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Introduction to Hindustan Unilever Limited August 2012
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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 expressions or variations of these expressions or negatives of these terms indicating future performance or results, financial or otherwise, which are forward looking statements. These forward looking statements are based on certain expectations, assumptions, anticipated developments and other factors which are not limited to, risk and uncertainties regarding fluctuations in earnings, market growth, intense competition and the pricing environment in the market, consumption level, ability to maintain and manage key customer relationship and supply chain sources and those factors which may affect our ability to implement business strategies successfully, namely changes in regulatory environments, political instability, change in international oil prices and input costs and new or changed priorities of the trade. The Company, therefore, cannot guarantee that the forward looking statements made herein shall be realized. The Company, based on changes as stated above, may alter, amend, modify or make necessary corrective changes in any manner to any such forward looking statement contained herein or make written or oral forward looking statements as may be required from time to time on the basis of subsequent developments and events. The Company does not undertake any obligation to update forward looking statements that may be made from time to time by or on behalf of the Company to reflect the events or circumstances after the date hereof.
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Contents
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About the Company
India FMCG Market Opportunity
Our Strategy
Financial Information, Shares & Governance
5 Contact Information
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1 About the Company
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Our Vision
We work to create a better future everyday.
We help people feel good, look good and get more out of life with brands and services that are good for them and good for others.
We will inspire people to take small everyday actions that can add up to a big
difference for the world.
We will develop new ways of doing business that will allow us to double the size of our company while reducing our environmental impact.
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HUL: India’s largest FMCG Company
More than 75 years of experience in
India Products touch the lives of 2 out of 3 Indians everyday
Direct distribution reach of > 2 Mn
stores No.1 and strong No.2 in more than
95% of the business
Get more out of life
7 brands > Rs. 1000 crs; 13 brands > Rs. 500 crs
17 out of top 100 most trusted brands in India^
^Brand Equity Survey, 2011
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Pan India footprint
Source: Statistics on India, Total Coverage : Nielsen, Census of India 2011 •HUL manufacturing locations (own and outsourced) Mn = Million
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• ~ 15,000 employees
• ~ 2,000 suppliers & associates
• ~ 70 Manufacturing locations
• 40+Depots, 2700+ Distributors
• Direct coverage 2 mn+ outlets
Population 1.2 billion 5545 Towns 2.5 million outlets
638,000 villages 5 million outlets
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Portfolio straddling the pyramid
Fabric Cleaning Skin Cleansing Hair Skincare Tooth Paste
Soaps & Detergents: 48% Personal Products: 31%
% contribution of the segment to total revenue (April - December 2011)
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Portfolio straddling the pyramid
Tea Coffee Processed Foods Ice Creams Water
Beverages: 12% Packaged Foods: 6% Others: 3%
% contribution of the segment to total revenue (April - December 2011)
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*Nielsen Equity Management Program Score
Most responsive supplier of the year
Value Award by TESCO India
6 EMVIES in 2011 6th most innovative company
globally - Forbes eQ* at 89
(world class level)
No.1 Employer by Aon Hewitt Best Employer Brand in Asia, 2011
Golden Peacock Global Award for Corporate Social Responsibility for the year 2011
Golden Peacock Environment Management Award for 2011 in the FMCG category
External Recognition
Consumers Customers
Employees Communities
No.1 Employer of choice by Nielsen Campus track
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2 India FMCG Market Opportunity
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Large consumption opportunity
CAGR of 12% in base case; 17% with high estimates
28 50
87
FY 10 E FY 15 P FY 20 P
FMCG - $ bln
Base Case High Case
62
137
Source: FMCG roadmap to 2020 – CII Report, 2010
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Head room for growth
Penetration
Data Source: Euromonitor
€ per capita consumption Consumption
7963
45
7965
48
Annual DQ Dec
Skin Care
2011 2010
All India penetration
89 7963
8875
60
Annual DQ Dec
Hair Care2011 2010
9180
63
8978
60
Annual DQ Dec
Oral Care2011 2010
Data Source: IMRB Factbook
5.93.2
0.6
5.32.7
0.6
China Indonesia India
Skin Care2011 2010
1.7 1.6
0.5
1.6 1.5
0.4
China Indonesia India
Shampoo2011 2010
2.41.2
0.3
2.41.1
0.3
China Indonesia India
Ice cream
2011 2010
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Rising incomes to favor Personal Care and Foods
0 5000 10000
LSM 1
LSM 2-4
LSM 5-7
LSM 8+
LSM 8+ (new categories)
Exp per HH / year (INR)
LSM 1 LSM 2-4 LSM 5-7 LSM 8+
Laundry, Skin Cleansing Pers Prod Foods
1x
1.7 x
3.1 x
4.9 x
7.7 x
*Source : Family Budget Survey, Consumer Panel *HUL Participating Categories; HH: Households
Demand elasticity Personal Care / Foods explosion
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HUL: Uniquely positioned to exploit the opportunity
Strong brands across benefits & price points Consumer understanding, supply chain, go-to-market
R&D, brand development, buying No.1 Employer*, diverse talent pool
*awarded by Aon Hewitt in 2011
Portfolio Capabilities
Talent Global leverage
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3 Our Strategy
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Clear and compelling strategy
Consistent Growth Competitive Growth Profitable Growth Responsible Growth
Strategic framework Sustainable Living Plan Our Goals
Virtuous circle of growth
A business model that works
Profitable Volume Growth
Innovation A&P/R&D
Cost Leverage
+ Efficiencies
Cost Savings
Focused on execution
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Market HUL Domestic consumer
Sales growth HUL EBIT
FY 2011-12: Delivered on goals
Competitive growth Ahead of market
Consistent growth Volume led
Profitable growth Margin expansion
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UVG Price USG
10 8
18
17.5%
140 bps ↑
HUL FMCG growth % FMCG growth %
Winning Principles
Our first priority is to our consumers, then customers, employees and communities. When we fulfill our responsibilities to them our shareholders will be rewarded.
