Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — CLSA Investors' Forum 2009
42 slides from Hindustan Unilever's conference presentation, Sep 23, 2009
Slide 1: CLSA Investors' Forum
CLSA Investors’ Forum 23rd September, 2009 Mr Nitin Paranjpe CEO and MD Hindustan Unilever Limited
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 Context Strategy & Execution Focus & Priorities
Slide 4: Agenda
Agenda Context Strategy & Execution Focus & Priorities
Slide 5: FMCG Markets
FMCG Markets ¾ FMCG consumption growth is intact ¾ Broad based growth across categories and across urban and rural FMCG Market sustains growth of over 15% … but price element comes down in last 6 quarters (eg skin cleansing) 16.0 Skin Cleansing 25.0 Price Growth% 24.2 14.0 20.8 22.5 18.1 18.9 18.6 1
Slide 6: 2009 in perspective
2009 in perspective ¾FMCG market growth sustained, but ¾frequent price changes, especially in mass segment ¾downtrading in certain categories ¾down-stocking in wholesale and organised retail ¾Appropriate actions taken timely ¾focus on consumer value (including competitive pricing) at all times ¾play
Slide 7: Monsoon and Impact on Rural Markets
Monsoon and Impact on Rural Markets Monsoon status c. 20% deficiency; mitigating factors expected to partly offset impact Occupation % share of % share of Earning Category Rural Rural Hholds Weight Income Regular Salary/ 20% 11% 1.80 Job Security + Wages 6th Pay Commission Others 3% 2% 1.50 Non Agri
Slide 8: Changing Income Pattern
Changing Income Pattern 2003 2013 181 mn households 231 mn households Affluent Top End Business 3 Affluent 11 Changing attitudes Aspirers 46 Aspirers 124 Trebling Credit Culture 131 Strivers 96 Strivers B.O.P Opportunity The shape of India is changing… from a pyramid to a diamond Source : National C
Slide 9: Agenda
Agenda Context Strategy & Execution Focus & Priorities
Slide 10: Our Vision
Our Vision To earn the love and respect of India, by making a real difference to every Indian. Competitive, Profitable and Sustainable Growth
Slide 11: Our Strategy
Our Strategy • Leverage brand portfolio and consumer understanding by • Straddling the pyramid & deploying full portfolio • Driving consumption & penetration opportunity • Winning with consumers, channels, segments/markets of tomorrow • Build markets and capabilities for the future • Leverage Unilev
Slide 12: Portfolio straddling the pyramid
Portfolio straddling the pyramid Fabric Personal Shampoo Skin Tooth Tea Coffee Wash Wash Paste Affluent Aspiring Striving Strong brands across categories addressing needs of every consumer Identifying the opportunity and filling it is important
Slide 13: Strong portfolio across categories
Strong portfolio across categories Market Leader Strong No. 2 65 56.4 49.1 49.5 46.3 45.4 42.240.1 36.2 32.5 31.6 28.0 24.1 22.7 21.8 21.6 11.6 11.7 9.8 7.9 5 5.2 Fabric Personal Dishwash Skin Shampoo Deos Packet Coffee Jams Toothpaste Ketchups Wash Wash Tea HUL – Market Share (%) Competition Market
Slide 14: Increasing consumption: Lifebuoy Handwash Programme
Increasing consumption: Lifebuoy Handwash Programme Since 2002, the project has touched 50,676 villages and 120 million people. Campaign Impact •Awareness of germs - 52% to 83% •Association of germs with disease - 35% to 57% • Context • Barriers to Soap Usage very high • Insight : “ Visible clean is
Slide 15: Our Strategy
Our Strategy • Leverage brand portfolio and consumer understanding by • Straddling the pyramid & deploying full portfolio • Driving consumption & penetration opportunity • Winning with consumers, channels, segments/markets of tomorrow • Build markets and capabilities for the future • Leverage Unilev
Slide 16: Consumers of tomorrow: Dove
Consumers of tomorrow: Dove Dove Hair Fall Therapy All India market share already >1% within 3 months of launch Launch of Dove Deos Dove Shampoo - Rapid Market Share Gain in Urban 7.1 All India 5.9 Urban 4.9 Dove Soaps – Shares 4.6 3.9 continuously 3.3 gaining shares for last 8 quarters BUILDING A $
