Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Q2 2002 Earnings Presentation
45 slides from Hindustan Unilever's earnings presentation, Jul 22, 2002
Slide 1: Analysts Meet Mumbai - Results JQ & FH 2002
H IN D U STA N LEVER LIM ITED A nalysts M eet M um bai-22nd July,2002 Results JQ & FH 2002 1
Slide 2: Economy - modest recovery in sight
Economy - modest recovery in sight g G D P grow th of5.4% in 2001-02,agrigrow th at5.7% g lagged im pacton ruraldem and g Early signs ofrevivalin ruraldem and & business confidence - signs ofindustrialrevivalstillw eak g Econom ic outlook for 2002-2003 hinges on g M onsoon & agriculturalproduction g
Slide 3: Good JQ 2002 performance
Good JQ 2002 performance g HPC Power Brands up by 5% - driving HPC growth of 3.9% g Overall FMCG sales grow by 1.7% in a declining market g Personal Wash sales up 12% g Skin (+19%) continued strong growth g Toothpaste sales decline reversed g Oil & Fats (+5%), Culinary (+12%) & Coffee (+ 8%) did wel
Slide 4: Strategy recap
Strategy recap KEY STRATEGIC OBJECTIVES Securing the Growth thru’ Improving future of the focus on Foods Non-FMCG Power Brands Profitability businesses …..sustained profitable “quality” growth 4
Slide 5: HPC growth beats the market
HPC growth beats the market % HPC MARKET HLL GROUP HPC POWER BRANDS 8 6 5.0 4.1 4 2 0 -2 -4 -6 -5.7 -5.5 -6.2 -8 -7.0 MQ 2002 JQ 2002 5
Slide 6: Innovation fuels growth - Lifebuoy
Innovation fuels grow th •Lifebuoy 6
Slide 7: Market rewards Lifebuoy
Market rewards Lifebuoy •Lifebuoy grow s by 30.3% 7
Slide 8: Innovation fuels growth - Lifebuoy, Fair & Lovely
Innovation fuels grow th •Lifebuoy •Fair & Lovely 8
Slide 9: Fair & Lovely bounces back to high growth
Fair & Lovely bounces back to high growth • Fair & Lovely grow s by 21.5% 9
Slide 10: Innovation fuels growth - Liril
Innovation fuels grow th •Lifebuoy •Fair & Lovely •Liril 10
Slide 11: Liril continues to grow strongly
Liril continues to grow strongly •Lirilgrow s by 12.4% 11
Slide 12: Innovation fuels growth - Ayush
Innovation fuels grow th •Lifebuoy •Fair & Lovely •Liril •A yush 12
Slide 13: Lever Ayush
Lever A yush Poshak,N ashak,R akshak truth ofA yurveda proofof Science • Ayush launched in June ‘02 after rigorous R&D and extensive clinical testing • 5 OTC non prescriptive products introduced • Purity of ayurvedic ingredients endorsed by AVP , Coimbatore • Launched in Tamilnadu, phased rollout 13
Slide 14: Market activation drives growth - Lux
M arketactivation drives grow th •Lux 14
Slide 15: Growing Lux
Growing Lux •Lux grow s by 14.5% 15
Slide 16: Market activation drives growth - Lux, Surf
M arketactivation drives grow th •Lux •Surf 16
Slide 17: Got Kids? Get New Surf
Got Kids ? Get New Surf •Surfgrow s by 10.4% 17
Slide 18: Market activation drives growth - Wheel
M arketactivation drives grow th •Lux •Surf •W heel 18
Slide 19: Bringing Wheel to life
Bringing Wheel to life •W heelgrow s by 5.8% 19
Slide 20: Market activation drives growth - Pepsodent
M arketactivation drives grow th •Lux •Surf •W heel •Pepsodent 20
Slide 21: The Magic of Pepsodent
The Magic of Pepsodent •Pepsodentgrow s by 5.2% Pepsodent Germ Indicator Drive 21
Slide 22: Sustained improvement in underlying profitability of Foods
Sustained im provem entin underlying profitability ofFoods +420 bps +670 bps • Beverages & Foods gross margins up by 670 bps in FH ‘02 (JQ ‘02 : + 420 bps) • Modern Foods achieves Operational Break-Even • Foods margin improvement reinvested to JQ FH 2001 2002 support innovation G ross M argin Im pro
