Hindustan Lever Ltd., India’s biggest household products maker, may post profits in the three months ended 31December at the slowest pace, as a warmer-than-average winter cut sales of skin-care creams.
Income before one-time gains and charges will probably gain 13.4 % to Rs4.98 billion ($113.3 million) in the fourth quarter from Rs4.39 billion, according to the median estimate of six analysts surveyed by Bloomberg by telephone and e-mail. Sales may have risen 12.3 % to Rs33.4 billion. The Mumbai-based company will announce earnings tomorrow.
Unseasonal weather cut sales of personal care products, including skin-care creams such as Pond’s and Fair & Lovely, which account for about one-fourth of the company’s revenue. Intense competition with rivals such as Procter & Gamble Co. prompted Hindustan Lever to spend more in the past year to advertise its range of toothpastes, soaps, detergents, teas and ice creams.
“Lower growth in personal products is expected to impact overall margins,” said Abhijeet Kundu, an analyst at Prabhudas Lilladher Securities Ltd. in Mumbai. “Skin creams are expected to grow at a slower rate due to the late onset of winter by one to one-and-a-half months.”
Kundu, who has a “market performer” rating on the stock, forecast sales of personal products grew 13.1% in the quarter, compared with a 25 % pace in the year-earlier period.
Shares of Hindustan Lever, the Indian unit of the world’s second-largest food and detergent company, rose 11 % in 2006 compared with a 47 % gain in the benchmark Sensitive index on the Bombay Stock Exchange.
Hindustan Lever sells more of its personal care products in the fourth quarter of the year, when winter arrives in the northern parts of the country.
Colder and drier weather prompts more Indians to purchase skin-care creams and moisturizers. About 33 % of Hindustan Lever’s revenue from personal care products in 2005 came from sales in the fourth quarter.
Minimum temperatures in capital New Delhi in the first week of December were about 4 degrees Celsius (7.2 degrees Fahrenheit), higher than the 80-year average, according to the Indian Meteorological Department.
Earnings estimates of analysts surveyed don’t include one-time gains or charges. Hindustan Lever had a one-time gain of 823.6 million rupees in the year-earlier period.