Slide 17: Consumers of tomorrow: Lipton Tea & Taj Mahal Tea Bags
Consumers of tomorrow: Lipton Tea & Taj Mahal Tea Bags USP - With goodness of Theanine • First Tea Brand to use digital to engage with a younger TG Relaunch of • Facebook application, blogs, Taj Tea Bags DIGITAL IMV, innovations to engage Worlds Largest Jigsaw Challenge DIRECT CONTACT •New campaign;
Slide 18: Channels of tomorrow: Modern Trade
Channels of tomorrow: Modern Trade Personal Wash Hair Care Skin Creams Toothpaste Deodorant MTShares GTShares In aggregate; MT shares > GT shares Source : A.C Nielsen – June Quarter 2009 Value shares
Slide 19: Segments of tomorrow: Hair Conditioners
Segments of tomorrow: Hair Conditioners HUL Shares and Market Growth% Conditioners Market 35 45.0% in India growing fast 32.4 40.0% 42.6% with huge potential 30 HUL Shares Market Growth% 28.3 35.0% 28.4% 25.6 30.0% 32.4% 31.5% 31.4% 25 22.7 27.5% 25.0% Sachets to generate trials 20 19.4 20.0% 18.2 1
Slide 20: Building new markets: Pure-it
Building new markets: Pure-it Progress Volume market leadership in South India >700 towns, 20 states covered Increasing penetration through retail presence in <10 L population towns More than 400 safe water zones established Growing consistently @ > 50% More than 7 million lives protected Complete p
Slide 21: Strengthening capabilities: Brilliant Activation
Strengthening capabilities: Brilliant Activation ‘Call Me’ interactive campaign Generated over 3 million unique calls >2% market share gain in Non Metros Axe Indexed Sales Accelerated Growth achieved after campaign Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
Slide 22: Strengthening capabilities: Out of Home
Strengthening capabilities: Out of Home • SWIRL’S - a successful concept in Europe • 68 parlours established across 10 Indian cities Various • FRESH : Fresh Ingredients shop and product • CHOICE : Create Your Own formats • THEATER & FUN : Specially for You 68 No. of Swirl Parlours 40 20 2007 2008 Cu
Slide 23: Strengthening capabilities: Winning at Point of Sale
Strengthening capabilities: Winning at Point of Sale Winning Winning In MT In GT Power Power of of Power Power of of One One Shopper Shopper People People Analytics Analytics Unilever Unilever Insights Insights iQ iQ GTM GTM (U) (U) Channel Channel Programs Programs Lean Lean & & Agile Agile Organiz
Slide 24: Creating a million perfect stores…
Creating a million perfect stores… Creation of Perfect Stores + Mass Customization Intelligent Information Systems • Business insights from execution and sales data to seamlessly support business decisions • To enable superior execution and planning of events • Appropriate product assortment to maxi
Slide 25: Leveraging Unilever: Global R&D Centres
Leveraging Unilever: Global R&D Centres Beverages, Processed Fabric Wash, Fabric Wash, Hair Care, Deos, Foods, etc. Beverages, Processed Oral Care, Surface Cleaners, Foods, etc. etc. Port Vlaardingen, Sunlight, NL UK Colworth, Trumbull, UK US Shanghai, China Bangalore, India Skin Care, Deos, Shampoo
Slide 26: Unilever Research and Development Strengths
Unilever Research and Development Strengths Spray Technology Skin Mildness Product Processing Deodorants and Moisturizing e.g. Ice Cream Hair Structured Science of Tea Technology Oils and Emulsions
Slide 27: Leveraging Unilever know how: Surf Excel Bars
Leveraging Unilever know how: Surf Excel Bars 16.2 16.3 16.3 15.6 15 14 13.2 All India Value Market Share Q2 06 Q4 06 Q2 07 Q4 07 Q4 08 Q1 09 Q2 09 • Surf Excel – Nil Mineral Bar • India’s first detergents bar with no fillers • Patented technology with Competitive advantage • High phosphate content
Slide 28: Leveraging Unilever know how: Skin Creams
