India's top consumer goods maker, Hindustan Lever Ltd, on July 30, reported a forecast-beating 17 percent rise in quarterly profit on improved sales and said it was ready to fight to stay the market leader. In its second quarter to end-June, Lever's net profit rose to 3.0 billion rupees ($69 million) from 2.56 billion a year earlier, above a median 2.77 billion forecast in a Reuters poll of 10 analysts.
Sales rose more than 10 percent to 28.36 billion rupees, also beating a median forecast of 27.82 billion.
"We haven't fully neutralised the impact of high input prices, but wherever possible, we have managed the higher crude oil-driven raw material costs through cost management and judicious prices increases," said Finance Director D. Sundaram.
Lever, 52 percent-owned by Anglo-Dutch Unilever Plc is expected to see 2005 net profit rise 14.5 percent to 12.5 billion rupees, according to Reuters Estimates.
The company had seen net profit slide for five consecutive quarters on high raw material costs and sluggish sales. It was also caught in a price war in detergents and shampoos with the local arm of Procter & Gamble last year. But it has since raised product prices, relaunched some products, and benefited from tax changes and fiscal benefits for new plants in some states. "We will do whatever it takes to maintain our leadership position," Sundaram said.
Shares in Lever, which makes Lux soap, Wheel detergent, Pepsodent toothpaste and Lipton tea, rose 1.6 percent to 166.95 rupees in a Bombay market that hit a new high on Friday. Hindustan Lever shares gained 24 percent in the April-June quarter, outpacing a 22 percent rise in the consumer goods index and an 11 percent rise in the key Bombay index.
Lever's dominant presence in home and personal care - which make up nearly two-thirds of sales - has been threatened lately by P&G and Colgate-Palmolive and home-grown rivals Marico Industries, Godrej Consumer Products, Dabur India and Nirma Industries.
Lever's second-quarter revenues from home and personal care rose 12 percent from a year ago, and revenues from foods - a renewed area of focus - rose 11 percent. Its advertising and promotion costs, nudged up by competition, rose 12 precent. Cost of raw materials rose by 16 percent on the year.
The crucial June-September monsoon rains are expected to be normal this year, boosting spending in villages, home to nearly two-thirds of India's billion-plus people, and the focus of Lever's recent efforts to increase market share.
Lever has high hopes for its new water purifier and has launched direct selling initiatives in urban and rural areas.
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