Godrej Consumer Products Limited · NSE:GODREJCP
Godrej Consumer Products — Investor Day (May 2023)
44 slides from Godrej Consumer Products's investor day presentation, May 11, 2023
Slide 1: Presentation of Sell Side Analyst Meet (exchange cover letter)
Godrej Consumer Products Ltd. Regd. Office: Godrej One, 4th Floor, Pirojshanagar, Eastern Express Highway, Vikhroli (E), Mumbai - 400 079, India. Tel : +91-22-2518 8010/8020/8030 Fax : +91-22-2518 8040 Website : www.godrejcp.com CIN : L24246MH2000PLC129806 May 11, 2023 BSE Limited Corporate Relation
Slide 2: Analyst Meet 2023
CONSUMER PRODUCTS ANALYST MEET 2023
Slide 3: Disclaimer
Disclaimer Some of the statements in this communication may be forward looking within the meaning of applicable laws and regulations. Actual results might differ substantially from those expressed or implied. Important developments that could affect the Company’s operations include changes in the in
Slide 4: Developing categories: GCPL's Strategy - A Progress Report
Developing categories GCPL’s Strategy - A Progress Report Sudhir Sitapati
Slide 5: Recap of FY23, Strategy for FY24, Outlook for FY24
Recap Strategy Outlook of FY23 for FY24 for FY24 4
Slide 6: The December 2021 strategy
The December 2021 strategy Double-digit volume growth Led through category development Funded by radical simplification Consumers UVG Shareholders Employees But, what does it mean in the short term? 5
Slide 7: The strategy led to a plan
The strategy led to a plan Jan’22: Our plan for FY23 Feb’22: The Ukraine crisis PFAD prices (USD/MT) 1,475 Moderate High price volume growth growth 1,000 Good GM but moderate EBITDA due to media investments Q1 FY22 Q2 FY22 Q3 FY22 Q4 FY22 Question: How do you deal with a black swan event that occurs
Slide 8: Answer: Stick to the strategy but rethink the metrics
Answer: Stick to the strategy but rethink the metrics Media spends Consolidated inventory Cash flow from operations 40% INR cr 21 days FY19 Reduction FY20 Indonesia MT channel inventory FY21 24 days FY22 Reduction FY23 ~2,150 FY22 FY23 INR 1,000 cr INR 2,000 cr Invested in category Simplified business
Slide 9: Progressively stronger performance with a very strong Q4 (1/3)
Progressively stronger performance with a very strong Q4 (1/3) India Q4 Household Insecticides In teens Household Insecticides Early double-digit +24% y-y 17% 16% 15% 56.2% 14% 13% 12% +26% y-y 26.6% India Branded Home Care Personal Care India Branded Home Care Personal Care Gross Margin EBITDA Marg
Slide 10: Progressively stronger performance with a very strong Q4 (2/3)
Progressively stronger performance with a very strong Q4 (2/3) Indonesia Q4 GAUM Q4 DOUBLE 11% 21.5% 8% sales sales growth growth DIGIT Core business EBITDA margin (constant currency) Africa FMCG (ex-Hygiene, sales growth constant currency) Improving core business Steady growth trajectory 9
Slide 11: Progressively stronger performance with a very strong Q4 (3/3)
Progressively stronger performance with a very strong Q4 (3/3) Consolidated Q4 6% 10% 17% 32% 29% UVG Sales growth Gross profit EBITDA Net profit* growth growth growth *Net profit without exceptionals and one-offs 10
Slide 12: Recap for FY23, Strategy for FY24, Outlook for FY24
Recap Strategy Outlook for FY23 for FY24 for FY24 11
Slide 13: GCPL's key markets are at the cusp of explosive HPC growth
GCPL’s key markets are at the cusp of explosive HPC growth Source: Euromonitor; Internal estimates 12
Slide 14: Our strategy responds to this big insight
Our strategy responds to this big insight OUR OUR PURPOSE Bringing the goodness of health and beauty VALUES to consumers in emerging markets Category development Funded by radical People and Planet OUR OUR in existing portfolio simplification alongside Profit VISION STRATEGY Delight 2 billion consum
Slide 15: Invest in India and simplify in International
As we enter FY24, our strategy remains unchanged Invest in India and simplify in International Category development Funded by radical People and Planet in existing portfolio simplification alongside Profit 14
Slide 16: Invest in India and simplify in International
As we enter FY24, our strategy remains unchanged Invest in India and simplify in International Category development in Funded by radical People and Planet simplification alongside Profit existing portfolio 15
Slide 17: The category development playbook
The category development playbook Driving relevance Investing in our brands SOV (India) +1,400 bps FY21 FY22 FY23 16
Slide 18: Slide 18
Slide 19: The category development playbook: create access
The category development playbook Create access Improve distribution Sample Households 0 3 mn 6 mn FMCG direct coverage in Africa FY22 FY23 FY22 FY23 FY24 1.8x x 2x x Nigeria Kenya 18
Slide 20: Slide 20
Slide 21: * SPRAYS IN A ROOM
4% ¢ he * 10 SPRAYS IN A ROOM Kill/mosquitoesiinstantlys
Slide 22: The capabilities for market development: Global categories (1/2)
The capabilities for market development: Global categories (1/2) Advertisements for Goodknight Liquid Vapouriser Communication idea: Equal parenting Fathers putting their child to sleep India Nigeria Indonesia 21
Slide 23: The capabilities for market development: Global operations (2/2)
