Introductionto hul tcm114-284399
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Hindustan Unilever Limited (HUL) is India's largest FMCG company with a portfolio spanning soaps and detergents, personal care, beverages, and packaged foods. HUL has a pan-India footprint reaching over 2 million outlets directly and 5 million outlets indirectly. HUL aims to deliver consistent growth through competitive growth, profitable growth, and responsible growth. HUL's strategy focuses on better quality products, stronger brands, bigger innovations, improved front-end execution, and driving returns on marketing investments. HUL is also committed to its Unilever Sustainable Living Plan to decouple growth from environmental impact. Financially, HUL achieved 17.5% domestic consumer sales growth and
Introductionto hul tcm114-284399
- 1. Introduction to Hindustan Unilever Limited August 2012 1
- 2. Safe harbour statement This Release / Communication, except for the historical information, may contain statements, including the words or phrases such as ‘expects, anticipates, intends, will, would, undertakes, aims, estimates, contemplates, seeks to, objective, goal, projects, should’ and similar expressions or variations of these expressions or negatives of these terms indicating future performance or results, financial or otherwise, which are forward looking statements. These forward looking statements are based on certain expectations, assumptions, anticipated developments and other factors which are not limited to, risk and uncertainties regarding fluctuations in earnings, market growth, intense competition and the pricing environment in the market, consumption level, ability to maintain and manage key customer relationship and supply chain sources and those factors which may affect our ability to implement business strategies successfully, namely changes in regulatory environments, political instability, change in international oil prices and input costs and new or changed priorities of the trade. The Company, therefore, cannot guarantee that the forward looking statements made herein shall be realized. The Company, based on changes as stated above, may alter, amend, modify or make necessary corrective changes in any manner to any such forward looking statement contained herein or make written or oral forward looking statements as may be required from time to time on the basis of subsequent developments and events. The Company does not undertake any obligation to update forward looking statements that may be made from time to time by or on behalf of the Company to reflect the events or circumstances after the date hereof. 2
- 3. Contents 1 About the Company 2 India FMCG Market Opportunity 3 Our Strategy 4 Financial Information, Shares & Governance 5 Contact Information 3
- 5. Our Vision We work to create a better future everyday. We help people feel good, look good and get more out of life with brands and services that are good for them and good for others. We will inspire people to take small everyday actions that can add up to a big difference for the world. We will develop new ways of doing business that will allow us to double the size of our company while reducing our environmental impact. 5
- 6. HUL: India’s largest FMCG Company More than 75 years of experience in India Get more out of life Direct distribution reach of > 2 Mn stores Products touch the lives of 2 out of 3 Indians everyday No.1 and strong No.2 in more than 95% of the business 7 brands > Rs. 1000 crs; 13 brands > Rs. 500 crs 17 out of top 100 most trusted brands in India^ ^Brand Equity Survey, 2011 6
- 7. Pan India footprint Population 1.2 billion 5545 Towns 638,000 villages • 2.5 million outlets 5 million outlets • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Source: Statistics on India, Total Coverage : Nielsen, Census of India 2011 •HUL manufacturing locations (own and outsourced) Mn = Million • • • • • • • • • • • ~ 15,000 employees • ~ 2,000 suppliers & associates • ~ 70 Manufacturing locations • 40+Depots, 2700+ Distributors • Direct coverage 2 mn+ outlets 7
- 8. Portfolio straddling the pyramid Fabric Cleaning Skin Cleansing Soaps & Detergents: 48% % contribution of the segment to total revenue (April - December 2011) Hair Skincare Tooth Paste Personal Products: 31% 8
- 9. Portfolio straddling the pyramid Tea Coffee Beverages: 12% % contribution of the segment to total revenue (April - December 2011) Processed Foods Ice Creams Packaged Foods: 6% Water Others: 3% 9
- 10. External Recognition Consumers Customers Most responsive supplier of the year 6 EMVIES in 2011 6th most innovative company globally - Forbes eQ* at 89 Value Award by TESCO India (world class level) *Nielsen Equity Management Program Score Employees Communities No.1 Employer of choice by Nielsen Campus track Golden Peacock Global Award for Corporate Social Responsibility for the year 2011 Golden Peacock Environment Management Award for 2011 in the FMCG category No.1 Employer by Aon Hewitt Best Employer Brand in Asia, 2011 10
