MUMBAI: Hindustan Lever Ltd. (HLL) reported a 32 per cent growth in net profit at Rs. 1,855 crore for the year 2006 against Rs. 1,408 crore in 2005, in spite of increasing cost pressures. The better performance is due to improved product mix and cost saving initiatives coupled with selective price increases. However, the figures for the two years are not strictly comparable as there were exceptional items, which amounted to Rs. 288 crore (Rs. 316 crore) arising from the sale of the Nihar brand in the March quarter.

The board of the company has proposed a final dividend of Rs. 3 per share and this, along with the interim dividend of Rs. 3 per share, amounts to a total dividend of Rs. 6 per share against Rs. 5 in the previous year.

Net sales were up 10 per cent at Rs. 12,103 crore (Rs. 11,061 crore) on the back of 13 per cent growth in the previous year. Of this, domestic FMCG sales were up 13 per cent at Rs. 10,692 crore (Rs. 9,475 crore). Exports were Rs. 1,279 crore (Rs. 1,348 crore).

The gross profit was Rs. 1,992 crore (Rs. 1,729 crore). The profit before interest and tax was higher by 16 per cent at Rs. 1,709 crore (Rs. 1,471 crore). The company provided Rs. 295 crore (Rs. 253 crore) for current tax and Rs. 27 crore (Rs. 41 crore) for deferred tax.

The higher gross margins, resulting from savings, were deployed in supporting brands for driving sales growth. As a result, Advertising and Promotion (A&P) expenditure was up 27 per cent. According to Harish Manwani, Chairman, HLL, "our growth in margins is particularly satisfying considering that over the last two years, we have spent around Rs. 450 crore in A&P in strengthening our portfolio."

D. Sundaram, Director, Finance, said HLL's processed foods and ice-creams business has moved into the positive territory. "Although they are smaller in scale and size, our ice-cream business saw a 38 per cent growth during the year and a 50 per cent growth in the fourth quarter."

Mr. Manwani said the company was ready to launch its product in the bottled water segment after having tested it extensively in select markets.

For the fourth quarter ended December 2006, HLL reported a net profit (after exceptional items) of Rs. 511 crore (Rs. 521 crore on higher net sales of Rs. 3,156 crore (Rs. 2,974 crore).

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