Mumbai, April 28 - India's top consumer goods maker, Hindustan Lever Ltd., on Friday posted a 77 percent jump in quarterly profit, but its shares fell more than 4 percent as the earnings were boosted by a one-time gain from a brand sale.
Lever, maker of Lux soap and Surf detergent, is expected to benefit from recent tax cuts on ice creams and processed foods. But high oil prices will pressure the cost of packaging and making detergents, while competition will force higher spending on advertising, analysts say.
Lever, 52-percent owned by Anglo-Dutch Unilever Plc, said net profit rose to 4.43 billion rupees ($98 million) in the first quarter to March from 2.5 billion rupees reported a year earlier. Net sales rose 12 percent to 27.98 billion.
The profit included a one-time gain of 2 billion rupees from the sale of its Nihar hair oil to Marico.
A Reuters poll had forecast for a net profit of 3.24 billion rupees and sales of 28.45 billion rupees.
Its full-year profit is forecast to rise 14 percent to 16.1 billion rupees, according to Reuters Estimates.
"We will continue to judiciously use the levers of pricing, cost management and brand investment to sustain profitable growth," Chairman Harish Manwani said in a statement.
Its shares were down 4.06 percent at 275.60 rupees by 12:35 p.m. (0705 GMT), while the main BSE index was off 1.4 percent.
Shares in Hindustan Lever, valued at nearly $14 billion, had risen 38 percent during the January-March quarter, beating a 34.2 percent gain for the sector index and a 20 percent rise for the BSE index.
CORE FOCUS
Lever reported its first profit rise in more than a year in the April-June quarter of 2005, after a bruising price war with Procter & Gamble in detergents and shampoos.
Since then, Lever has raised product prices, relaunched a few brands, hived off some non-core businesses and benefited from tax changes that have prevented smaller firms from undercutting and fiscal incentives for plants in poor states.
Lever's first-quarter revenues from home and personal care -- which make up nearly two-thirds of its sales -- rose 20 percent from a year ago, and revenues from foods rose 11 percent.
Its advertising and promotion costs, pushed higher by competition, rose 45 percent on the year.
Besides competition from Colgate-Palmolive (India), Dabur, Godrej Consumer Products, Marico and tobacco heavyweight ITC Ltd. has also entered food and personal care, and will soon make home care products.
Meanwhile Lever, which expects the consumer goods market to expand 2.5 times over the next 10 years from $9.2 billion, is testing a water purifier in south India, a chain of ayurvedic spas and direct selling networks in rural and urban areas. ($1=45 rupees)