Embedding consumer and customer centricity
Consumer & Customer License
Project Popeye
Mission Bushfire – Perfect stores Customer Credo
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How will we win
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Better quality products, stronger brands
Tripled blind product wins % Improved brand equity scores
X
2009
2010
2011
2X
3X
3/4th of portfolio
holding/gaining *
Measured for the top 25 brands; *Exit 2011 Vs second half 2009
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Bigger, better and faster innovations Covering 60%+ of portfolio
Lux relaunch with silk protein extract
Rin bar relaunch with superior formulation and packaging
Fair & Lovely Future Tube: Aspirational & affordable Lakme Sun expert
Pepsodent G relaunched
Dove: Nourishing Oil Care range with Vita Oils
Now more accessible with Re.1 sachet Clear Relaunched
Dove Body lotions with advanced deep care
complex
Vim relaunched with “100 Nimbuon ki Shakti”
Sunsilk Keratinology Haircare range for salon treated hair
Fair & Lovely Facewashes
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Bigger, better and faster innovations Covering 60%+ of portfolio
Kissan range expanded and relaunched Soupy Noodles
Rs.5 pack
0
Pureit Marvella RO
Cup–a–Soup instant soups
Bru Exotica Bru Lite
Taj Mahal flavoured Teabags Taj Mahal green Teabags
Brooke Bond 3 Roses relaunched
Bru Gold
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How will we win
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Lead market development: Skincare
More usage More users More benefits
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Lead market development: Hair
More usage More users More benefits
Increasing Consumption in Rural
Serums, Masks, Treatments for Salon treated hair
Driving Hair conditioners
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Stepping up front end execution
Product
Pack
Proposition
Price
Place
Promotion
Better Stores
CORE SERVICED : 2 Mn+
DISTRIBUTED: 6.5 Mn
Direct
More stores
2010 2011
Better served*
* Modern Trade on shelf availability
310 bps ↑
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How will we win
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Differentiated Supply Chain Driving benefits across value chain
Consumer perceived
quality
E2E competitive
costs
World class service
Live Superior Service. Delivery Sustainable, Profitable Growth
Flawless execution, Safety and Sustainability
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Focus on cash and savings
2008-09 2011-12
Step up in cost savings Savings as a % of Turnover
Delivering cash TWC as a % of turnover
2010-11 2011-12
Maximizing ROCE Optimizing investments
TWC: Trading working capital; includes debtors, creditors and inventory excludes cash; ROCE: Return on Capital employed
52% Productivity
Improvement Capacity increase in 2011
% Contributed by
48% New Capital Investments
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Driving Return on Marketing Investments Getting more out of advertising
Awareness
Pers
uasi
on
70%
2010 2011 2010
2011
Improvement in Ad preview scores Up by 800 bps
Production and media fees Lower by 900 bps
More ads pre-tested Up by 50%
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Driving Return on Marketing Investments Optimizing promotional spends
+
-/-
-/- + TO Growth
RO
I Pos
itive
2010 2011
2010 2011
More green activities Higher by 1100 bps
Higher ROI Up 200 bps
More activities evaluated Up by > 50%
ROI: Return on Investment
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How will we win
Winning with People: Building a talent powerhouse
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.McKinsey & Co
BCG
P&G
TAS
HUL
# 1 Dream employer across campuses*
2010 2011
100
108
High people engagement
* Survey by Nielsen Indexed Employee Engagement Scores
# 1 Best employer in India, 2011 awarded by Aon Hewitt
No.1 Employer of choice by Nielsen Campus track
Performance culture that respects our values A broad based systematic approach
Strengthening Performance culture
Aligned goals Sharper differentiation Reward linked to performance
2006-07 2011-12
Fixed Variable
Performance culture index is up by 14% in 2011
Delivery
Stan
dard
s of
Lea
ders
hip
