HLL profits up 22.4 %

Mumbai: Hindustan Lever Limited (HLL) registered a Profit Before Tax ( PBT ) of
Rs. 1665 crores and Profit After Tax (PAT) of Rs. 1310 crores for 2000, a growth of 20 % and 22.4 % respectively. Net sales for the year were Rs. 10604 crores registering a growth of 4.5 %.

For December quarter, sales rose by 6 % to Rs. 2648 crores. PBT at Rs. 520 crores grew by 20.5 % while PAT at Rs. 430 crores recorded a 24.5 % rise.

Operating margin for the year improved from 12.8% in 1999 to 14.8% in 2000.

Earnings Per Share (EPS) for the year improved to Rs 5.95 from Rs.4.86 in 1999 (on a comparable basis, on Re.1 share). The Rs.10/- paid up share has been split into 10 shares of Re.1 each, effective July 2000.

The Board has recommended a final dividend of Rs. 2 for the year, per share of Re.1. Total dividend for the year (including interim dividend of Rs.1.50) would amount to Rs. 3.50 or 350% of the face value as compared to 290% paid last year. The dividend payout, (inclusive of dividend tax @ 22%) works out to 71.9 % of profit after tax, as compared to 66.1% (inclusive of dividend tax @ 11%).

Commenting on the year, Mr.M.S.Banga, Chairman of the Company, said:

"The company’s results reflect our high focus on profit growth through improving product mix, cost optimisation initiatives such as Activity Value Analysis, ongoing cost effectiveness programmes and continuous thrust on supply chain efficiencies.

These results have been achieved despite a slowing of market growth and intense competition in certain categories. Product prices were by and large held reflecting stable input prices of key commodities. The company has undertaken several market and consumer focussed initiatives, which we believe, will lead to market development and also address competitive issues. Some of these have already started showing positive results."

In Personal Wash, the premium portfolio recorded a growth of 16%, while the popular and discount segment grew by 4%; overall sales were however impacted by a decline in the carbolic segment. Fabric Wash recorded a growth of 7% with premium powders growing by 19 %. Growth in Personal Care was led by Hair. Skin sales were flat in the face of low market growth and intense competition. In Oral Care, the company held its market share in toothpaste and gained share in toothbrush in the face of a very aggressive response from competition. The Household Care business grew by a healthy 22% through the continued success of Vim.

The 2 year declining trend in tea was reversed and sales for the year grew by 5% with premium portfolio sales rising by 15% . Aggressive investments in Branded Staples and Tomato Products led to a healthy growth of 26% and 19% respectively. Culinary Products recorded 50% growth in December quarter. After several quarters of continuous decline, Oils and Fats business registered a healthy volume growth of 16% in December quarter resulting in a 9% volume growth for the year. The sales value however, declined by 10% due to a record low commodity price during the year. The Ice cream business reduced its losses during the year very significantly through innovative re-engineering of the supply chain.

Group exports registered a growth of 9% led by the core categories of HPC (+ 21 %) and Beverages (+ 12 %) as well as manufactured Marine Products (over 100 %).

The results for the year include impact of transfer of packet tea exports business of Lipton India Exports Limited, a wholly owned subsidiary of the company, to HLL, effective April 1, 2000. On the other hand, this excludes the animal feeds business, which has been transferred from HLL to Gold Mohur Food and Feeds Limited, another subsidiary effective from the same date. The results for the year are also not comparable with the previous year to the extent of sale of the dairy business of HLL to Nutricia in September 1999. If these transfers/sales are excluded, profit after tax would reflect a growth of 20.5 % over the previous year compared to 22.4 % shown in the results above. Similarly, net sales for the year would reflect a growth of 4.1 % compared to 4.5 % shown in the results above.