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Slide 24: Ice Creams - new strategy working
Ice Creams - new strategy working g N ew Strategy im plem ented +1350 bps +1000 bps g Focussed business m odel g Step change in G ross M argins g Significantly im proved results JQ FH 2001 2002 G ross M argin Im provem ent 24
Slide 25: Confectionery rolls ahead
Confectionery rolls ahead g M ax forays into confectionery g C hild centric productdevelopm ent/innovation g N ationally rolled outpostsuccess in Tam ilnadu g ‘M ax’range ofconfectionery annualised sale > R s 50 C rs M ax setto becom e the largestkids im pulse brand 25
Slide 26: Securing the future of Non FMCG businesses
Securing the future ofN on FM C G businesses g D ivestm ents com pleted g Seeds (M Q ‘02 ) g D iversey Lever(JQ ‘02 ) g Transfer ofLeather & M ushroom s business to subsidiaries for potentialJV/divestm ent g Traded exports rationalised 26
Slide 27: Core exports do well
Core exports do well g Share ofcore FM C G in totalexports increases g H PC exports up 7.4% in JQ ‘02 g Foods exports dow n by 12.9% in JQ ‘02 -im pacted by loss ofTea exports to R ussia g U nilever sourcing opportunities secured for Tea B ags g C offee exports grow w ell g Processed m arine records
Slide 28: Sourcing opportunities growing a $ bln business
Sourcing opportunities growing a $ bln business Unilever 3P g Leveraging on cost arbitrage opportunities 13 27 with the West & Unilever sourcing g Export sourcing opportunities not at the 100 87 73 cost of domestic business g Sourcing business will improve Exports margin basket HPC Foods Others Leve
Slide 29: Financial highlights & insights
H IN D U STA N LEVER LIM ITED A nalysts M eet M um bai-22nd July,2002 Financial highlights & insights 29
Slide 30: JQ 2002 sales summary
JQ 2002 sales sum m ary R s C rores JQ 2001 JQ 2002 G row th % D om estic FM CG 2287 2326 1.7 - HP C 1731 1799 3.9 - Foods 556 527 (5.2) E xports 313 305 (2.8) - FM C G 178 169 (5.2) - N on FM C G 135 136 0.5 O thers 41 35 (14.7) C O N TIN U IN G B U SIN E S S E S 2642 2667 0.9 D isposals / D iscont
Slide 31: JQ 2002 results
JQ 2002 results Rs.Crores JQ 2001 JQ 2002 Growth % PBIT 376 465 23.7 Fin Income (net) 73 55 (24.3) PBT 449 520 15.9 Tax ( incl Deferred ) 102 119 17.3 PAT ( bei ) 347 400 15.5 Exceptional Item 120 47 (60.9) Net Profit 467 447 (4.1) 31
Slide 32: FH 2002 sales summary
FH 2002 sales sum m ary R s C ro re s FH 2001 F H 2 0 0 2 G ro w th % D o m e s tic F M C G 4430 4353 (1 .7 ) - HPC 3273 3278 0 .1 - Foods 1157 1076 (7 .0 ) E x p o rts 622 582 (6 .5 ) - FM CG 368 327 (1 1 .1 ) - Non FM CG 254 255 0 .3 O th e rs 72 77 7 .9 C O N T IN U IN G B U S IN E S S E S 5124 5
Slide 33: FH 2002 results
FH 2002 results Rs.Crores FH 2001 FH 2002 Growth % PBIT 705 846 20.0 Fin Income (net) 150 125 (16.3) PBT 855 971 13.6 Tax ( incl Deferred ) 192 216 13.3 PAT ( bei ) 663 754 13.7 Exceptional Item 142 122 (14.6) Net Profit 806 876 8.7 33
Slide 34: Falling yields & dividend phasing affect financial income
Falling yields & dividend phasing affect financial income Rs Crores FH 2001 FH 2002 % Change Financial Income 153 131 (14.1) Treasury Income 141 129 (8.9) Dividends from Sub / Assc Cos 12 2 (78.2) * Dividend from HLCL to flow into SH 02 in view of the change in the company’s accounting year 11.5 10.