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How will we win
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Unilever Sustainable Living Plan Three big goals
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Unilever Sustainable Living Plan India Highlights 2011
30 million people reached with Lifebuoy soap handwashing programmes in 2010-11 30 million people have gained access to safe drinking water by using Pureit in-home water purifier, since 2005 Around 60%of our major food and beverage brands – Brooke Bond, Bru, Knorr, Kissan and Kwality Wall’s – comply with the ‘Healthy Choice’ guidelines’ Reduced CO2 emissions by 14.7%, water use by 21.5% and waste by 52.8% in our factories, over 2008 baseline Improved CO2 efficiency in transportation by 17.8% 60% of tomatoes in Kissan Ketchup are sourced sustainably
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4 Financial Information, Shares & Governance
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HUL Financial Performance
Rs. Crore 2005 2006 2007 2008-09^ 2009-10 2010-11 2011-12
Net Sales 11,061 12,103 13,675 20,239 17,524 19,381 21,736
Operating Profit 1,471 1,709 1,934 2,845 2,566 2,458 3,073
Operating Profit Margin 13.3 14.1 14.1 14.1 14.6 12.7 14.1
Net Profit 1,408 1,855 1,925 2,496 2,202 2,306 2,691
Earning Per Share (Rs.) 6.4 8.41 8.73 11.46 10.10 10.58 12.46
Net Cash Flow from Operating Activities 1967 1595 1680 2029 3441 1892 2870
Operating Profit - Profit from Operations Before Other Income, Interest and Exceptional Items
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Financial year 2011-12 – Results FMCG exports demerged – reported numbers not comparable
Rs Cr
Particulars FY'10-11 FY'11-12 Growth% FY'10-11 FY'11-12 Growth%
Net Sales 19,381 21,736 12% 18,451 21,736 18%
PBITDA 2,678 3,291 23% 2,584 3,291 27%
PBIT 2,458 3,073 25% 2,382 3,073 29%
PBIT margin (%) 12.7% 14.1% 140 bps 12.9% 14.1% 120 bps
PAT bei 2,156 2,592 20% 2,096 2,592 24%
Net Profit 2,306 2,691 17% 2,246 2,691 20%
Domestic Consumer Business grows at 17.5%
EBIT margins up 140 bps
PAT (bei) up 20%
HUL (as reported) HUL (ex FMCG exports)
Performance trends – EPS and DPS
2008-09: 15 months period Calendar year 2007, includes Platinum Jubilee special dividend of Rs.3 per share
Earnings per Share (Rs.)
Dividend per Share (Rs.)
-
2.0
4.0
6.0
8.0
10.0
12.0
14.0
2006
2007
2008
-09
2009
-10
2010
-11
2011
-12
-
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
2006
2007
2008
-09
2009
-10
2010
-11
2011
-12
Stock Exchange Stock Code
Bombay Stock Exchange 500696
National Stock Exchange Hindunilvr
Listing Details
Share Listing & Ownership
FII: Foreign Institutional Investors Status as on 31st March, 2011
Shareholding pattern
Uniliver 53%
MFs 2%
DII 8%
FIIs 19%
General Public 14%
Others 4%
Corporate Governance
HUL firmly believes in maintaining high standards of Corporate Governance
To succeed, we believe, requires the highest standards of corporate behaviour towards everyone we work with, the communities we touch, and the environment on which we have an impact. This is our road to sustainable, profitable growth and creating long-term value for our shareholders, our people,
and our business partners.
The Board of Directors of the Company represents an optimum mix of professionalism, knowledge and experience. The total strength of the Board of Directors of the Company is nine Directors, comprising Non-Executive Chairman, four Executive Directors and four Non-Executive Independent Directors.
For details, refer investor center at:
http://www.hul.co.in/investorrelations/CorporateGovernance/?WT.LHNAV=Corporate_Governance
“I believe that nothing can be greater than a business, however small it may be, that is governed by conscience; and that nothing can be meaner or more petty than a business, however large,
governed without honesty and without brotherhood.” – William Hesketh Lever
Board of Directors
Management Committee
Further information & contact details
More information is available at http://www.hul.co.in/investorrelations/
The IR team can be contacted by telephone as follows: +91 22 39832211 Or by e-mail at: [email protected]
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Introduction to Hindustan Unilever Limited August 2012
