Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Non-Deal Roadshow (November 2011)
62 slides from Hindustan Unilever's roadshow presentation, November 2011
Slide 1: Investor Presentation
Investor Presentation November 2011
Slide 2: Safe harbour statement
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
Slide 3: Contents
Contents 1 About the Company 2 FMCG Market Opportunity 3 Our Strategy 4 Recent Performance – SQ’11 3
Slide 4: About the Company
1 About the Company 4
Slide 5: Our Vision
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 de
Slide 6: HUL: India's largest FMCG Company
HUL: India’s largest FMCG Company More than 75 years of experience in India Products touch the lives of 2 out of 3 Get more Indians everyday out of life Market Capitalization > of $ 16 Bln No.1 and strong No.2 in more than 95% of the business 7 brands > $200 mn*; 12 brands > $100 mn 17 out of top 10
Slide 7: Pan India footprint
Pan India footprint Population 1.2 billion • 5545 Towns 2.5 million outlets 638,000 villages 5 million outlets • • • • • • • • • • • • • • • • • • • • • • • • • • • • • ~ 16,000 employees • • • ~ 2,000 suppliers & associates • • • • ~ 70 Manufacturing Locations • • • • • ~ 43 Depots, 2700+ Distribut
Slide 8: Unparalleled leadership positions
Unparalleled leadership positions Market Leader Strong No.2 HUL – Market Share (%) Competition Market Share (%) * Source: AC Nielsen market share for FY 2010-11 average 8
Slide 9: Portfolio straddling the pyramid
Portfolio straddling the pyramid Fabric Wash Personal Wash Shampoo Skin Tooth Paste Soaps & Detergents: 45% Personal Products: 30% HOME AND PERSONAL CARE * % contribution of the segment to total revenue in FY 2010-11 9
Slide 10: Portfolio straddling the pyramid
Portfolio straddling the pyramid Tea Coffee Processed Foods Ice Creams Water Beverages: 12% Packaged Foods: 6% Others: 2.2% FOOD & BEVERAGES AND OTHERS * % contribution of the segment to total revenue in FY 2010-11 10
Slide 11: Recent Performance
Recent Performance Turnover: From $2.6 bln to $4.2 bln CAGR 11.3% 2006 2007 2008 2009-10 2010-11 *$/ Rupee conversion at 2010 average rate; 1$=INR 45.76 11
Slide 12: Recent Performance – Financial Year 2010-11
Recent Performance – Financial Year 2010-11 Financials 2010-11 Growth Turnover $4.2 bn $410 mn EBIT margin 12.8% ∆ -190 bps EPS Cents 23 4.7% Operating cash generated during FY 2010-11: $417 mn Conversion rate: 1$=INR 45.76 12
Slide 13: External Recognition
External Recognition Consumers Customers Most responsive supplier of the year 6 EMVIES in 2011 6th most innovative company eQ* at 89 Value Award by globally - Forbes (world class level) TESCO India *Nielsen Equity Management Program Score Employees Communities Golden Peacock Global Award for Corpora
Slide 14: FMCG Market Opportunity
2) | FMCG Market Opportunity 14
Slide 15: India: Large consumption opportunity
India: Large consumption opportunity FM CG - $ bln 137 62 87 50 28 FY 10 E FY 15 P FY 20 P Base Case High Case CAGR of 12% in base case; 17% with high estimates *Source: Industry Reports 15
Slide 16: Penetration & Consumption: Head room for growth
Penetration & Consumption: Head room for growth Penetration Consumption All India penetration $ per capita consumption 79 Skin Care 7.9 Skin Care 48 4.3 0.8 Annual Monthly China Indonesia India Hair Care Shampoo 88 2.3 2.1 60 0.6 Annual Monthly China Indonesia India 89 Oral Care 3.3 Ice cream 60 1.7
Slide 17: Changing consumer aspirations: Favourable
Changing consumer aspirations: Favourable Demand Elasticity Personal Care/Foods Explosion 7.7 x 4.9 x 3.1 x 1.7 x 1x HUL Participating Categories Source : Family Budget Survey, Consumer Panel17
Slide 18: HUL: Uniquely positioned to exploit the opportunity