Slide 35: HPC category performance
H PC category perform ance FH 2002 FH 2002 JQ 2002 % Growth Market Growth HLL Group HLL Group Personal Wash (12.1) 2.1 11.6 Fabric Wash (4.9) (2.7) 2.7 Dishwash (3.2) (5.8) (18.5) Toothpaste (5.7) (8.2) 0.7 Shampoo 8.9 (12.8) (14.7) Skin (excl. Talc) (5.3) 12.9 19.0 Talcum Powder (8.6) (6.2) (8.7) S
Slide 36: Foods category performance
Foods category perform ance FH 2002 FH 2002 JQ 2002 % Growth Market Growth HLL Group HLL Group Packet Tea (9.7) (12.1) (8.9) Coffee (6.1) 6.4 7.6 Vanaspati 6.6 0.4 11.4 Culinary Jams (13.9) 16.2 19.6 Ketchup (6.2) (4.3) (2.6) Atta (Branded) (12.5) (34.8) (32.3) Salt (11.6) (22.7) (29.4) Source :M ar
Slide 37: HPC market shares
HPC market shares Market Share % June 2001 Mar 2002 May 2002 Personal Wash 59.0 58.8 59.0 Detergent Powders 38.4 38.0 38.5 Detergents Bars 47.4 46.6 47.2 Dishwash 61.2 62.2 61.6 Toothpaste 35.9 34.4 34.3 Shampoo 64.6 60.1 59.9 Skin (excl. Talc) 53.9 53.4 53.2 Talcum Powder 65.8 63.9 65.8 Source :O R
Slide 38: Foods market shares
Foods market shares Market Share % June 2001 Mar 2002 May 2002 Packet Tea 36.2 34.1 35.2 Coffee 44.1 41.6 43.1 Atta 18.9 13.1 11.6 Branded Salt 16.7 14.1 13.1 Jams 74.9 77.2 75.5 Ketchup 40.5 33.0 32.8 Vanaspati 28.0 25.9 24.9 Source :O R G Value Shares (urban+rural) 38
Slide 39: Comparable position net of M&A
Comparable position net of M&A g O UT g IN g Q uest g Lakm e Lever g N ickelC atalyst g A dhesives g B estfoods g Seeds g A viance g D iversey Lever g Leather % Growth JQ 2002 FH 2002 Published Comparable Published Comparable Net Sales (8.9) (5.4) (9.4) (7.7) PBIT 23.7 30.8 20.0 25.5 PAT bei 15.5 22
Slide 40: Focus on profitability continues
Focus on profitability continues Rs Crore FH 2001 FH 2002 % Growth Operating Profit 705 846 20.0 Operating Margin % 12.7 16.7 Operating margins improve thru - - Enriched Mix - Cost Management Initiatives % FH 2001 FH 2002 Return on Net Worth 61.6 58.1 ROCE 48.6 45.6 40
Slide 41: Improved segmental results
Im proved segm entalresults JQ JQ % FH FH % Rs.Crores 2001 2002 Change 2001 2002 Change Soaps & Detergents 200 285 42.2 404 512 26.7 Personal Products 154 186 20.5 291 338 16.3 Beverages 52 59 13.4 105 119 13.6 Foods 0 (9) 3 (15) Ice Cream (3) 5 (9) (3) Exports 16 23 43.6 35 46 31.0 Others 33 4 35 (
Slide 42: New cost management initiatives
New cost management initiatives g Corporate Synergies g Packaging g Freight g Media Buying g Continued Efficiency Drive g Logistics g Information Technology g Overheads 42
Slide 43: Strong cash generation
Strong cash generation Rs Crores FH 2001 FH 2002 Cash from operations 771 929 Disposal of businesses 178 171 Working Capital reduction 24 132 Treasury Income (net) 101 103 Total Cash Generation 1074 1335 Capital Expenditure 164 102 Dividend Payment 440 550 Tax Paid 119 144 Surplus Invested 351 539 T
Slide 44: In summary....
In summary…. g Innovation led FM C G sales grow th by 1.7% in declining m arkets,H PC up 3.9% (JQ ‘02 ) g O perating Profits (PB IT )up 20% (FH ‘02 ) g Progress on strategic objectives w ellon course g H PC Pow er B rands outperform m arket g Im provem ents in Foods profitability sustained g N on co
Slide 45: Thank you
H IN D U STA N LEVER LIM ITED A nalysts M eet M um bai-22nd July,2002 thank you © H LL 2002 45