HUL 4Q net profit falls as demand slows

HUL's standalone net profit in Q4 of 2008 stood at Rs.615.74 crore, down from Rs.631.44 crore in Q4 of 2007 (year-on-year or YoY decline of 2.48 percent) while its net sales grew from Rs.3687.40 crore to Rs.4307.71 crore (YoY rise of 16.82 percent).

The total income of the company in the period under review was Rs.4378.67 crore, up from Rs.3789.40 crore reported in the year ago period (YoY rise of 15.55 percent).

During the same period, the company's expenditure rose from Rs.3161.10 crore to Rs.3655.22 crore (YoY rise of 15.63 percent).

Earnings per share (after extraordinary items) dipped from Rs.2.90 to Rs.2.83 per share.

Segment wise, HUL's revenue, during the December quarter, from sale of soaps and detergents, personal products, beverages, processed foods and ice creams rose 24.85 percent, 11.32 percent, 23.92 percent, 17.94 percent and 15.93 percent respectively. HUL earns over two third of its revenue from sale of soaps, detergents and personal products.

The company's revenue from exports, however, declined 23.05 percent.

HUL, which is the Indian unit of Anglo-Dutch consumer goods giant Unilever Plc., said its FMCG business grew by 21 percent with underlying volume growth of 2 percent.

HPC (home and personal care) Business grew 21 percent driven by price growth in Soaps and Detergents and all round volume growth in Personal Products. Laundry business grew strongly across all brands and growth in Personal Wash was led by Lux, Lifebuoy, Dove and Pears. Shampoo category continued growth momentum with robust volume growth, led by Sunsilk. Growth in Skin category was driven by Fair & Lovely and Close Up in the Oral category. Dove range of deodorants was launched in this quarter and Surf Excel Quickwash was relaunched, HUl said in a statement.

Foods business grew by 23 percent with a strong performance across Beverages, Processed foods and Ice-Cream. Tea, Processed Foods and Ice-Cream all delivered strong volume growth. Gelato range of Ice-Creams was launched in this quarter, it added.

However, the company said that strong volume growth in personal products and foods business was partly offset by the impact of slowdown in soaps and detergents, as high input cost contributed to price growth and decline in demand for detergents. HUL has reportedly lost nearly 5 percent market share in soaps and detergents segment to other players due to demand slowdown and higher input costs.

Looking forward, HUL said it saw input cost inflation falling, which, if sustained, will reflect in lower consuming cost and higher earnings.

We continue to deliver strong top line and operating profit growth. Softening commodity prices augur well for the business as we sustain our focus on delivering superior consumer value. In the current economic scenario, market development and consumer spending are being monitored closely to manage the business dynamically. We remain determined to leverage our strong portfolio and scale to deliver competitive and profitable growth, said Harish Manwani, chairman, HUL.

In a separate development, HUL said R. Sridhar has succeeded D. Sundaram as its CFO.

HUL, which used to follow the calendar year as its accounting year, also said it will henceforth follow April-March period as the financial year. Consequently, as a transitory arrangement, the next annual Accounts and Reports of the company will be for a period of 15 months commencing January 1, 2008 and ending March 31, 2009, it said.

Shares of HUL closed up 2.51 percent at Rs.253.10 at the Bombay Stock Exchange on Tuesday.