Hindustan Unilever Limited · NSE:HINDUNILVR
Hindustan Unilever — Hindustan Lever — Q1 2004 Earnings Presentation
55 slides from Hindustan Unilever's earnings presentation, Apr 29, 2004
Slide 1: Analysts & Press Meet
Analysts & Press Meet 29th April 2004 29th April, 2004
Slide 2: Strategy Chapter I, India Opportunity, Strategy Chapter II
Strategy Chapter I 2000 - 03 MQ’04 India Opportunity New Organisation Strategy Chapter II 29th April, 2004
Slide 3: MQ'04
MQ’04 29th April, 2004
Slide 4: MQ 2004 Decisive Steps
MQ 2004 Decisive Steps •Drive growth agenda •Take competitive challenges head on •Financial commitment for long term value 29th April, 2004
Slide 5: MQ 2004 Highlights
MQ 2004 Highlights • HPC - Volume growth accelerates to 7% - Pricing actions lead to 3.5% value growth - All continuing brands are Power brands • FOODS - Power brands (88% of the portfolio) grow 8% - Overall growth 1.4% • PBIT declines due to market investments & losses in Non - FMCG businesses 29th
Slide 6: MQ 2004 HPC Topline Highlights
MQ 2004 HPC Topline Highlights Growth Volume Value Personal Wash 4 4 Laundry 4 = Skin 4 4 Shampoos 4 8 Toothpaste 8 8 Colour Cosmetics 4 4 Household Care 4 4 HL Network 4 4 29th April, 2004
Slide 7: Personal Wash
Personal Wash Innovation and Activation drive growth •Value Growth 9% •All Premium brands grow •Lifebuoy continues growth momentum – Recently Re-launched 29th April, 2004
Slide 8: Laundry
Laundry Powerful Competitive Strategy •Surf/ Rin relaunched with improved quality •Price of Surf and Surf Excel reduced •Good volume growth; sales value lagging 29th April, 2004
Slide 9: Skin
Skin Sustained strong growth •Strong growth 17% •Fair & Lovely and Lakme surge ahead •Powerful Innovations in place - Fair & Lovely Oil Control - Lakme Sunexpert Range 29th April, 2004
Slide 10: Shampoos
Shampoos Proactive Growth Strategy • Slow start to the year • Deep cut Consumer Promotion on bottles • MQ volume gain does not fully reflect acceleration during the quarter • Sales value decline 11% • Innovation and pricing plans to accelerate growth 29th April, 2004
Slide 11: Toothpaste
Toothpaste Better Value •Price points and price/kg reduced from Apr’03 •Pepsodent volumes grow well •Close-up declines; Robust growth plans in place •Sales value decline 9.6% due to base effect in price 29th April, 2004
Slide 12: Colourful Cosmetics
Colourful Cosmetics Colourful performance continues • Explosive growth 36% • Backed by exciting innovations •Lakme Enrich Lipstick & Fruitshock collection •Brand building through Lakme India Fashion Week. 29th April, 2004
Slide 13: MQ 2004 Foods Topline Highlights
MQ 2004 Foods Topline Highlights Growth Volume Value Tea- Brooke Bond 4 4 Coffee 4 4 Culinary Products 4 4 Salt 4 4 Atta 8 8 Ice-cream 4 4 29th April, 2004
Slide 14: Tea
Tea Encouraging Progress • Brooke Bond growth through activation and LUPs • Lipton portfolio doubles, albeit on smaller base • Sales value flat due to decline in non-power brands 29th April, 2004
Slide 15: Coffee
Coffee Sustains Strong Growth • Strong Growth 21% • Growth led by volumes and LUPs 29th April, 2004
Slide 16: Processed Foods
Processed Foods •Culinary Products grow 6% •Salt grows by 4% •Atta declines 29th April, 2004
Slide 17: Ice-cream
Ice- cream •Sales value grows by 2% •Good volume growth led by affordable portfolio of innovations 29th April, 2004
Slide 18: Exports
Exports Specialty decline offsets FMCG growth •FMCG Exports growth only 5% due to phasing. •Specialty Exports decline 9% • Anti dumping issues in Marine 29th April, 2004
Slide 19: MQ 2004 Results Highlights
MQ 2004 Results Highlights • Operating Profits (PBIT) declines 13.7% • Strategic and competitive pricing • Trade Rebating • Brand investments in Foods and Beverages • Quality upgradation • Adverse impact ( Rs. 20 crs) across Marine, Plantations and Property. • Partly off-set by growth and margin gai
