Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — CLSA Investor Forum 2008
35 slides from Hindustan Unilever's conference presentation, Sep 24, 2008
Slide 1: CLSA Conference Investor Presentation
CLSA Conference Investor Presentation 24th Sept 2008
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: Agenda
Agenda Overview India Opportunity HUL - Uniquely Placed Financials & Summary
Slide 4: 75 year history & Strong leadership
75 year history & Strong leadership Touches 2 out of every 15000 employees 3 Indians everday* • 1100 managers Reach 80% • • Households* • • • • 71 manufacturing locations • • • • 2000 suppliers & associates Direct Coverage • • •• 1mln Outlets** • • • • • • • • • • • • • Shelf Availability • 4.0 3.7
Slide 5: Market Leaders across Categories
Market Leaders across Categories Market Leader Strong No. 2 66.9 58.4 59.6 47.9 52.7 53.4 46.5 46.9 38.3 36.8 30.0 30.4 27.6 24.5 23.9 23.221.2 13.3 15 12.9 9.1 8.1 7.5 5.7 Fabric Personal Dishwash Skin Shampoo Talcum Deos Packet Coffee Jams Toothpaste Ketchups Wash Wash Powder Tea HUL – Market Shar
Slide 6: An unmatched brand portfolio
An unmatched brand portfolio 6 MEGA BRANDS ~ more than $ 200 mn each, 52% FMCG portfolio
Slide 7: Financial Overview 2007
Financial Overview 2007 Mn $ Turnover 3473 EBIT 499 EBIT % 14.4% PAT (bei) 448 Reported Profit 487 EPS 21c Market Capitalisation 13117 Personal Products Soaps and 26% Detergents Exports Processed Breverages 46% 10% Foods 11% 4% Others Icecreams 2% 1% * Figures based on FY 2007 Audited Results ++ Mar
Slide 8: Agenda
Agenda Overview India Opportunity HUL - Uniquely Placed Financials & Summary
Slide 9: Opportunities & Challenges
Opportunities & Challenges z Increasing per capita income drives FMCG growth z India and its consuming class z Changing consumption patterns z Evolving trade structure
Slide 10: Favourable Economics & Demographics
Favourable Economics & Demographics 599 551 494 505 12.0 1200 461 9.7 424 10.0 9.0 8.9 1000 7.9 8.1 8.0 6.9 800 5.4 6.0 4.5 600 3.9 4.0 400 2.0 200 0.0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2002 2003 2004 2005 2006 2007 GDP Growth Per Capita Income Per capita Disposable Income ($)* 45 (% of
Slide 11: Changing Income Pattern
Changing Income Pattern 2003 2013 181 mn households 231 mn households Rich Classes Top End Business 3 Affluent 11 Changing attitudes Aspiring Classes 46 Aspirers 124 Trebling Credit Culture 131 Strivers 96 Striving Classes B.O.P Opportunity The shape of India is going to change… from a pyramid to a
Slide 12: Opportunity to grow consumption
Opportunity to grow consumption Per Capita Consumption (US $ ) Detergents Shampoo 7.5 Mkt Size Mln. $ 542 6.7 Mkt Size Mln. $ 2247 22.9 6.0 16.6 12.1 1.0 1.0 1.4 2.2 1.9 0.3 India India China Indonesia Brazil Germany USA India India China Indonesia Brazil USA Germany Ice Creams Skin care 49.4 36.6 M
Slide 13: Evolving trade structure…
Evolving trade structure… Modern Trade General Trade Year Modern Trade General Trade 2007 5% 95% 2010 10% 90% 2025 25% 75%
Slide 14: Agenda
Agenda Overview India Opportunity HUL - Uniquely Placed Financials & Summary
Slide 15: HUL – Uniquely Positioned to Create Value
HUL – Uniquely Positioned to Create Value z Our Strategy z Competitive Strengths z Innovation and R&D capabilities to straddle the pyramid z Versatile distribution network z Strong Corporate Responsibility and Governance z Strong Local talent base
Slide 16: Our vision
Our vision To earn the love and respect of India, by making a real difference to every Indian.
