• MAY 4, 2001

P&G: 3Q bottomline surges 20%

P&G Hygiene & Healthcare has declared a huge 23% decline in its turnover to Rs 1,011 m in its 3QFY01. The company has a June ending accounting year. P&G's net profit however, surged nearly 20% during the period.

(Rs m) 3QFY00 3QFY01 Change 9m FY00 9m FY01 Change
Net Sales 1,308 1,011 -22.7% 3,842 3,571 -7.0%
Other Income 15 39 159.7% 36 64 81.1%
Expenditure 1,047 715 -31.7% 3,028 2,615 -13.6%
Operating Profit (EBDIT) 261 296 13.7% 814 956 17.5%
Operating Profit Margin (%) 19.9% 29.3%   21.2% 26.8%  
Interest 7 0   35 1 -96.0%
Depreciation 57 70 22.6% 171 213 24.6%
Profit before Tax 212 266 25.2% 644 806 25.3%
Tax 39 57 48.8% 114 149 30.8%
Profit after Tax/(Loss) 174 208 19.9% 530 658 24.1%
Net profit margin (%) 13.3% 20.6%   13.8% 18.4%  
No. of Shares (eoy) (m) 21.6 21.6   21.6 21.6  
Earnings per share* 32.1 38.5   32.7 40.5  
Current P/e ratio         19.1  

The surge in bottomline despite a decline in topline came largely because of a 32% decline in the company's operating expenditure. This led to a surge in operating margins by 940 basis points.

To lend focus to its business, P&G consciously decided to be present only in two products viz. Anti-cold (Vicks) and feminine care (Whisper). Its strategy has revolved around premium positioning of both its product categories. In a sense, the company has been focussing on margins (value) rather than volumes. But competition from products such as Dcold and Smyle has impacted the sales of Vicks cough drops.

On a nine month consolidated basis the company's turnover has declined by 7%. Here also, P&G's bottomline has improved by 24%.

The stock is trading at a P/e multiple of 19.1 times its annualised nine month FY01 earnings.

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407