Top Story


Home >> Marketing >> Article

Laundry, shampoo to drive Hind Lever profit in near term

Font Size   16
Laundry, shampoo to drive Hind Lever profit in near term

Aggressive pricing and higher investment have helped Hindustan Lever defend its market position against the onslaught of competition in conventional businesses such as laundry and shampoos over 2004. But HLL will continue to lean heavily on these businesses for its sales and profit growth, in the foreseeable future.

But HLL will continue to lean heavily on these businesses for its sales and profit growth, in the foreseeable future. The slew of restructuring and exit costs taken by HLL in the December quarter are a signal that a good number of its new business forays are yet to click in the marketplace.

Significant volume and value growth in the laundry business and market share gains in laundry, personal care, toothpastes and beverages are the key positive highlights to HLL's latest numbers. They show that HLL has, for now, successfully warded off price wars and regional competition.

This, however, has extracted a price on profitability, with net profits shrinking by 33.6 per cent on a comparable basis for 2004. HLL is likely to continue with its strategy of driving volume sales, which means that profit growth is likely to be sluggish.

This quarter, HLL has made a decision to exit the confectionery business, taken a write-off on the Modern Foods business, withdrawn some innovations made only last year in processed foods and admitted that the progress of Ayush is not up to expectation. The foods business has continued to de-grow impacted by "product rationalisation".

The water and the salon businesses are still in nascent stages. This indicates that HLL will, for now, have to depend on new channels of distribution to try and step up consumption levels for its cash cows - the home and personal care businesses. This could be a slow process, with HLL having to fight off competitors every step of the way.

However, there are a few factors that point to better numbers from HLL over the coming fiscal. For one, since HLL effected the deep price cuts on laundry last March, the sharp profit decline arising from the base effect, may wear off after the March 2005 quarter.

Second, improving market growth rates in categories such as shampoos, toothpaste and personal wash will also begin to show on HLL's numbers. The recent price increases on laundry brands will also help to a small extent. Third, with the rationalisation of its foods business complete, foods may prove to be less of a drag on growth. The redemption of bonus debentures in end-2004 will also reduce the interest outgo and pep up net profit growth for HLL in 2005.


Our typical marketing budget is usually 10 per cent of the topline spend

There are some forces impacting the way our business works. The IT/ITeS sector has changed tremendously. Platforms like Twitter have made everyone journalists. Smartphones have made everyone a photographer. The trend that we are seeing is one of hyperdigitalization, which is causing the lines between product and services to blur. For example, <a href=

The OOH sector is among the fastest growing, globally. Brands and marketers have realized its potential and impact and begun to craft medium-specific adverts. Self-regulation is not only necessary but also essential to growth of the sector. The industry needs to exercise a certain level of this self-restraint to prove its commitment to maintaining the best standards in advertising.

<b>Clients are looking for experiential solutions beyond radio or print: Abraham Thomas, Radio City 91.1 FM</b><br><br> From entering new markets to launching large format events, Radio City 91.1FM has been on a roll. The radio channel recently announced the launch of India’s biggest singing talent hunt-Radio City Super Singer Season 8. Earlier this year, the channel set up its own creative-cum...

The interesting animated rap music video encapsulates Droom’s ecosystem tools and their role in facilitating second-hand automobile transactions

Perfumes are invisible and these new ads from Skinn create a story out of this

New campaign aims at first-time users by providing ‘first-night free’ – a first-ever offering by the brand on online hotels booking