Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Hindustan Lever — Q2 2001 Earnings Presentation
50 slides from Hindustan Unilever's earnings presentation, 2001
Slide 1: Hindustan Lever Ltd Review of Results
HINDUSTAN LEVER LTD REVIEW OF RESULTS Analysts Meet Mumbai
Slide 2: Presentation Sequence
Presentation Sequence • Economic environment • Financial results - JQ/ FH’01 • Interim dividend • Results analysis • Performance review
Slide 3: Economic Environment
Economic Environment
Slide 4: The Economy (1)
The Economy …. (1) • GDP growth down from 6.5% to 5.2% largely contributed by rural sector • Fiscal deficit continues to be under pressure; money supply growth up by 16%; inflation 7.1% • Rupee depreciation 0.84% in FH ’01
Slide 5: The Economy (2)
The Economy …. (2) • Markets remain sluggish • Decline witnessed in demand in several FMCG categories • Economic outlook for SH’01 evolving – Monsoon progress positive – Poor realisation cause for concern
Slide 6: Market Growth
Market Growth Value Growth % Year Jan- 2000 May 2001 Toilet soaps 5.9 (4.0) Detergents 2.5 (4.4) cake/bars Washing powder 8.1 3.4 Toothpaste 10.0 6.5 Shampoo 12.5 2.0 Skin cream 12.9 8.7 Tea 0.4 (14.3) Source : ORG
Slide 7: Financial Results: JQ/FH 2001
Financial Results : JQ/ FH 2001
Slide 8: HLL Results - JQ 2001 (1)
HLL Results - JQ 2001 … (1) Rs.Crores JQ 2000 JQ 2001 Growth % Net Sales 2880 2931 1.8 Other Income 77 91 17.9 Operating Costs 2534 2539 0.2 PBIDT 423 483 14.4 Interest Expense 2 2 1.9 Depreciation 33 33 (0.8) PBT 388 449 15.7
Slide 9: HLL Results - JQ 2001 (2)
HLL Results - JQ 2001 …(2) Rs.Crores JQ 2000 JQ 2001 Growth % PBT 388 449 15.7 Tax 101 102 1.0 PAT 287 347 20.9 Exceptional 120 Item Net Profit 287 467 62.7
Slide 10: HLL Results - FH 2001 (1)
HLL Results - FH 2001 … (1) Rs.Crores FH 2000 FH 2001 Growth % Net Sales 5494 5574 1.5 Other Income 167 193 15.5 Operating Costs 4858 4843 (0.3) PBIDT 803 924 15.1 Interest Expense 5 3 (41.7) Depreciation 67 66 (0.9) PBT 731 855 17.0
Slide 11: HLL Results - FH 2001 (2)
HLL Results - FH 2001 …(2) Rs.Crores FH 2000 FH 2001 Growth % PBT 731 855 17.0 Tax 181 191 5.4 PAT 549 664 20.8 Exceptional Item 0 142 Net Profit 549 806 46.7
Slide 12: Sales Growth - JQ'01
Sales Growth - JQ’01 Rs. Crores JQ’00 JQ’01 Grth % Total 2880 2931 1.8 HPC 1598 1737 8.7 Foods 625 556 (10.9) Power Brands 5.7 Exports - FMCG 158 178 12.8 - Non-FMCG 376 328 (12.8) Others 98 132 35.0 Disposals 25
Slide 13: Sales Growth - FH'01
Sales Growth - FH’01 Rs. Crores FH’00 FH’01 Grth % Total 5494 5574 1.5 HPC 3052 3283 7.5 Foods 1265 1158 (8.5) Power Brands 4.8 Exports - FMCG 212 *368 73.3 - Non-FMCG 715 573 (19.8) Others 156 192 23.0 Disposals 94 * includes LIEL transfer Rs. 97 crores
Slide 14: HLL Results - FH 2001 Highlights (1)
HLL Results - FH 2001 Highlights … (1) • Margin improves by 1 % through portfolio balancing and cost focus • Improving trend in Home and Personal Care categories market shares • Prices maintained
Slide 15: HLL Results - FH 2001 Highlights (2)
HLL Results - FH 2001 Highlights … (2) • Three pronged strategy for profitable growth – Focus on 30 power brands in FMCG; early results encouraging – Foods profitability improving – Good progress in securing the future of non-FMCG businesses Progress in all areas
Slide 16: Dividend Recommendation
Dividend Recommendation