Leveraging Unilever know how: Skin Creams Pond’s White Beauty Re-launch with Vaseline Healthy improved formulation White MS (H&B 10.2 Creams) Rapid Share Gain 6.6 after Re-launch 4.4 Education 0.9 and 0.2 0.3 sampling Jan'09 Feb'09 Mar'09 Apr'09 May'09 Jun'09 Winner of the Amazing Skin Wall comes on
Slide 29: Our Strategy
Our Strategy • Leverage brand portfolio and consumer understanding by • Straddling the pyramid & deploying full portfolio • Driving consumption & penetration opportunity • Winning with consumers, channels, segments/markets of tomorrow • Build markets and capabilities for the future • Leverage Unilev
Slide 30: Improved Field Execution
Improved Field Execution Field Execution Field Execution All India Rural 140 300 120 250 100 200 80 150 60 100 40 50 20 0 0 Dec'08 Jun'09 Jul'09 Field Execution Efficiency - All India Field Execution Efficiency - Rural Improvement in Field Execution particularly in Rural Indexed Chart (vs Dec 2008)
Slide 31: Enhanced Customer Service
Enhanced Customer Service DOH Inventory Order Servicing 120 115 100 110 80 105 60 100 40 95 20 90 0 85 2008 Jan '09 Feb '09 Mar '09 Jun '09 Days on Hand (Finished Goods) Customer Order Servicing % Better customer service along with strong cash delivery Indexed Chart (vs 2008)
Slide 32: Driving cost efficiencies
Driving cost efficiencies Indexed Chart (Base=2005) 200 180 Supply Chain Cost Savings 160 140 120 100 80 60 40 20 105 0 100 Overheads as % of turnover 2005 2008 95 90 Ì as % of turnover 85 +70 bps (vs 2005) 80 75 70 65 60 2005 2008 * excl Water & exceptional items Tight cost management ensuring cont
Slide 33: Our Strategy
Our Strategy • Leverage brand portfolio and consumer understanding by • Straddling the pyramid & deploying full portfolio • Driving consumption & penetration opportunity • Winning with consumers, channels, segments/markets of tomorrow • Build markets and capabilities for the future • Leverage Unilev
Slide 34: Embedding sustainability
Embedding sustainability Prosperity People Planet (Economic) (Social) (Environment) 1. Enhance 1. Health 1. Water livelihoods 2. Empowerment 2. GHGs Who :Brands will lead the effort Where: Around our units of operation How: Through Partnerships
Slide 35: Embedding sustainability
Embedding sustainability Prosperity People Planet (Economic) (Social) (Environment) 1. Enhance 1. Health 1. Water livelihoods 2. Empowerment 2. GHGs Partner DHAN foundation Partner with Pratham 45% water returned to for enhancing livelihood for girl child education ground Sourcing from Primary LB Sw
Slide 36: Agenda
Agenda Context Strategy & Execution Focus & Priorities
Slide 37: Key Financials
Key Financials 2008-09** 2007 2006 Sales Growth* 15.5% 13.5% 10.0% EBIT Growth 18.8% 15.4% 16.2% EPS (cents) 24 18 17 Operating cash flow* $422 Mn $350 Mn $332 Mn Dividend Payout Ratio 77% 121%@ 83% * Before restructuring, disposals. Conversion rate $1= INR 48 ** Audited results FY 2008-09 for 15 mo
Slide 38: 2009/10: Focus and Priorities
2009/10: Focus and Priorities Ensure competitiveness across the portfolio, particularly at the mass end Continue to invest in emerging categories and segments ¾ Strengthen/ build Processed Foods, Water and Premium Personal Care Drive focus and speed alongside leveraging scale Significantly strengthe
Slide 39: Summary
Summary • FMCG market growth continues to be robust • Our goal remains unchanged • Competitive, Profitable, and Sustainable growth • Strategy consistent; increased execution rigour
Slide 40: Thank You
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Slide 41: CLSA Investors' Forum
CLSA Investors’ Forum 23rd September, 2009 Mr Nitin Paranjpe CEO and MD Hindustan Unilever Limited
Slide 42: Volatility in 2009
Volatility in 2009 COMMODITY PRICES Crude Oil (USD Per Barrel) Palm Oil (MYR Per Ton) Benzene (USD Per Ton) 160 4500 1600 140 4000 1400 120 3500 1200 3000 100 1000 2500 80 800 2000 60 600 1500 40 400 1000 20 500 200 0 0 0 May-07 May-08 May-09 Nov-07 Nov-08 Jan-07 Mar-07 Jul-07 Sep-07 Jan-08 Mar-08 J