India's top consumer goods maker, Hindustan Lever Ltd on Sunday posted an expected 35 percent rise in quarterly profit on higher prices of soaps and detergents and strong sales of personal care products.
The maker of Lux soap and Surf detergent is gaining from rising incomes in urban and rural markets. But high oil and raw material prices are raising the cost of packaging and making detergents, while competition is forcing more advertising spends.
"We are facing pressure from high fuel prices, packaging material and freight costs," Finance Director D. Sundaram told reporters on a conference call.
"But we will continue to focus on cost savings and selective price increases to mitigate the impact," he said. Lever, 52-percent owned by Anglo-Dutch Unilever Plc, said net profit rose to 3.81 billion rupees ($81.6 million) in the second quarter to June from 2.82 billion a year earlier. Net sales rose 9 percent to 30.83 billion rupees.
The median forecast of a Reuters poll was for a net profit of 3.81 billion rupees and sales of 31.66 billion rupees.
Lever's full-year profit is forecast to rise nearly 15 percent to 16.18 billion rupees, according to Reuters Estimates.
Lever's shares ended down 1.3 percent at 242.25 rupees on Friday in a weak Mumbai market.
Lever's shares, valued at $11.4 billion, fell 16 percent during the April-June quarter, compared with a 12 percent decline for the sector index and a 6 percent fall for the main share index.
After a bruising price war with Procter & Gamble in detergents and shampoos, Lever posted its first profit rise in more than a year in the April-June quarter of 2005.
Since then, Lever has raised product prices, relaunched brands, sold some non-core businesses, and benefitted from fiscal incentives for manufacturing plants in poor states and tax changes that have prevented smaller firms from undercutting.
Lever's second-quarter revenues from home and personal care - which make up nearly two-thirds of sales - rose 14 percent from a year earlier, and revenue from foods rose 4 percent.