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Lever Brothers: Strong financial performance

  1. KSE-100 index
  2. Lever Brothers: Strong financial performance
  3. Reduction in lending rates
  4. Consumer's behaviour towards marketing

55 per cent growth in the sales of detergents and personal products

By Syed M. Aslam
May 22 - 28, 2000

The government should also take appropriate fiscal measures to help discourage smuggling besides the on-going administrative crackdown on the massive illegal trade at big and small markets nationwide. This suggestion was made by the chairman of Lever Brothers Pakistan Limited, J.M. Deplon de Vaux at a press briefing held in Karachi recently.

The senior management of the company including Mr Vaux, commercial director Rob Zoon and company secretary Aamer Aziz Saiyid attended the briefing which highlighted the strong performance of Lever Brothers for the year ended December 31, 1999.

He also said that the import tariff structure is directly related to the volume of smuggling into the country which fluctuates between 10 per cent to 50 per cent of the market of any product in any given year. Asked if the company has to compete against the smuggled counterparts of its own products, Deplon answered in affirmative.

Blaming the tariff anomalies in the last budget he said that many raw materials used by the company to produce a range of detergents and personal products in the country is subjected to same tariff which applies to finished products. "We don't pay 25 per cent tariff on any of the raw materials imported by us. The accepted norm between the ratio of import tariff on finished and raw material used in the manufacture of the similar product the worldover is 20 per cent. However, the import of the detergent powder imported by us is subjected to the maximum 35 per cent duty while the duty on the semi-finished equivalent which needs just packing is fixed at 25 per cent." The similar is the case with many of our other products and we have made a number of proposals to the National Tariff Commission as in many cases duty on raw materials is higher than that on the comparative finished products, he added.

PAGE asked Deplon why the drastic reduction in maximum import tariff from over 80 per cent six years ago to 35 per cent at present has not brought any relief to the consumers in general? He attributed it to a number of reasons which included the absence of strong business activity and sluggish economy, the neutralisation of any impact of duty reduction by the incessantly rising inflation and the numerous currency devaluations.

Welcoming the anti-smuggling drive which he said would encourage local economy and industries in the recent months he said that the overall volume of smuggling shrunk in 1999 which already shown signs of improvement in the previous year. The situation, he said, has improved significantly from 1997 when some 30 per cent of our sales volume was hurt by smuggling, he added.

Besides cost-effective and restructuring measures such as the closure of over-capacity tea factories the strong performance of Lever Brothers was led by 55 per cent growth in the sales of detergents and personal products. The operating profit in absolute terms in this particular business segment increased by 7 per cent last year. This particular segment of the business is the main growth engine for the company which is supported by large investments in advertising and promotions. It also explains the justification for Lever Brothers plans to introduce new categories of products this year.

Eyeing the huge potential in the detergents and personalised products segment the company has plans to focus its attention on innovation in consumer knowledge and increased support for its biggest selling brands. The company has also hinted at 'some acquisitions' to grow by entering into new categories which it believes can build and sustain a competitive edge.

It also plans to develop new channels of distribution to reach consumers out of grocery stores. Realizing that these opportunities for growth will require the company to invest heavily in advertising, promotions and market development activities the company is embarking upon an ambitious project designed to bring a change in the efficiency of its entire supply chain.

Expansion and finance

The company invested Rs 259 million in capital assets in 1999 including IT, safety and environmental protection across all domains of its activity. It feels that the tools provided by the new technologies will help it bring its brands at competitive prices to more people nationwide.

Financial Results


Year ended 31.12.99

18-months ended 31.12.98


Rs 19.4 Billion

Rs 27.6 Billion

Operating Profit

Rs 1.659 Billion

Rs 1.690 Billion

Pre-Tax Profit

Rs 1.165 Billion

Rs 1.148 Billion

Post-Tax Profit

Rs 763.96 m

Rs 738.329 m

Unappropriated Profit

Rs 358.071 m

Rs 259.044 m

Basic earnings/share

Rs 57.45

Rs 55.52