Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Q3 FY2023 Earnings Presentation
34 slides from Hindustan Unilever's earnings presentation, Jan 19, 2023
Slide 1: Hindustan Unilever Limited – DQ'22 Results
Hindustan Unilever Limited DQ’22 Results : 19th January 2023 Sensitivity: Public
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: Sanjiv Mehta, Chief Executive Officer and Managing Director
Sanjiv Mehta Chief Executive Officer and Managing Director Sensitivity: Public
Slide 4: DQ'22: Strong all-round performance
DQ’22 : Strong all-round performance Turnover Growth YoY Underlying Volume Growth 16% 5% Market Share EBITDA Margin EPS ESG >75% 23.6% 12% 76 23.5 Business winning shares +30 bps sequential improvement YoY Growth Best rated Indian FMCG co. As per December’22 MAT Business winning report based on Niel
Slide 5: Inflation moderating gradually
Inflation moderating gradually Softening in few commodities notably Palm; USD strengthening adding to inflation Crude and Food Ingredients still elevated DQ’22 Inflation USD/INR vs. DQ’21 vs. DQ’20 82 Crude Oil 10% 100% (Brent USD/bbl) YoY 76 10% DQ-21 MQ-22 JQ-22 SQ-22 DQ-22 70 Soda Ash SQ-21 DQ-21
Slide 6: FMCG market growth improving sequentially; volumes still declining
FMCG market growth improving sequentially; volumes still declining FMCG market growth (Urban + Rural) Delayed onset of winter Value Volume 10% MAT SQ’22 DQ’22 Dec’22 0% MAT SQ’22 DQ’22 Dec’22 -10% Source : Nielsen market data for December’22 (HUL relevant categories) 6 Sensitivity: Public
Slide 7: Market growth led by urban; rural slowdown likely bottoming out
Market growth led by urban; rural slowdown likely bottoming out Urban Rural Value Volume Value Volume 10% 10% MAT SQ’22 DQ’22 MAT SQ’22 DQ’22 Dec’22 Dec’22 0% 0% MAT SQ’22 DQ’22 MAT SQ’22 DQ’22 Dec’22 Dec’22 -10% -10% Source : Nielsen market data for December’22 (HUL relevant categories) 7 Sensitivi
Slide 8: Clear and compelling strategy
Clear and compelling strategy Navigating the short term While progressing well on our challenges with agility long-term strategic choices Developing our portfolio Growing our consumer franchise Win with our brands powered by purpose and innovation & Lead in the channels of the future Build different
Slide 9: Responsible growth: Doing well by doing good
Responsible growth : Doing well by doing good Our community development initiative Lifebuoy has reached over 500 ‘Prabhat’ made a positive difference to million people to educate healthy nearly 9 million people habits 9 Sensitivity: Public
Slide 10: Foray into Health & Wellbeing
Foray into Health & Wellbeing Our strategy Strategic partnership Underpinned by our capabilities ▪ Consumer and Customer understanding ▪ Build a portfolio of fast growing, lifestyle-led, science-driven ▪ Leading R&D and innovation brands capability ▪ Data & Analytics ▪ Focused on attractive segments
Slide 11: Ritesh Tiwari, Chief Financial Officer
Ritesh Tiwari Chief Financial Officer Sensitivity: Public
Slide 12: DQ'22: Strong all-round performance
DQ’22 : Strong all-round performance Turnover Growth EBITDA PAT (bei)* Net Profit Growth Margin INR INR 16% 23.6% 2,581 cr. 2,505 cr. 5% -180 bps 13% 12% Underlying Volume Growth Change YoY Growth YoY EPS Growth YoY *PAT (bei) : Profit After Tax before exceptional items 12 Sensitivity: Public
Slide 13: Protecting business model through dynamic financial management
Protecting business model through dynamic financial management Net Material Inflation (NMI) moderating sequentially Gross Margin up QoQ; step-up in A&P 51% 51% 49% 22% 20% 46% 47% 18% 16% 45% 11% 11% 10% 9% 10% 10% 8% 7% SQ-21 DQ-21 MQ-22 JQ-22 SQ-22 DQ-22 SQ-21 DQ-21 MQ-22 JQ-22 SQ-22 DQ-22 NMI % M
Slide 14: DQ'22: Segmental performance
DQ’22 : Segmental performance BEAUTY & PERSONAL FOODS & HOME CARE CARE REFRESHMENT 32% 40% 26% INR 5,518 cr. INR 5,718 cr. INR 3,700 cr. Segmental Revenue 32% 10% 7% Growth Segmental Margins 19% 25% 18% Segment Revenue Growth = Segment Turnover growth + Other Operating Income, Segment Margins (EBIT)
Slide 15: DQ'22: Innovations (1/2)
DQ’22 : Innovations (1/2) Lakme Face Serum FYHP Sensitivity: Public 15
Slide 16: DQ'22: Innovations (2/2)
DQ’22 : Innovations (2/2) Korr soup Sensitivity: Public 16
Slide 17: DQ'22: Activations and communications
DQ’22 : Activations and communications Sensitivity: Public 17
Slide 18: HC: Stellar performance continues, double digit volume growth
HC : Stellar performance continues, double digit volume growth ❑ Fabric Wash: High double-digit growth with robust performance across brands and formats. Double-digit volume growth. ▪ Handsome market share gains continue, both value and volume ❑ Household Care: Grew in high double-digit with strong