The capabilities for market development: Global operations (2/2) ~70 USD mn 16 5 Business clusters 87 FY23 Markets larger LATAM, USA, Africa & Active markets than $1mn Middle East, India & Indonesia 2X Expand to Focus on building 120+ core portfolio business in countries 3 years Setting up Godrej In
Slide 24: We think our market development strategy is working
We think our market development strategy is working Source: NielsenIQ 23
Slide 25: Consumer Connect
Consumer Connect
Slide 26: Invest in India and simplify in International
As we enter FY24, our strategy remains unchanged Invest in India and simplify in International Funded by radical Category development People and Planet in existing portfolio simplification alongside Profit 25
Slide 27: The cost principles
The cost principles Costs consumers see Costs consumers don’t see Selling & Employee Material cost Distribution cost cost Media General & Administration cost Reduce costs that consumers don’t see 26
Slide 28: Simplification in sales and distribution in Indonesia
Simplification in sales and distribution in Indonesia A three tier distribution system moves to a two tier in 4 months 40% 30% 30% 60% of sales through 10 of sales through of sales through of sales through modern trade chains 110 distributors 60,000 outlets 140 distributors 27
Slide 29: Simplification in sales and distribution in GAUM
Simplification in sales and distribution in GAUM Partnered with a National Distributor in Nigeria Leverage Increase National outlets by Distributor’s strong reach ~2X Increase Reduce lead warehouse times by footprint ~4X Benefit from Better working National capital Distributor’s management larger pres
Slide 30: Simplification in supply chain in GAUM
Simplification in supply chain in GAUM Consolidate manufacturing in Nigeria for part of the USA business Lower net Simplify USA to a Higher USD availability manufacturing cost marketing and distribution in Nigeria = lower focused business forex expenses 29
Slide 31: Integrating technology in decision making
Integrating technology in decision making Algorithms over judgement Shared Services From To Demand forecasting Heuristics based Data analytics Finance Supply Chain Cost assumptions Current trend Future outlook Media planning Judgement based Algorithmic model Forecasting horizon Next 3 months Next 12
Slide 32: And it's working: Reduction in controllable costs
And it’s working | Reduction in controllable costs Break up of controllable cost savings Overheads Sales & Supply Distribution Chain Non-working ATL ~2200 FY23 controllable cost savings of 150 bps 31
Slide 33: Invest in India and simplify in International
As we enter FY24, our strategy remains unchanged Invest in India and simplify in International People and Planet Category development Funded by radical in existing portfolio simplification alongside Profit 32
Slide 34: Building a stronger performance culture
Building a stronger performance culture Input metrics Output metrics UVG USG EBITDA + Media EBITDA Higher Lower Higher fixed in year salience of long compensation variable pay term incentives Less working Cash from capital operations When you focus on input, output happens Aligning reward structure
Slide 35: Planet alongside profit
Planet alongside profit FY23 FY26 Emissions Emissions Reduced by 48% Net zero by 2035* from FY11 baseline *Scope 1 and 2 Renewables Renewables 32% of energy 60% of energy Plastics Plastics Plastic neutral Remain neutral 34% recyclable 80% recyclable 34
Slide 36: Recap for FY23, Strategy for FY24, Outlook for FY24
Recap Strategy Outlook for FY23 for FY24 for FY24 35
Slide 37: Double-engine of FMCG
Double-engine of FMCG Driving multi-year sustainable Volume Growth and Gross Margin Sameer Shah
Slide 38: Our macro prognosis for FY24
Our macro prognosis for FY24 Continue momentum Continue volume-led Expect minimal (FMCG in Africa, Air growth momentum price growth Fresheners and Hair Colours in India) Scale up Household Recovery in Gross margins revert Insecticides in India Indonesia to normative levels
Slide 39: Aim to deliver sustainable volume-led profitable growth
Aim to deliver sustainable volume-led profitable growth Quality of profits Gross margins High single-digit UVG* Media investments High teens EBITDA growth* Controllable cost *Organic business 38
Slide 40: Continued focus on improving cash flow from operations
Continued focus on improving cash flow from operations Optimise controllable Reduce complexity Working capital cost across value chain in operations reduction Cash flow from operations growth > EBITDA growth* *Organic business 39
Slide 41: Capital deployment plans
Capital deployment plans Net cash ( crore) 2,209 Utilised cash to Net cash repay debt Evaluate suitable options for returns to shareholders Net debt post RCCL business acquisition -2,558 Mar'20 Mar'23 May'23 Sep'23 Mar'24
Slide 42: Journey so far and looking ahead
Journey so far and looking ahead FY23* FY24* FY25* H1 H2 Weak Stable Strong High gross Pricing Healthy volumes volumes volumes margin growth volumes Low gross Recovering margins gross margins High media investments High media investments Scale benefits driving healthy EBITDA growth Low controllable
Slide 43: Q&A
Q&A
Slide 44: Thank you
Thank you www.godrejcp.com