HUL: Uniquely positioned to exploit the opportunity Portfolio Capabilities Strong brands across benefits & price points Consumer understanding, supply chain, go-to-market Talent Global Leverage No.1 Employer*, diverse talent pool R&D, brand development, buying *awarded by Aon Hewitt in 2011 18
Slide 19: Our Strategy
3 Our Strategy 19
Slide 20: Turbo charging the Compass
Turbo charging the Compass Driving virtuous circle of growth 20
Slide 21: How will we win
How will we win NON-NEGOTIABLES Winning with brands and innovation 1 2 3 Deliver superior products, design, branding and marketing Bigger, better, faster innovations Appeal to more consumers across needs and price points Winning in the marketplace Winning with people 4 5 6 7 10 12 Lead market develo
Slide 22: Deliver superior products
Deliver superior products Portfolio with blind >50% of portfolio product wins: tripled launched/ relaunched 3X 2X Personal Products X Soaps & Detergents Packaged Foods Beverages Water 22
Slide 23: Win in core…
Win in core… Soaps & Detergents Beverages 23
Slide 24: …and drive categories of tomorrow
…and drive categories of tomorrow Personal Products Packaged Foods 24
Slide 25: Winning in Skin & Hair Care
Winning in Skin & Hair Care Reshaping our portfolio Building future segments Transforming the experience Integrated communication 25
Slide 26: Reshaping our portfolio
Reshaping our portfolio Towards aspirational beauty and expertise 26
Slide 27: Building emerging segments
Building emerging segments New benefits Anti Aging Premium Whitening Colour Cosmetics New regimes Hair Conditioners Hair treatments 27
Slide 28: Transforming experience
Transforming experience Through Point of Sale Beauty Salons Assisted sales with professionally trained Lakme Salons: Evolving Beauty Advisors: Largest footprint beauty experience 28
Slide 29: With integrated communication
With integrated communication Traditional media CRM Online CRM: Consumer Relationship Module 29
Slide 30: Strategy delivering results
Strategy delivering results Premium Skin Lightening Hand & Body Market Size in $ Mln Market Size in $ Mln VHW Share 259 159 HUL Share 212 126 184 147 79 53 2008 2009 2010 2011 2008 2009 2010 2011 Hair Conditioners Face Wash Market Size in $ Mln 176 Market Size in $ Mln HUL Share HUL Share 128 88 42
Slide 31: Personal Products: Driving growth
Personal Products: Driving growth Portfolio contribution Growth contribution PP* / Total sales PP incremental/ Total incremental sales (FY 2010-11) (FY 2010-11) Personal Products Rest *PP: Personal Products 31
Slide 32: Building Packaged Foods with Knorr & Kissan
Building Packaged Foods with Knorr & Kissan Building Savoury Soups Soupy Noodles Dish Penetration Building Spreads & Dressings 32
Slide 33: Accelerating growth in Ice Creams
Accelerating growth in Ice Creams Leveraging strong portfolio Leading market development Creating out Successful of home experience implementation of MDM Delivering results $ mn revenue - CAGR 22% More than 150 parlours * Calendar Year; ^ Financial Year; Conversion rate: 1$=INR 45.76 33
Slide 34: How will we win
How will we win NON-NEGOTIABLES 1 Deliver superior products, design, branding and marketing Winning with brands and 2 Bigger. better, faster innovations innovation 3 Appeal to more consumers across needs and price points 4 Lead market development nose in the 5 Win with winning customers 6 Be an exec
Slide 35: Win with winning customers: Rural
Win with winning customers: Rural Rural coverage tripled in 2010 Every village in the country mapped Technology leveraged for blueprinting Rigorous ROI model for each state Shakti & Shaktiman Khushiyon ki Doli 45000 Shakti Ammas & 23000 Largest ever consumer contact programme Shaktiman acr