Slide 17: Our Goal & Strategy
Our Goal & Strategy GOAL Achieve sustainable, competitive and profitable growth across our portfolio STRATEGY z Leverage brand portfolio and consumer understanding by ¾ Straddling the pyramid ¾ Driving consumption and penetration opportunity z Build segments & markets for the future where ¾ Unilever
Slide 18: Portfolio straddling the pyramid across categories
Portfolio straddling the pyramid across categories Particulars Laundry Soaps Shampoo Skin Tooth Tea Coffee Paste Market Size - $ mln 2247 1658 542 698 691 1113 177 HUL Share 38.3% 52.7% 46.5% 53.4% 30.0% 23.2% 46.9% Nearest Competitor 13.3% 9.1% 23.9% 7.5% 47.9% 21.2% 36.8% Affluent Aspiring Strivin
Slide 19: Category Leadership: Laundry
Category Leadership: Laundry Laundry Market Shares 38.3 37.5 37.8 37.0 36.5 35.2 34.6 34.1 34.3 Q2- Q3- Q4- Q1- Q2- Q3- Q4- Q1- Q2- 06 06 06 07 07 07 07 08 08 -Surf Excel Children Festival- Bring alive “Dirt is good” campaign -More than 40,000 children participated Affluent Wheel Smart Shrimati Seas
Slide 20: Creating successful brands: Dove Hair
Creating successful brands: Dove Hair TV PR PRINT Launch Phase POS INTERNET - GT - MT OOH 4.0 3.8 Activation to Create Relevance, Provide 3.5 Dove MT share graph 3.3 Experience, Amplification 3.0 2.9 2.5 2.4 Survey for 1 week via Internet and SMS 2.0 1.5 Dove Beautiful Hair Gallery 1.0 1.2 0.5 5000
Slide 21: Building Category: Ponds Top End
Building Category: Ponds Top End Top End Counters Global trainers 943 advisors across 13 cities 700 counters in 60 days One global look for counters Superior Quality Products More than 50 SKUs backed by Knock Out Claims Market Leader in Anti Ageing Segment Direct Marketing Model 3 million consumer c
Slide 22: Building Category: Processed Foods
Building Category: Processed Foods Launch of Jam in Tubes. Easy to use format Actrivation through Disney cartoon characters Knorr enters the centre of the plate with the launch of Meal Makers Knorr Indian soups-moves soup from ‘alien/ foreign’ to ‘familiar/ for me’ Will gain share from the 400 crore
Slide 23: Pureit’ … a breakthrough innovation
Pureit’ … a breakthrough innovation Complete protection … `as safe as boiled water’. Meets US EPA standards. No harmful viruses, bacteria, parasites. Works without electricity, pressurised piped water. Great tasting , clear water • Affordable: Purifier INR 1800 ; Germkill Battery INR 300 Progress •
Slide 24: Tapping ‘Out of Home’ Opportunity
Tapping ‘Out of Home’ Opportunity Growing incidence of Out of Home consumption Creating a Large &Growing Market z 58% LSM 8+ consumers work between 9 a.m. to 6 p.m. z Market in Premium channel estimated at 1500 cr. Growing at 23% p.a. HUL uniquely poised to unlock the opportunity z Brands: z Lipton
Slide 25: Modern Trade - Reaching Shoppers
Toothpaste Tooth brush Dish Wash Jams, Squashes Soap Custards and jelly LAUNDRY DAIRY Sanitary napkins Skin Hair DIAPERS DEO Paper pdts Coffee Tea SOUP MEAT SEASONINGS SAUCE OIL CHECKOUTS PASTA SAUCE DRESSINGS SNACKS Ice cream BAKERY Modern Trade - Reaching Shoppers WINE DELI Cosmetics
Slide 26: Rural distribution Model
Rural distribution Model Phase I Phase III Van Based Shakti Entrepreneurs Fixed Route Coverage 50% Rural Pop (Target) 25% Rural pop Town Based Distributor SS Villages Phase II SS - Star Seller Distributor Based In the Village Villages Hub & Spoke Model Large Villages – accessible by Motor-able Roads
Slide 27: Project Shakti- Enabling direct rural reach
Project Shakti- Enabling direct rural reach z To Reach: z Small, scattered settlements and poor infrastructure make distribution difficult z Over 500,000 villages not reached directly by HUL z To Communicate: z Low literacy hampers effectiveness of print media z Poor media-reach: 500 million Indians
Slide 28: Capabilities: Leveraging IT for Growth
Capabilities :Leveraging IT for Growth Planning Hub Supplier Kirana Distributor C & FA Factory Daily Daily Daily Daily Hand – held Dist Mgmt Central Unify - Prod. Plan – wkly terminal System - Despatch - Daily - On shelf availability - Sales - Stocks - Stocks - sales - Prices, Invoicing 35 Brands, 1
Slide 29: Innovation and R&D capabilities
Innovation and R&D capabilities z HUL leads global research in Oral, Skin and Laundry z Some achievements: • Single Shot Soap making process • Skin Lightening Cream • Non Soap Detergent Bars • Poly coated Dish Wash Bar • Drinking water purifier (Pure-It) • Amaze
Slide 30: Continued focus on Safety and Environment
Continued focus on Safety and Environment CO2 reduction 2004-2007 311.9 276.4 250.9 242.2 Received carbon credits for innovative Kg/T soap manufacturing process. 2004 2005 2006 2007 Energy Consumption 3.27 2.73 Reducing Oil Dependency through 2.28 2.21 GJ/T Bio Mass Based Boilers 2004 2005 2006 2007
Slide 31: Corporate Responsibility – Aiding in the Development of the Country
Corporate Responsibility – Aiding in the Development of the Country z Lifebouy Swasthya Chetana - Health & Hygiene z Shakti – Empowerment of women through micro-enterprise Opportunity z Yashodadham - Relief and Reconstruction in Gujarat's Kutch district z Asha Daan - Happy Home actively supported by
Slide 32: Agenda
Agenda Overview India Opportunity HUL - Uniquely Placed Financials & Summary
Slide 33: Key Financials
Key Financials 2007 2006 2005 Reported Growth 13.3% 9.4% 11.4% Continuing sales growth* 13.5% 10.0% 11.5% EBIT/ Sales % 14.4% 14.1% 13.3% EBIT Growth 15.4% 16.2% 1.1% Operating cash flow* 420 Mn $365 Mn $489 Mn * Before restructuring, disposal As per audited financial statements of the company; acco
Slide 34: Summary
Summary z 3rd consecutive year of accelerated growth in FMCG portfolio. Growth broad based and across all categories z Consumer spending in FMCG continues z Successfully implement the top end skin & processed Foods strategy. z Build momentum to the Water Business z Build on competitive capabilities
Slide 35: Thank you
Thank you