- 11. 2 India FMCG Market Opportunity 11
- 12. Large consumption opportunity FM CG - $ bln 137 62 87 50 28 FY 10 E FY 15 P Base Case FY 20 P High Case CAGR of 12% in base case; 17% with high estimates Source: FMCG roadmap to 2020 – CII Report, 2010 12
- 13. Head room for growth Consumption Penetration € per capita consumption All India penetration Skin Care Skin Care 2011 2011 2010 79 5.9 5.3 2010 79 65 63 48 45 3.2 2.7 0.6 0.6 China Indonesia India Annual Shampoo 2011 1.7 1.6 DQ Dec Hair Care 2010 2011 89 1.6 1.5 88 2010 79 75 63 60 0.5 0.4 China Indonesia India Annual Dec Oral Care Ice cream 2011 DQ 2011 2010 91 89 80 2010 78 63 2.4 2.4 60 1.2 1.1 0.3 0.3 China Indonesia India Annual Data Source: Euromonitor Data Source: IMRB Factbook DQ Dec 13
- 14. Rising incomes to favor Personal Care and Foods Demand elasticity Personal Care / Foods explosion 7.7 x LSM 8+ (new categories) 4.9 x LSM 8+ LSM 5-7 3.1 x LSM 2-4 1.7 x LSM 1 1x 0 5000 10000 LSM 1 LSM 2-4 Laundry, Skin Cleansing LSM 5-7 LSM 8+ Pers Prod Foods Exp per HH / year (INR) *HUL Participating Categories; HH: Households *Source : Family Budget Survey, Consumer Panel 14
- 15. HUL: Uniquely positioned to exploit the opportunity Portfolio Strong brands across benefits & price points Talent Capabilities Consumer understanding, supply chain, go-to-market Global leverage No.1 Employer*, diverse talent pool R&D, brand development, buying *awarded by Aon Hewitt in 2011 15
- 17. Clear and compelling strategy Strategic framework Sustainable Living Plan Our Goals Consistent Growth Competitive Growth Profitable Growth Responsible Growth 17
- 18. A business model that works Virtuous circle of growth Cost Leverage + Efficiencies Profitable Volume Growth Innovation A&P/R&D Focused on execution Cost Savings
- 19. FY 2011-12: Delivered on goals Competitive growth Consistent growth Profitable growth Ahead of market Volume led Margin expansion 18 140 bps ↑ 18 8 UVG Market FMCG growth % 17.5% 10 14 Price USG HUL Domestic consumer Sales growth HUL EBIT HUL FMCG growth % 19
- 20. Winning Principles Our first priority is to our consumers, then customers, employees and communities. When we fulfill our responsibilities to them our shareholders will be rewarded.
- 21. Embedding consumer and customer centricity Consumer & Customer License Customer Credo Project Popeye Mission Bushfire – Perfect stores
- 22. How will we win 22
- 23. Better quality products, stronger brands Tripled blind product wins % Improved brand equity scores 3X 2011 2X 3/4th 2010 of portfolio holding/gaining * X 2009 Measured for the top 25 brands; *Exit 2011 Vs second half 2009 23
- 24. Bigger, better and faster innovations Covering 60%+ of portfolio Lux relaunch with silk protein extract Rin bar relaunch with superior formulation and packaging Vim relaunched with “100 Nimbuon ki Shakti” Fair & Lovely Future Tube: Aspirational & affordable Sunsilk Keratinology Haircare range for salon treated hair Dove: Nourishing Oil Care range with Vita Oils Fair & Lovely Facewashes Lakme Sun expert Dove Body lotions with advanced deep care complex Now more accessible with Re.1 sachet Pepsodent G relaunched Clear Relaunched 24
- 25. Bigger, better and faster innovations Covering 60%+ of portfolio 0 Kissan range expanded and relaunched Soupy Noodles Rs.5 pack Cup–a–Soup instant soups Pureit Marvella RO Taj Mahal green Teabags Taj Mahal flavoured Teabags Brooke Bond 3 Roses relaunched Bru Gold Bru Exotica Bru Lite 25
- 26. How will we win 26
- 27. Lead market development: Skincare More usage More users More benefits 27
- 28. Lead market development: Hair More usage More users More benefits Increasing Consumption in Rural Driving Hair conditioners Serums, Masks, Treatments for Salon treated hair 28
- 29. Stepping up front end execution More stores Better Stores Better served* 310 bps ↑ DISTRIBUTED: CORE SERVICED 6.5 Mn Product Proposition : 2 Mn+ Place Pack Direct Price 2010 2011 Promotion * Modern Trade on shelf availability 29
- 30. How will we win 30
- 31. Differentiated Supply Chain Driving benefits across value chain Live Superior Service. Delivery Sustainable, Profitable Growth World class service Consumer perceived quality E2E competitive costs Flawless execution, Safety and Sustainability 31
- 32. Focus on cash and savings Step up in cost savings Savings as a % of Turnover Maximizing ROCE Optimizing investments % Contributed by Delivering cash TWC as a % of turnover 2010-11 2011-12 52% Capacity increase in 2011 2008-09 2011-12 Productivity Improvement 48% New Capital Investments TWC: Trading working capital; includes debtors, creditors and inventory excludes cash; ROCE: Return on Capital employed 32