Slide 20: MQ 2004 Results Highlights
MQ 2004 Results Highlights •Higher PBT decline of 26% •Lower interest rate leading to lower financial income •Interest on bonus debentures •PAT decline (21%) lower due to tax gain Rs Crores MQ 04 MQ 03 (+/-) PBIT 359 416 -57 Financial Income (net) 41 83 -42 Int. on Bonus Debentures -30 0 -30 PBT 370
Slide 21: Strategy Chapter I 2000-03
Strategy Chapter I MQ’04 2000 - 03 29th April, 2004
Slide 22: Profitable Growth Through Focus
Strategy: Chapter 1 -2000-03 Profitable Growth Through Focus 29th April, 2004
Slide 23: Focus on FMCG
Profitable growth through focus Focus on FMCG 2000 2004 Non - FMCG 8% 24% 76% FMCG 92% •Focused Portfolio: Non FMCG down from 24% to 8% •Value delivered in divestment Rs 3.8 bln 29th April, 2004
Slide 24: Powerful Brands
Profitable growth through focus Powerful Brands 2000 2004 35 110 Brands Powerful Brands Across Categories & Income Segments 29th April, 2004
Slide 25: Stronger Brands
Profitable growth through focus Stronger Brands Ponds #3 Lux#4 Pepsodent #5 Rin # 8 Surf # 9 CloseUp #10 6 out of Top 10 trusted brands in India from HLL * Source : Brand Equity Trusted Brands Survey 29th April, 2004
Slide 26: Power Brands
Power Brands Mega Six > $ 100 Mln Brooke Bond Wheel Lux Lifebuoy Fair & Lovely Rin 29th April, 2004
Slide 27: Improving Foods Profitability
Profitable growth through Focus Improving Foods Profitability Foods Gross Margins % 1300 Bps Improvement 2000 2003 29th April, 2004
Slide 28: New Ventures Seeded
Profitable growth through Focus New Ventures Seeded Herbal Health & Beauty Max Confectionery Hindustan Lever Network Water 29th April, 2004
Slide 29: Building New Capabilities
Profitable growth through Focus Building New Capablities • Leveraging HLL scale for Modern Trade and Rural • New channels developed • Out of Home, HL Network, Shakti •Separate innovation and activation resources in marketing 29th April, 2004
Slide 30: Shareholder Reward
Profitable growth through Focus Shareholder Reward CAGR = 11% CAGR = 16% 2000 2003 DPS 2000 2003 EPS Cash return through Bonus Debenture Scheme Rs 19b 29th April, 2004
Slide 31: India Opportunity
Strategy Chapter I 2000 - 03 MQ’04 India Opportunity 29th April, 2004
Slide 32: Growth in Disposable Income
Growth in Disposable Income Per Capita Income (US$ / Annum) 1015** 1020 * 556 * India - 2003 India - 2013 China - 2003 * Source : Euromonitor ** Source : BRICs Report - Goldman Sachs 29th April, 2004
Slide 33: HLL Positioned to Capitalize on the Indian Opportunity
HLL strongly positioned to capitalize on the Indian Opportunity • Increasing aspirations of consumers to • look good • feel good • get more out of life • HLL HPC and Foods brands strongly positioned to deliver these 29th April, 2004
Slide 34: Opportunity to Grow Consumption
Opportunity to grow consumption Per Capita Consumption (US $ ) Fabric Wash Toothpastes Shampoos China 1.7 0.8 1.1 Indonesia 2.0 1.1 1.2 India 1.2 0.4 0.6 Source : Euromonitor 29th April, 2004
Slide 35: FMCG Markets: A New Equilibrium Will Prevail
FMCG Markets A new equilibrium will prevail • Recent stagnation due to discontinuities • choice explosion • interest rate reduction • Consumers will come to a new equilibrium • FMCG only 4% of household spend • Marketing will drive consumption & upgradation 29th April, 2004
Slide 36: FMCG Market Size - Opportunity
FMCG Market Size - Opportunity FMCG Market Size $Bn 27.8 * 11.6* India - 2003 India - 2013 Market will increase at 9% p.a; constant money * Source HH Panel Data ** Estimated based on China’s current per capita consumption 29th April, 2004
Slide 37: Strategy Chapter II
Strategy Chapter I 2000 - 03 MQ’04 India Opportunity Strategy Chapter II 29th April, 2004
Slide 38: Creating Shareholder Value by Delivering Consumer Value
Strategy : Chapter II Creating Shareholder Value by Delivering Consumer Value 29th April, 2004
Slide 39: Delivering Consumer Value
