HLL profit rises 32.8% to Rs 1,070 cr

HLL profit rises 32.8% to Rs 1,070 cr
ENS ECONOMIC BUREAU

MUMBAI, FEB 23: Fast-moving consumer goods (FMCG) giant Hindustan Lever Ltd (HLL) broke yet another record on Wednesday as it announced a net profit of Rs 1,069.94 crore, a growth of 32.8 per cent over previous fiscal's Rs 806 crore. The board of directors has announced a final dividend of Rs 17 per equity share which, alongwith interim dividend of 12 per cent, makes a total dividend of Rs 29 per share (290 per cent).

The gross turnover for the year ended December 1999 was up by seven per cent at Rs 10,918 crore, up from Rs 10,215 crore recorded in previous year. Outgoing Chairman Keki Dadiseth attributed the performance to ``consistent margin improvement and strategic cost leadership.''

The earnings per share for the year 1999 was Rs 48.62, representing a growth of 32.5 per cent over previous year's EPS of Rs 36.70 per share. During the fourth quarter of calender 1999, HLL recorded a net profit of Rs 345.12 crore, a growth of 50.5 per cent.

In order to inject liquidity into the scrip, the board of directors has also recommended the splitting of shares of Rs 10 face value into 10 shares of Re 1 each. The stock split in the ratio of 10:1 will enable small investors to participate in the equity capital of the company as the liquidity of the shares will improve. The final dividend and stock split is subject to shareholders approval at the annual general meeting to be held on April 24.

Addressing a news conference, Dadiseth said the domestic home and personal care business recorded good sales growth in a market which witnessed significant consumer downtrading. He said the foods portfolio, excluding tea and oils and fats, also grew well. The fall in commodity prices of oils coupled with trade de-stocking in a bearish market, affected sales realisations of the oils and fats business.

``The bottomline growth has been driven by lower consuming costs, savings through efficient supply chain management and a tight control of overheads. The turnover growth was fuelled by a 11 per cent turnover growth in soaps and detergents, 18 per cent in personal products, 67 per cent increase in branded staples and a 10 per cent increase in ice creams.

Reacting to results, the share opened at an all-time high of Rs 3,136.55, up 40 per cent since the start of the year. But a downward correction set in and it closed at Rs 2,870, down Rs 34.25 from Tuesday's close on the Bombay Stock Exchange.

The finance director D Sundaram announced a number of e-commerce initiatives that would bring e-business to the heart of the company. The company said its vision is to ``Connect, Attract and Fulfil'' on a massive scale. In the supply chain, the vision is to link in Phase I with some 3,000 stockists, 30,000 retailers and 100 suppliers spread over some 1,000 locations.

``HLL believes that the success on the e-business domain will depend on three factors -- technology, consumer insight and physical fulfillment,'' Sundaram said. ``We have unique strengths in consumer understanding and the backbone of the vast distribution system to enable physical fulfillment,'' he added.

Technology will be sourced through partnerships and HLL's internet vision encompasses three opportunity segments in business connectivity, consumer connectivity and consumer commerce. HLL is also creating an extranet covering its key stockists and retailers to optimise the supply chain right up to the front end. Similarly, an extranet is also being created covering the suppliers, factories and the purchasers with the aim of achieving real time, vendor-management inventory. E-banking initiatives are also being piloted to enable paperless financial settlements. The Aviance business is already being configured to be mainly run through the net.

In the area of consumer connectivity, HLL has already progressed some distance through the Pond's interactive website, Hello Hindustan and Mera Hindustan initiatives in the detergents business as well as events like Close Up Antakshari on the net. The company said that interactive communication on the net will be consumer centric, rather than brand centric. Internationally, Unilever has announced ventures such as the JV with iVillage, a woman's portal and participation in start-ups such as Wowgo. HLL is exploring similar opportunities in India. The company said, Consumer Commerce is the third leg of the opportunity.