Slide 19: BPC: Double digit growth led by Skin Cleansing
BPC : Double digit growth led by Skin Cleansing ❑ Skin Cleansing: Strong double-digit growth, broad based across the portfolio, volumes grew in mid-single digit. With softening in Palm Oil, price reductions taken in soaps portfolio ▪ Market development actions in bodywash yielding good results ❑ Hai
Slide 20: F&R: Steady performance led by Foods, Coffee and Ice Cream
F&R : Steady performance led by Foods, Coffee and Ice Cream ❑ Beverages: Continued value and volume market leadership in Tea. Business grew volumes in mid-single digit, price cuts soften overall value growth. Coffee continues to perform well delivering double-digit growth Some other ❑ Health Food Dr
Slide 21: DQ'22: Results summary
DQ’22 : Results summary Rs. Crores Particulars DQ’22 DQ’21 Growth Sales 14,986 12,900 16% EBITDA 3,537 3,279 8% EBITDA Margin 23.6% 25.4% -180 bps Other Income (Net) 202 66 Exceptional Items – Credit / (Charge) -102 -66 PBT 3,377 3,024 12% Tax 872 781 PAT bei 2,581 2,292 13% Net Profit 2,505 2,243 1
Slide 22: FY'23: 9-month performance
FY’23 : 9-month performance Turnover EBITDA PAT (bei)* Net Profit INR INR INR INR 43,516 cr. 10,161 7,249 cr. 7,410 cr. 17% 10% 13% 14% Growth YoY Growth YoY Growth YoY EPS Growth YoY *PAT (bei) : Profit After Tax before exceptional items 22 Sensitivity: Public
Slide 23: Outlook
Outlook Sensitivity: Public
Slide 24: Looking ahead
Looking ahead ❑ Cautiously optimistic in the near-term ❑ Worst of inflation likely behind us, will aid gradual recovery in consumer demand ❑ YoY material inflation still elevated, growth will continue to be price-led ❑ Focus on right price-value equation and building back gross margin ▪ Step-up in A
Slide 25: Royalty and Central Services agreements
Royalty and Central Services agreements Sensitivity: Public
Slide 26: Overview of current arrangement with Unilever
Overview of current arrangement with Unilever ❑ Current Technology & Trademark licensing and Central Services Agreement with Unilever was entered into in 2013. Term expires on 31st Jan 2023 ❑ Contract grants right to use Unilever owned trademarks, technology, corporate logo and gives access to centr
Slide 27: Access to world class brands, technology and services
Access to world class brands, technology and services Cutting edge technology and Centralised services and Unilever brands innovation expertise (Illustrative examples) Enabling HUL to meet emerging consumer needs with agility and win in the marketplace Sensitivity: Public 27
Slide 28: Unilever: A global FMCG powerhouse
Unilever : A global FMCG powerhouse € 52 bn Wide portfolio of iconic & on-trend brands Worldwide presence Turnover Latin America 12% North America Asia Pacific & 20% Africa 46% Europe 22% 12 12 of the top 50 global consumer brands 190 countries, c.60% business in €1 bn brands emerging markets Turnov
Slide 29: Unilever: World-class R&D
Unilever : World-class R&D Deep science and technology expertise Cutting edge R&D (examples) Global Scale, local knowledge Renewable Ingredients Bio-Surfactants Concentration Carbon Rainbow & Eco-Design & New Formats Next Generation Biology Microbiome Neurosignaling Skinification & Immunity & Deposi
Slide 30: Unilever expertise: Access to best practices, standards and tools
Unilever expertise : Access to best practices, standards and tools Illustrative examples Supply Chain Marketing OEE Improvement SMED+ Programmes World class In-house manufacturing Digital HUB creative agency capabilities AERA Global Technical People data Deeper Planning authority framework centre Pr
Slide 31: Review of existing arrangement
Review of existing arrangement ❑ Request for review received from Unilever ▪ Expiry of current contract ▪ HUL receiving steady stream of benefits from Unilever - faster innovations, superior products and technology, greater expertise and enhanced services ❑ India : Priority market for Unilever ▪ Lar
Slide 32: New arrangement approved by HUL Board
New arrangement approved by HUL Board ❑ HUL Board has approved new royalty and central services arrangements effective 1st February 2023 for a period of 5 years ❑ Staggered increase in effective rate over a period of 3 years from c. 2.65% to c.3.45% of Turnover ▪ c. 45 bps increase from Feb to Dec 2
Slide 33: In Summary
In Summary 1. DQ’22 : ▪ Strong growth momentum : Topline growth 16%, Underlying volume growth 5% ▪ Gross Margin sequentially up 170 bps, A&P stepped up ▪ Healthy EBITDA margin at 23.6%, sequential improvement of 30 bps 2. Outlook: ▪ Cautiously optimistic in the near term ▪ Worst of inflation is like
Slide 34: Hindustan Unilever Limited
Hindustan Unilever Limited DQ’22 Results : 19th January 2023 Sensitivity: Public