HLL: Topline revival continues... - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

HLL: Topline revival continues...

Oct 30, 2003

FMCG major, Hindustan Lever, continues to improve on its revenue growth. The company has declared just over 4% growth in topline during the September quarter. However, a higher interest outgo (relating to the 9% debentures to shareholders) has seen profit before tax dip by a marginal 1.5%. The company has earned Rs 351 m as net extraordinary income, enabling it to post a 7% bottomline growth.

(Rs m) 3QFY03 3QFY04 Change 9mFY03 9mFY04 Change
Net Sales 23,675 24,675 4.2% 73,204 75,284 2.8%
Other Income 1,062 1,064 0.2% 2,838 3,470 22.3%
Total expenditure 19,054 19,860 4.2% 59,887 61,503 2.7%
Operating Profit (EBDIT) 4,621 4,815 4.2% 13,317 13,781 3.5%
Operating Profit Margin (%) 19.5% 19.5% 18.2% 18.3%
Interest 18 313 1678.4% 78 344 342.1%
Depreciation 313 296 -5.5% 1,013 919 -9.3%
Profit before Tax & extraordinary income 5,351 5,269 -1.5% 15,064 15,989 6.1%
Extraordinary income -68 351 - 1,148 351 -69.4%
Tax 1,150 1,188 3.3% 3,319 3,569 7.5%
Profit after Tax/(Loss) 4,133 4,432 7.2% 12,892 12,771 -0.9%
Effective tax rate (%) 21.5% 22.5% 22.0% 22.3%
Net profit margin (%) 17.5% 18.0% 17.6% 17.0%
No. of Shares (eoy) (m) 2201.2 2201.2 2201.2 2201.2
Earnings per share (Rs)* 7.5 8.1 7.8 7.7
Current P/e ratio (incl. Extraordinary income) (x) 22.2 23.1
*(annualised)

On a like to like basis, the company's revenues have grown by nearly 7% during 3QFY04. The growth has been led by skin care (up 43%), colour cosmetics (up 34%) and toothpaste (11%). HPC power brands grew by 7.7%. The company's beverages business (tea, coffee) has revived with a strong 9% growth. Infact, the Brooke Bond mother brand grew by a strong 22%.

Results on like to like basis
(Rs m) 3QFY03 3QFY04 Change 9mFY03 9mFY04 Change
Net sales 22,623 24,159 6.8% 69,823 73,098 4.7%
PBIT 4,580 4,825 5.3% 13,210 14,118 6.9%
PAT 4,234 4,080 -3.6% 11,909 12,474 4.7%
PBIT margin (%) 20.2% 20.0% 18.9% 19.3%
Net margin (%) 18.7% 16.9% 17.1% 17.1%

While soaps and detergents (43% of revenues) showed a marginal growth (0.7%) in revenues, the personal products business grew by a healthy 15%. The company's food business saw an 18% dip in revenues, but this was largely due to the hive off its oil & fats business (Dalda) to Bunge. The business however, reported lower losses at PBIT levels and margins continued to improve. In foods, culinary products (Kissan and Knorr) grew strongly by nearly 23%. Overall, processed foods grew by 21% YoY.

Sales break-up
(Rs m) 3QFY03 3QFY04 Change 9mFY03 9mFY04 % change
Domestic FMCG - HPC 15,588 16,394 5.2% 47,454 49,680 4.7%
Domestic FMCG - Foods (incl. ice-creams) 4,885 4,750 -2.8% 15,554 14,748 -5.2%
Domestic FMCG - Total 20,473 21,144 3.3% 63,008 64,428 2.3%
b) Exports 2,801 2,944 5.1% 8,875 9,316 5.0%
c) Others 400 587 46.6% 1,320 1,540 16.7%
Total 23,675 24,675 4.2% 73,204 75,284 2.8%

The company's ice cream business could not recover from the transporters' strike setback and reported a 6% dip in revenues and higher losses at the PBIT level. Exports were up 5% and were largely led by beverages exports (27% growth).

Segment revenue snapshot
(Rs m) 3QFY03 3QFY04 % change 9mFY03 9mFY04 % change
Soaps and Detergents 10,647 10,725 0.7% 32,562 32,841 0.9%
Personal Products 5,057 5,825 15.2% 15,200 17,217 13.3%
Beverages 2,703 2,937 8.7% 9,138 8,755 -4.2%
Foods (includes Oils and Fats,
Culinary and Branded Staples )
1,842 1,503 -18.4% 5,216 4,944 -5.2%
Ice Creams 232 218 -6.2% 900 777 -13.7%
Exports 2,801 2,944 5.1% 8,875 9,316 5.0%
Others (includes Chemicals,
Agri, Plantations etc)
864 851 -1.6% 2,619 2,330 -11.0%
Total Segment Revenue 24,147 25,003 3.5% 74,511 76,180 2.2%
Less : Inter segment revenue 283 82 -71.0% 714 290 -59.4%
Net Segment Revenue 23,864 24,921 4.4% 73,796 75,890 2.8%

HLL's stable operating margins are in line with the management strategy. At the analyst meet held post 2002 results, the management had clarified that they were satisfied with the operating margins levels reached and will focus on growing the revenues in 2003. The results are in line with the stated strategy.