Shareholder Value through Consumer Value Driving the agenda Delivering Consumer Value Brand Superior Strategic Relevance Quality Pricing Ten Point Program to improve margins 29th April, 2004
Slide 40: Brand Relevance through Consumer Insights
Shareholder Value through Consumer Value Brand Relevance through Consumer Insights • Surf Excel : Quick Wash , 50% water saving • Clinic Plus Milk Proteins : “5 in 1” hair health benefits • Fair& Lovely : Change your destiny • Lifebuoy : Family safe from germs • Soupy Snax : Instant pick me up • Lip
Slide 41: Superior Quality
Shareholder Value through Consumer Value Superior Quality Over Rs 400 cr invested in • Improved performance • Superior Sensorial • Better Packaging 29th April, 2004
Slide 42: Superior Quality
Shareholder Value through Consumer Value Superior Quality 29th April, 2004
Slide 43: Strategic Pricing: Driving Affordability
Shareholder Value through Consumer Value Strategic Pricing Price Index 2002 =100 2002 MQ 04 Pepsodent 100 85 Surf Excel 100 59 Clinic Plus 100 79 Driving Affordability 29th April, 2004
Slide 44: Strategic Pricing: Increasing Accessibility
Shareholder Value through Consumer Value Strategic Pricing Increasing Accessibility with new lower price points Rs.5 Rs 25 Rs 2, Rs 4.50 Rs 4 Rs 5 Rs 5 Rs 5 Rs 10 Rs 20 Rs 40 Rs 5 Rs.1.50 Rs.1 Rs.5 Rs 5 Rs 5 Rs 0.50 29th April, 2004
Slide 45: Unblinking Response to Competition
Shareholder Value through Consumer Value Unblinking Response to Competition • Low price competition in Personal Wash • 50 ps shampoo sachets • Laundry Pricing • ??? 29th April, 2004
Slide 46: Ten Point Programme
Shareholder Value through Consumer Value Ten Point Programme • Global Buying Initiatives • Technology driven cost savings • Tax efficient sourcing operations • Leveraging scale through vendor partnership • Channel Financing 29th April, 2004
Slide 47: Ten Point Programme
Shareholder Value through Consumer Value Ten Point Programme • Large scale Logistics optimisation including Continuous Replenishment Systems • Restructuring funded by exceptional income • Improving performance of value destroyers • Structural cost savings from simplified structure • Scale savings in
Slide 48: New Organisation
Strategy Chapter I 2000 - 03 MQ’04 India Opportunity New Organisation Strategy Chapter II 29th April, 2004
Slide 49: The New HLL
Delivering the Strategy The New HLL • Focussed company • 35 powerful brands Simpler organization 29th April, 2004
Slide 50: The New HLL: Simplified Organization
The New HLL Simplified Organization Detergents Personal Products HPC HPC Exports Beverages Processed Foods Ice Creams Foods Confectioneries Beverages Exports 29th April, 2004
Slide 51: The New HLL: Management Structure
The New HLL Management Structure Business Group President (HPC Asia) and Non-Executive Chairman MS Banga Vice Chairman Director Managing Director Managing Director Finance & IT HPC Foods MK Sharma D. Sundaram Arun Adhikari S. Ravindranath 29th April, 2004
Slide 52: Simplified Organization Benefits
Simplified Organization Benefits • Better organized for growth • Empowered , simpler , quicker • Maximizing synergy benefits • Optimal resource allocation • Leaner and fitter • Better structure to benefit from Unilever • Asia HPC and Foods • Technology and Brand development 29th April, 2004
Slide 53: HLL Now Well Positioned to Deliver Exceptional Consumer Value
HLL now well positioned to deliver ”Exceptional consumer value” • Focussed and strong brands • Continuous innovation stream • Dedicated activation resources • Superior Quality & Strategic pricing • Strong cost reduction programmes • Simple organization with sharper execution capabilities 29th April,
Slide 54: Shareholder Value
Shareholder Value Exceptional Growth Outstanding Consumer Shareholder Value Value = EPS Growth 29th April, 2004
Slide 55: Thank you
Thank you 29th April, 2004