

"Food categories, excluding tea and oils and fats, increased sales overall by 15.4 per cent with strong growth in branded staples and coffee," it said.

HLL said while the tea business showed no sales growth, the decline in volumes, consequent to the impostion of excise duty last year, was arrested.

"The oils and fats business was adversely impacted due to the continued fall in commodity oil prices and trade de-stocking in a bearish market," it said.

"The core exports businesses continued to be under pressure, but overall, exports were higher consequent to a one-off opportunity," HLL said.

UNI/Reuters

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