Slide 36: Win with winning customers: Modern Trade
Win with winning customers: Modern Trade Focus on Customer Service Increasing Market Shares No.1 Supplier of Choice eQ^ scores highest in industry Profitability Improved *Nielsen Equity Management Program Score 36
Slide 37: Execution powerhouse: Project iQ
Execution powerhouse: Project iQ • Rolled out Nationally • Drive higher throughput through perfect stores 37
Slide 38: How will we win
How will we win NON-NEGOTIABLES Winning with brands and 2 innovation Winning in the 5 marketplace 6 7 through 8 improvement 9 10 Winning "1 with people 12 Deliver superior products, design, branding and marketing Bigger, better, faster innovations Appeal to more consumers across needs and price poin
Slide 39: Lean, responsive & consumer led value chain
Lean, responsive & consumer led value chain Consumer Perceived Quality • Product incidents • Consumer complaints E2E Competitive Cost • Manufacturing & Distribution excellence Service & • Commodity Risk Execution Management • CCFOT • OSA *CCFOT: Customer Case Fill On Time; OSA: On Shelf Availability
Slide 40: Results
Results Integrated Service & Competitive Quality Culture Execution Cost 2700+ Distributors Global Buying Scale MT Distribution & Multi-functional Collaboration Savings 123 125 140 100 127 100 Reduction in consumer complaints Improvement in Shelf QDI# 2007 2009 Current 2009 2010 2011 Indexed CCFO
Slide 41: ROMI: Comprehensive approach
ROMI: Comprehensive approach Optimum allocation to Optimised promotional sell advertisement, promotions out & trade spends Optimal advertising production & fee ROMI: Return on Marketing Investment 41
Slide 42: ROI Positive
Results AD Preview Score ROMI + ROI Positive >2/3rd -/- + TO Growth Indexed production & media fees -/- Driving promotional efficiencies CY2010 YTD Sep'11 YTD Sep’11 = Jan to Sep’11 ROMI Update: SQ’11 42
Slide 43: How will we win
How will we win 1 Deliver superior products, design, branding and marketing brands and 2 Bigger, better, faster innovations 3 Appeal to more consumers across needs and price points 4 Lead market development Winning in the 5 Winwith winning customers 6 Be an execution powerhouse 7 Lean, responsive an
Slide 44: Winning with People
Winning with People # 1 Dream employer across High people engagement campuses HUL 65 TAS 62 P&G 59 BCG 55 .McKinsey & Co 53 Aditya Birla Group 51 Bain & Company 51 # 1 Best employer in India, 2011 Google 50 awarded by Aon Hewitt ITC 45 Goldman Sachs 39 Indexed Employee Engagement Scores 44
Slide 45: Building a consumer & customer centric organisation
Building a consumer & customer centric organisation Consumer & Customer Centricity 3500 employees on street, Customer Credo 16,000 outlets converted into perfect stores 45
Slide 46: Driving a new performance culture
Driving a new performance culture Comprehensive Framework Measured by Business Performance Results Culture Index 46
Slide 47: How will we win
How will we win NON-NEGOTIABLES Winning with people 11 12 Deliver superior products, design, branding and marketing Bigger, better, faster innovations Appeal to more consumers across needs and price points Lead market development Win with winning customers Be an execution powerhouse Lean, responsive
Slide 48: Leading responsible growth
Leading responsible growth GROW MARKETS ENSURE SUSTAINABLE RESPONSIBLE RESPONSIBLY PRACTICES LEADERSHIP 48
Slide 49: Launched India Water Body
Launched India Water Body "Five Water: conservation avofacts _ é live ins districts intndia. Aan MT PN ene ARES ee : 300000 people to 4 - benefit roche ee over 50 billion BIDAR liters of water to be Ps GULBURGA 7 harvested . TBELLARY Beech aa foes Ps KOLAR 50% 3 : O expected rise in PERAMBALUR oe “