The big picture...
% contribution
to sales
Revenue growth PBIT growth PBIT margin
(%)
PBIT margin
growth (basis points)
Soaps and Detergents 43.1% 0.9% -4.9% 23.3% (140)
Personal Products 22.6% 13.3% 16.9% 34.3% 106
Beverages 11.5% -4.2% -5.0% 18.8% (17)
Foods (includes Oils and Fats,
Culinary and Branded Staples )
6.5% -5.2% - -0.8% 349
Ice Creams 1.0% -13.7% - 7.5% 1,238
Exports 12.2% 5.0% -34.4% 4.1% (243)
Others (includes Chemicals,
Agri, Plantations etc)
3.1% -11.0% - -4.1% (134)
*Based on 9mFY04 numbers

The company's higher interest outgo is a result of interest to its debenture holders. The extra-ordinary income represents net of profit on sale of its oil & fats business to Bunge (Rs 562 m), loss arising out of disposal of mushroom undertaking (Rs 190 m) and loss on fixed assets arising out of restructuring of Bangalore culinary products factory (Rs 87 m).

At the current price of Rs 179 the stock trades at 23x annualised 9mFY04 earnings. From the results it is clear that HLL's strategy of streamlining its brands and businesses is paying off. Revenue growth continues to show an uptrend. Also, profitability has improved in the last 3 years. As and when the demand revival kicks in, HLL is likely to be a key beneficiary of the same. It is a good long term growth story.

Cost break-up
As a % of sales 3QFY03 3QFY04 9mFY03 9mFY04
Material consumption 35.4% 38.4% 38.3% 38.6%
Purchase of goods 14.6% 13.7% 13.7% 14.6%
Staff costs 6.4% 5.6% 6.2% 6.1%
Advertising & promotions 11.4% 9.2% 9.3% 7.8%
Other expenses 14.8% 15.4% 14.3% 14.5%


Equitymaster requests your view! Post a comment on "HLL: Topline revival continues...". Click here!

  

More Views on News

HUL Announces Quarterly Results (3QFY20); Net Profit Up 11.9% (Quarterly Result Update)

Feb 1, 2020 | Updated on Feb 1, 2020

For the quarter ended December 2019, HUL has posted a net profit of Rs 16 bn (up 11.9% YoY). Sales on the other hand came in at Rs 98 bn (up 2.6% YoY). Read on for a complete analysis of HUL's quarterly results.

HUL Announces Quarterly Results (2QFY20); Net Profit Up 21.2% (Quarterly Result Update)

Oct 15, 2019 | Updated on Oct 15, 2019

For the quarter ended September 2019, HUL has posted a net profit of Rs 18 bn (up 21.2% YoY). Sales on the other hand came in at Rs 99 bn (up 6.7% YoY). Read on for a complete analysis of HUL's quarterly results.

HUL 2018-19 Annual Report Analysis (Annual Result Update)

Jun 7, 2019 | Updated on Jun 7, 2019

Here's an analysis of the annual report of HUL for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of HUL. Also includes updates on the valuation of HUL.

HIND. UNILEVER 2017-18 Annual Report Analysis (Annual Result Update)

Aug 9, 2018 | Updated on Aug 9, 2018

Here's an analysis of the annual report of HIND. UNILEVER for 2017-18. It includes a full income statement, balance sheet and cash flow analysis of HIND. UNILEVER. Also includes updates on the valuation of HIND. UNILEVER.

More Views on News

Most Popular

Multibaggers of the Next Decade (The 5 Minute Wrapup)

Feb 26, 2020

The one key ingredient to be seen amongst top multibaggers of the next decade.

The Next Few Days Are Crucial for Smallcap Investors - And 3 Must-Buy Stocks (Profit Hunter)

Feb 19, 2020

While I have been writing about the rebound in smallcaps for quite some time now... I have shied from the question - When exactly is the smallcap rebound happening. Well, the answer is now.

The Top 8 Trading Mistakes You Should Avoid (Fast Profits Daily)

Feb 18, 2020

Avoid these mistakes and your trading will turn much more profitable.

Corona Virus Could Trigger a Rally in this Stock (Profit Hunter)

Feb 20, 2020

A company which benefits from crude oil and coronavirus - if you would like to know more about it read this.

This is What You Must Know as an Options Trader Today (Fast Profits Daily)

Feb 27, 2020

How you can stay on top of the challenges as an options trader.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get our special report, Secret to Increasing Your Trading Profits Today Now!
We will never sell or rent your email id.
Please read our Terms

HUL SHARE PRICE


Feb 28, 2020 (Close)

TRACK HUL

HUL - UNILEVER PLC. COMPARISON

COMPARE HUL WITH

MARKET STATS