- 33. Driving Return on Marketing Investments Getting more out of advertising More ads pre-tested Improvement in Ad preview scores Production and media fees Up by 50% Up by 800 bps Lower by 900 bps Persuasion 70% 2010 2010 2011 2011 Awareness 33
- 34. Driving Return on Marketing Investments Optimizing promotional spends More green activities Higher ROI Up by > 50% Higher by 1100 bps Up 200 bps ROI Positive More activities evaluated + -/- + TO Growth 2010 ROI: Return on Investment 2011 2010 -/- 2011 34
- 35. How will we win 35
- 36. Winning with People: Building a talent powerhouse # 1 Best employer in India, 2011 awarded by Aon Hewitt No.1 Employer of choice by Nielsen Campus track # 1 Dream employer across campuses* High people engagement 108 65 HUL 62 TAS 59 P&G BCG .McKinsey & Co 100 55 53 2010 * Survey by Nielsen 2011 Indexed Employee Engagement Scores
- 37. Performance culture that respects our values A broad based systematic approach
- 38. Strengthening Performance culture Sharper differentiation Aligned goals Reward linked to performance Variable Standards of Leadership Fixed 2006-07 Delivery Performance culture index is up by 14% in 2011 2011-12
- 39. How will we win 39
- 40. Unilever Sustainable Living Plan Three big goals 40
- 41. Unilever Sustainable Living Plan India Highlights 2011 30 million people reached with Lifebuoy soap handwashing programmes in 2010-11 30 million people have gained access to safe drinking water by using Pureit in-home water purifier, since 2005 Around 60%of our major food and beverage brands – Brooke Bond, Bru, Knorr, Kissan and Kwality Wall’s – comply with the ‘Healthy Choice’ guidelines’ Reduced CO2 emissions by 14.7%, water use by 21.5% and waste by 52.8% in our factories, over 2008 baseline Improved CO2 efficiency in transportation by 17.8% 60% of tomatoes in Kissan Ketchup are sourced sustainably 41
- 43. 4 Financial Information, Shares & Governance 43
- 44. HUL Financial Performance Rs. Crore 2005 2006 2007 2008-09^ 2009-10 2010-11 2011-12 Net Sales 11,061 12,103 13,675 20,239 17,524 19,381 21,736 Operating Profit 1,471 1,709 1,934 2,845 2,566 2,458 3,073 Operating Profit Margin 13.3 14.1 14.1 14.1 14.6 12.7 14.1 Net Profit 1,408 1,855 1,925 2,496 2,202 2,306 2,691 6.4 8.41 8.73 11.46 10.10 10.58 12.46 1967 1595 1680 2029 3441 1892 2870 Earning Per Share (Rs.) Net Cash Flow from Operating Activities Operating Profit - Profit from Operations Before Other Income, Interest and Exceptional Items 44
- 45. Financial year 2011-12 – Results FMCG exports demerged – reported numbers not comparable HUL (as reported) Rs Cr HUL (ex FMCG exports) Particulars FY'10-11 FY'11-12 Growth% FY'10-11 FY'11-12 Growth% Net Sales 19,381 21,736 12% 18,451 21,736 18% PBITDA 2,678 3,291 23% 2,584 3,291 27% PBIT 2,458 3,073 25% 2,382 3,073 29% PBIT margin (%) 12.7% 14.1% 140 bps 12.9% 14.1% 120 bps PAT bei 2,156 2,592 20% 2,096 2,592 24% Net Profit 2,306 2,691 17% 2,246 2,691 20% Domestic Consumer Business grows at 17.5% EBIT margins up 140 bps PAT (bei) up 20% 45
- 46. Performance trends – EPS and DPS Earnings per Share (Rs.) 14.0 12.0 Dividend per Share (Rs.) 10.0 8.0 10.0 6.0 9.0 4.0 8.0 7.0 2.0 6.0 - 2011-12 2010-11 2009-10 2008-09 2007 2006 5.0 4.0 3.0 2.0 1.0 2008-09: 15 months period Calendar year 2007, includes Platinum Jubilee special dividend of Rs.3 per share 2011-12 2010-11 2009-10 2008-09 2007 2006 -
- 47. Share Listing & Ownership Shareholding pattern Listing Details Stock Exchange Stock Code Bombay Stock Exchange 500696 National Stock Exchange Hindunilvr Others General 4% Public 14% FIIs 19% Uniliver 53% DII 8% MFs 2% FII: Foreign Institutional Investors Status as on 31st March, 2011
- 48. Corporate Governance HUL firmly believes in maintaining high standards of Corporate Governance To succeed, we believe, requires the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact. This is our road to sustainable, profitable growth and creating long-term value for our shareholders, our people, and our business partners. The Board of Directors of the Company represents an optimum mix of professionalism, knowledge and experience. The total strength of the Board of Directors of the Company is nine Directors, comprising Non-Executive Chairman, four Executive Directors and four Non-Executive Independent Directors. “I believe that nothing can be greater than a business, however small it may be, that is governed by conscience; and that nothing can be meaner or more petty than a business, however large, governed without honesty and without brotherhood.” – William Hesketh Lever For details, refer investor center at: http://www.hul.co.in/investorrelations/CorporateGovernance/?WT.LHNAV=Corporate_Governance
- 51. Further information & contact details More information is available at http://www.hul.co.in/investorrelations/ The IR team can be contacted by telephone as follows: +91 22 39832211 Or by e-mail at: Investor.Relations-hul@unilever.com
- 52. Introduction to Hindustan Unilever Limited August 2012 52