Slide 50: Recent Performance – SQ'11
4 Recent Performance – SQ’11 50
Slide 51: Competitive & profitable growth in a challenging environment
Competitive & profitable growth in a challenging environment • Domestic Consumer business grows 18.5% • Strong 9.8% UVG* with good price growth • Double digit growth across all FMCG segments • Strong performance in Modern Trade and Rural • Operating profit grows by 30.1%; up 130 bps • Growth driving
Slide 52: Accelerated growth momentum; sustained volume growth
Accelerated growth momentum; sustained volume growth Domestic Consumer Business Sales Growth 18% 15% 13% 9% FH'10-11 SH'10-11 JQ'11 SQ'11 UVG* 12.6% 13.5% 8.3% 9.8% *UVG: Underlying Volume Growth; 52
Slide 53: Continued focus on innovations
Continued focus on innovations Fair & Lovely Future Tube: Relaunch of Lakme Fruit Aspirational & affordable Moisture Range Lux relaunch with silk Vaseline relaunched: protein extract Multi layer moisture Vaseline Lip Therapy Face Wash: Range Pond’s White Beauty with 4 new variants expansion across b
Slide 54: Continued focus on innovations
Continued focus on innovations Kissan range relaunched: Helping moms in providing Knorr Soupy Noodles: goodness and nutritive value to their kids Accessible Rs.5 pack Unique green tea experience with 3 flavours Taj Mahal Tea Bags: Pureit Marvella: Entry 7 flavours for 7 days into “RO”segment 54
Slide 55: High media intensity continues
High media intensity continues Industry GRP – Indexed Chart 157 165 151 139 152 131 123 124 100 2008-09 2009-10 FH'10-11 SH'10-11 FH'11-12 FMCG excl S&D S&D S&D: Soaps and Detergents Source: Mindshare & HUL internal estimates 55
Slide 56: A&P remains competitive across segments
A&P remains competitive across segments Category Competitive SOV/ SOM* Brand investment Personal Products Packaged Foods Beverages Soaps & Detergents • A&P spends maintained at $142 mn (Rs.651 crore); lower by 200 bps • Spends increased in Personal Products, Beverages and Packaged Foods • Recalibrat
Slide 57: Inflationary pressures remain high
Inflationary pressures remain high Commodity Inflation % increase in SQ’11 vs SQ’10 52% 45% 20% • Prices moderate from recent Palm Oil Crude Coffee highs • Currency depreciation to have USD INR an adverse impact going forward 10% + depreciation 49 48 45 45 44 Jan'11 July'11 Aug'11 Sep'11 Oct'11 Aver
Slide 58: SQ'11 – Results
SQ’11 – Results $ million Particulars SQ'11 SQ'10 Growth% Net Sales 1207 1023 18.0 PBITDA 181 141 27.8 PBIT 168 129 30.1 PBIT margin (%age) 13.9 12.6 PBT bei 185 146 26.7 Exceptional Items 10 9 - PBT 195 155 25.7 PAT bei 143 117 22.3 Extraordinary Items (net of Tax) - - Net Profit 151 124 21.7 Conve
Slide 59: First Half FY'12 – Results
First Half FY’12 – Results $ million Particulars FH'11-12 FH'10-11 Growth% Net Sales 2410 2071 16.4 PBITDA 345 290 19.1 PBIT 321 266 20.4 PBIT margin (%age) 13.3 12.9 PBT bei 349 292 19.3 Exceptional Items 23 13 - PBT 371 305 21.6 PAT bei 269 231 16.7 Extraordinary Items (net of Tax) - - Net Profit
Slide 60: Looking ahead
Looking ahead Headwinds Tailwinds • Uncertain global economic • Strong monsoon augurs well environment • Diverse portfolio straddling the • Inflation and adverse impact of pyramid rupee depreciation • Differentiated capabilities for • Competitive intensity competitive advantage FMCG Markets will con
Slide 61: Our strategy and goals remain unchanged
Our strategy and goals remain unchanged • Competitive Growth • Profitable Growth • Sustainable Growth Winning Today Winning Tomorrow 61
Slide 62: Thank You
Thank You 62
Hindustan Unilever — Non-Deal Roadshow (November 2011) on 6ix