Slide 17: Dividend Recommendation
Dividend Recommendation Rs.per equity share of Re 1 2000 2001 Interim 1.50 2.50 Final 2.00 Total 3.50 Dividend includes distribution out of exceptional profits from Quest and AFS businesses disposed
Slide 18: Dividend Payout
Dividend Payout Rs.Crores FH 2000 FH 2001 Growth % Dividend 330.1 550.2 66.7 Tax on Dividend 72.6 56.1 (22.7) TOTAL 402.7 606.3 50.6 PAY OUT (%) 73.3 75.0 (incl. tax on dividend)
Slide 19: Key Indicators
Key Indicators Rs FH 2000 FH 2001 Growth % Earnings per share 2.50 3.66 46.7 Interim dividend per 1.50 2.50 66.7 share
Slide 20: Results Analysis
Results Analysis
Slide 21: Net Profit
Net Profit Rs. Crores FH2000 FH2001 Growth % PBT 731 855 17.0 Tax 182 191 5.4 Eff. tax rate 24.8 22.4 PAT 549 664 20.8 Exceptional Item 0 142 Net Profit 549 806 46.7
Slide 22: Impact Of Business Transfers
Impact Of Business Transfers • In • Out – Lakme lever – Quest – LIEL – Animal Feeds Sales growth : 2.2% instead of 1.8 % in JQ’01 1.2% instead of 1.5 % in FH’01 PAT growth : 21.5 % instead of 21% in JQ’01 19.2% instead of 21% in FH’01
Slide 23: Cash Flow - FH 2001
Cash Flow - FH 2001 Rs. Crores Cash Generated from : Business Operations 771.2 Disposal of business 177.6 Working Capital reduction 23.7 Treasury Income 101.3 Total 1073.8 Cash Deployed : Capital Expenditure 163.9 Dividend Payment 440.1 Surplus invested 469.8 Total 1073.8
Slide 24: Performance Review JQ/FH 2001
Performance Review JQ/ FH 2001
Slide 25: HPC Business
HPC Business
Slide 26: Slide 26
Slide 27: HPC Market Shares
HPC Market Shares % Dec. 2000 May 2001 Toilet Soaps 59.2 59.9 Detergents 41.5 41.7 (Pwdrs & Bars) Toothpaste 35.4 36.0 Dish Wash 62.9 62.2 Shampoo 65.9 65.0 Skin 56.0 54.1 ( excl. Talc) Note: ORG Urban + Rural - Value shares
Slide 28: HPC Category Wise Sales Growth
HPC Category Wise Sales Growth % MQ JQ FH 2001 2001 2001 Personal Wash (6.4) (2.8) (4.4) Fabric Wash 6.6 3.9 5.2 Household care 18.2 12.4 15.3 Skin 10.7 34.1 22.1 Shampoo (0.6) 15.4 7.5 Oral (7.8) 0.6 (3.7)
Slide 29: HPC Focussing on Power Brands
HPC Focussing on Power Brands Growth Overall Power Brands % % Group Sales JQ 01 5.3 9.0 FH01 3.8 7.0 A & P Support JQ 01 24.8 43.3 FH 01 19.6 32.6
Slide 30: HPC Soaps & Detergents
HPC SOAPS & DETERGENTS • Fabric Wash Sales growth 5.2% ; share gain in Detergent Bars • Personal wash sales decline in a depressed market ; declining share trend reversed • Dishwash bar Wheel Jugmug launched in record time • FAL soap launched, LUX relaunched ; Variants added to Breeze ( 2 in 1, Sand
Slide 31: HPC Personal Products
HPC PERSONAL PRODUCTS • Skin Care leads the growth , +22% • FAL sales driven by improved consumer value offering in sachet pack • Ponds talcum relaunched with addition of ‘Light N Fresh’ variant • Oral care decline arrested in the second quarter ; Pepsodent relaunched • Shampoo growth 15.0% in JQ’01
Slide 32: Foods Business
Foods Business
Slide 33: Slide 33
Slide 34: Foods Market Shares
FOODS Market Shares - Foods % Dec 2000 May 2001 Packet tea 36.4 35.8 Coffee 38.2 44.9 Culinary Products - Jams * 76.5 75.1 - Ketchups * 41.1 41.3 Branded Atta * 20.4 18.7 Branded Salt 15.3 15.6 Note: ORG Urban + Rural - Value shares *Urban
Slide 35: Improving Foods Profitability
FOODS Improving Foods Profitability • Overall Foods Gross margins up 500 basis points • Beverages Gross margins up 750 basis points • Other Foods Gross margins up 350 basis points
