MUMBAI, Oct 31 (Reuters) - Hindustan Unilever,
India's largest consumer goods maker, on Saturday reported a
21.6 percent drop in net profit for the September quarter, below
forecasts, due to mark-to-market forex losses and restructuring
costs.
The company, which makes popular soaps such as Lux, Dove and Surf detergent, expects growth in volumes to be sustained but expressed concerns over the lag effect of the poor monsoon rains, thew rise in commodity prices, inflation and interest rates.
'We would expect the FMCG (fast moving consumer goods) sector to continue to grow but we have yet to ascertain what impact the poor monsoons will have and the rise in consumer prices,' Chief Financial Officer R. Sridhar told reporters on a conference call.
Hindustan Unilever does not provide any forward looking statements.
The company, a unit of Anglo-Dutch firm Unilever Plc reported a net profit of 4.29 billion rupees ($91.35 million) down from 5.47 billion a year ago. Net sales rose to 42.28 billion rupees from 40.28 billion a year earlier.
A Reuters poll of 10 brokerages forecast net profit at 4.85 billion rupees on net sales of 43.9 billion.
The company has stepped up brand investments by 320 basis points, while it is relaunching several of its products including Lux, all of which are expected to take effect in future quarters, Sridhar said.
Profit in the September quarter were hit by charge of 91.3 million rupees on account of a mark-to-market loss on forward covers and restructuring cost of 1.66 billion rupees incurred as settlement for workers of one of its closed units, the company said.
The growth in sales was largely driven by personal products and food products categories, both of which increased 13 percent from year ago, Sridhar said.
Soaps and detergents rose at a lower rate as consumers opted for cheaper priced products.
Operating margin rose 140 basis points due to competitive pricing, better product-mix and better cost management.
The fast-moving-consumer-goods sector in India, estimated to be valued at more than $17 billion, has seen double digit growth in sales in the last couple of years.
Last week cigarettes, hotels and lifestyle apparels firm ITC Ltd, which competes with Hindustan Unilever in toiletries and branded foods segment, reported a 26 percent rise in September quarter net profit to 10.1 billion rupees, above forecasts.
HLL shares, valued at $13.1 billion, have risen about 13 percent so far this year, against a 65 percent rise in the main index and 41 percent rise in the sector index .
On Friday the company's shares closed down marginally at 282.95 rupees.
($1=46.96 rupees)
(Reporting by Janaki Krishnan)
((janaki.krishnan@thomsonreuters.com, +91-22 9892144116; Reuters Messaging: janaki.krishnan.reuters.com@reuters.net)) Keywords: HINDUSTANUNILEVER/RESULTS (if you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The company, which makes popular soaps such as Lux, Dove and Surf detergent, expects growth in volumes to be sustained but expressed concerns over the lag effect of the poor monsoon rains, thew rise in commodity prices, inflation and interest rates.
'We would expect the FMCG (fast moving consumer goods) sector to continue to grow but we have yet to ascertain what impact the poor monsoons will have and the rise in consumer prices,' Chief Financial Officer R. Sridhar told reporters on a conference call.
Hindustan Unilever does not provide any forward looking statements.
The company, a unit of Anglo-Dutch firm Unilever Plc reported a net profit of 4.29 billion rupees ($91.35 million) down from 5.47 billion a year ago. Net sales rose to 42.28 billion rupees from 40.28 billion a year earlier.
A Reuters poll of 10 brokerages forecast net profit at 4.85 billion rupees on net sales of 43.9 billion.
The company has stepped up brand investments by 320 basis points, while it is relaunching several of its products including Lux, all of which are expected to take effect in future quarters, Sridhar said.
Profit in the September quarter were hit by charge of 91.3 million rupees on account of a mark-to-market loss on forward covers and restructuring cost of 1.66 billion rupees incurred as settlement for workers of one of its closed units, the company said.
The growth in sales was largely driven by personal products and food products categories, both of which increased 13 percent from year ago, Sridhar said.
Soaps and detergents rose at a lower rate as consumers opted for cheaper priced products.
Operating margin rose 140 basis points due to competitive pricing, better product-mix and better cost management.
The fast-moving-consumer-goods sector in India, estimated to be valued at more than $17 billion, has seen double digit growth in sales in the last couple of years.
Last week cigarettes, hotels and lifestyle apparels firm ITC Ltd, which competes with Hindustan Unilever in toiletries and branded foods segment, reported a 26 percent rise in September quarter net profit to 10.1 billion rupees, above forecasts.
HLL shares, valued at $13.1 billion, have risen about 13 percent so far this year, against a 65 percent rise in the main index and 41 percent rise in the sector index .
On Friday the company's shares closed down marginally at 282.95 rupees.
($1=46.96 rupees)
(Reporting by Janaki Krishnan)
((janaki.krishnan@thomsonreuters.com, +91-22 9892144116; Reuters Messaging: janaki.krishnan.reuters.com@reuters.net)) Keywords: HINDUSTANUNILEVER/RESULTS (if you have a query or comment on this story, send an email to news.feedback.asia@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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