Slide 36: Foods Category Wise Sales Growth
FOODS Category Wise Sales Growth % MQ JQ FH 2001 2001 2001 Tea (13.9) (15.3) (14.5) Coffee 9.5 10.8 10.1 Oils and Fats 18.5 13.7 16.1 Culinary (12.3) (2.4) (7.1) Branded Staples (13.5) (12.6) (13.0) Ice cream (0.7) (6.4) (3.9)
Slide 37: Foods Focussing on Power Brands
FOODS Focussing on Power Brands Growth Overall % Power Brands % Group Sales JQ 01 (7.3) (3.3) FH01 (3.3) (0.9) A & P Support JQ 01 19.7 30.1 FH 01 8.9 14.0
Slide 38: Foods: Beverages
FOODS BEVERAGES • Focus on profitability ; Gross margins up by 750 basis points • Tea market remains bearish ; sales down by 15% due to continuing impact of portfolio restructuring & sharp decline in market. • Substantial volume growth in coffee ; sales up by 10% despite a sharp fall in commodity pr
Slide 39: Foods
FOODS FOODS • Measures to improve profitability in place ; Gross margins up 350 basis points • Overall sales growth 2.1% in FH ’01. Oils and Fats sales up by 16% despite lower prices • An integrated Foods Field Distribution System set up to harness synergy benefits of IBL merger.
Slide 40: Foods: Ice Creams
FOODS ICE CREAMS • Measures to improve profitability under execution • Ice cream sales impacted by early monsoon arrival particularly in North India • Retail market share improved in Delhi and Mumbai in JQ’01.
Slide 41: Foods: Modern Foods
FOODS MODERN FOODS • Sales up 58 % in FH ’01 • Bread - 78 % • SNF - 35 % • Business restructuring critical for viability ; VRS offered to employees of closed units • Significant synergy potential in supply chain
Slide 42: Foods: Best Foods
FOODS BEST FOODS • Merger of International Best Foods Ltd. approved by shareholders wef 01/07/2001. Pending court approval. • Sales of Knorr up 76 % in FH ’01 • Restructuring of field and offices sharply reduces fixed costs. Cash breakeven in Q2 ’01
Slide 43: Other Businesses
Other Businesses
Slide 44: Others: FMCG Exports
OTHERS FMCG EXPORTS • Exports of HPC categories up 58% in FH’ 01 • Tea exports up 7.3% despite a significant drop in commodity prices and downturn in Russian business
Slide 45: Others: Non FMCG Exports
OTHERS NON FMCG EXPORTS • Traded marine exports scaled down in view of poor viability • Proposal to transfer Leather and Mushroom businesses to subsidiary approved by shareholders
Slide 46: Others: Chemicals & Agri
OTHERS CHEMICALS & AGRI • JV with ICI group for Quest division of Flavours and Fragrances • Agri seeds sales grow 39%.
Slide 47: Others: New Ventures
OTHERS NEW VENTURES • Test marketing in confectionery started in Tamil Nadu , initial response encouraging • Project Sangam experiment in e-tailing launched near Mumbai • Accelerated progress in B2B connectivity initiatives • Several other Project Millennium initiatives in evaluation phase
Slide 48: New Channel Initiatives
New Channel Initiatives • Increased focus on : • Wholesale • Rural • Modern trade ; key retail accounts • Out-of-home opportunities in foods • New channels - direct marketing, beauty services and laundry services
Slide 49: In Summary
In Summary % Growth JQ 2001 FH 2001 Sales - Reported 1.8 1.5 - FMCG 3.2 2.8 - Power Brands 5.7 4.8 PAT 20.9 21.0 EPS 62.7 46.7 Interim Dividend (including distribution out of exceptional items) Rs.2.50 per share
Slide 50: Thank You
THANK YOU