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Hindustan Unilever LimitedJQ 2016 Results Presentation, 18th July 20161
Safe Harbor StatementThis 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 orvariations of these expressions or negatives of these terms indicating future performance or results, financial or otherwise, which are forwardlooking statements. These forward looking statements are based on certain expectations, assumptions, anticipated developments and other factorswhich are not limited to, risk and uncertainties regarding fluctuations in earnings, market growth, intense competition and the pricing environment inthe market, consumption level, ability to maintain and manage key customer relationship and supply chain sources and those factors which mayaffect our ability to implement business strategies successfully, namely changes in regulatory environments, political instability, change ininternational oil prices and input costs and new or changed priorities of the trade. The Company, therefore, cannot guarantee that the forward lookingstatements made herein shall be realized. The Company, based on changes as stated above, may alter, amend, modify or make necessary correctivechanges in any manner to any such forward looking statement contained herein or make written or oral forward looking statements as may berequired from time to time on the basis of subsequent developments and events. The Company does not undertake any obligation to update forwardlooking 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.2
Agenda1Strategy2Business Context3Current Quarter Performance4Looking Ahead3
Clear and compelling strategyStrategic FrameworkSustainable Living PlanGoalsConsistent GrowthCompetitive GrowthProfitable GrowthResponsible Growth4
JQ 2016: Quarter Summary Challenging business environment Market growth further slows down – volume and value Higher commodity costs Competitive activity remains highMarket value growthJQ'15 MQ'16JQ'16Business tracking ahead of market with sustained margin improvement5
JQ 2016 : Profitable volume-led growth sustained Domestic Consumer growth at 4%, underlying volume growth at 4% Impact of phase out of Excise Duty benefits on topline -40 bpsOperating Profit (PBIT) at Rs. 1543 crores, up 7%; margin expands 70 bps Impact of phase out of Excise Duty benefits on PBIT -15 bps COGS lower by 100 bps; driven by lower input costs and savings programs Competitive spends maintained across segments; A&P at 11%, down 60 bps Employee costs up 70 bps, arising from provision reversal in base quarterPAT (bei) at Rs. 1128 crores up 6%; Net Profit up 10% at Rs. 1174 croresFinancial Statements reported as per IND AS6
New Reporting SegmentsNew SegmentsOld SegmentsSoaps and Detergents Fabric WashHousehold CarePersonal Wash Fabric WashHousehold CareWaterHome CarePersonal Products Oral CareSkin CareHair CareDeodorantColor Cosmetics Personal WashOral CareSkin CareHair CareDeodorantColor CosmeticsPersonal CarePackaged Foods FoodsPopular FoodsModern FoodsIce Cream & Frozen Desserts FoodsPopular FoodsBeverages TeaCoffee TeaCoffeeIce Cream & Frozen DessertsOthers WaterInfant & feminine careExports Infant & Feminine CareExportsModern FoodsFoodsRefreshmentOthers7
Broad based growth across segments in a slowing marketSegmentsSales Growth (%)Home Care7Personal Care2Refreshment5Foods4Domestic Consumer4 Home Care: Growth led by healthy volumes Personal Care: Step up in Personal Products, offset by deflation in Personal Wash Refreshment: Continued steady growth Foods: Healthy underlying growth impacted by one-offs8Sales growth Segment Turnover growth excluding Other Operational Income
Continued focus on innovations9
Impactful 360 activationFAL: Association with TV SeriesSurf Excel: Ready for LifeBru: Summer thrills with tasteAxe: Movie tie upDove: Break the rules of BeautyKnorr: World on a plate10
Home CareFabric Wash Household Care Water11
Home CareGrowth led by healthy volumes Fabric Wash: Growth driven by the premium segment Surf, our largest brand, maintains its strong growth momentum Household Care: Vim liquids continues to do well Water: Strategic interventions starting to deliver; robust devices growth12
Personal CarePersonal Wash Skin Care Hair Care Oral Care Deodorants Color Cosmetics13
Personal CareStep up in Personal Products, offset by deflation in Personal Wash Personal Wash: Lifebuoy, Pears and Dove drive volume growth Skin Care: Growth led by the premium segment BB & CC creams performing very wellHair Care: Volume led growth sustained; broad based across brands14
Personal Care .(contd.)Step up in Personal Products, offset by deflation in Personal Wash Oral Care: Subdued performance Sampling on Pepsodent core underway to drive trials on ‘best ever flavor’Colour Cosmetics: Lakme delivers strong innovation led growth onpremium make-up Deodorants: Axe does well, aerosol range relaunch in quarter15
Indulekha acquisition completed in-quarter16
RefreshmentTea Coffee Ice Cream & Frozen Desserts17
RefreshmentSteady growth Tea: Green Tea and Natural Care lead growth, driven by market development Coffee: Strong competitive position maintained in a deflationary cost environment Ice Cream & Frozen Desserts: Another quarter of robust growth18
Foods19
FoodsHealthy underlying growth driven by market development Kissan sustains strong growth on Ketchups; Jams impacted by one-off event Knorr delivers robust growth on Instant Soups and Noodles20
JQ 2016 : Results SummaryRs. CroresParticularsJQ’16JQ’15Growth %Sales7,9887,7134PBIT1,5431,4377108123Less : Finance Costs65Exceptional Items – Credit / (Charge)71101,7151,565541496PAT bei1,1281,0636Net Profit1,1741,06910Add : Other IncomePBTLess : Tax10 Exceptional item includeso One time write back of provision for pension benefits due to plan amendments of Rs. 115 Crore21
HUL Ind AS transition : Points to note1Relaxations provided by SEBI (5th July ’16) not availedSEBI Relaxation2DetailsPublished by HUL1Quarter ComparativesMandatory only forcorresponding quarter of PYAll quarters published2FY15-16 (YTD) ComparativesMandatory only in MQ’17Published3Limited Review for PYquartersMandatory from DQ’16Completed4Audit for FY 15-16 (YTD)Mandatory only in MQ’17CompletedExcise duty treatmentto change end of year JQ, SQ & DQ’16 - As per SEBI circular dated 30-Nov-2015 Excise duty will be shown net of revenue MQ’17 - As per Schedule III of Companies Act,2013 Excise duty will be grossed in revenue and shown as cost of goods sold22
HUL Ind AS transition : Key impactsJQ ’15JQ ’16IGAAPInd ASChangeInd ASNet Sales (Rs cr.)79737713-2617988PBIT margin (%)17.95%18.63% 68 bps19.31%Net Profit margin (%)13.28%13.86% 58 bps14.70%* A&P % Sales14.47%11.57%-289 bps11.01%* A&P – Advertising and Promotion23
Outlook Near term market growth likely to remain muted; concern on recent volume trends Optimistic about medium term impact of Monsoon & 7th Pay Commission payouts Higher input costs likely Continued focus on driving volume led growth with improvement in operating margin Strategy unchanged: Consistent, Competitive, Profitable, Responsible Growth24
Update 1: New Capital Investment in Assam Intend to set up a new manufacturing unit with an investment of about Rs.1000 crores Location planned near the existing factory in Doom Dooma, Upper Assam. Investment is subject to receipt of requisite approvals. New unit to be commissioned in early 2017. Reiterates HUL’s commitment to Make in India and invest for growth in Personal Care.25
Update 2: Intention to divest KCLL JV stake Intention to divest 50% shareholding in Kimberly-Clark Lever Pvt Ltd to JV partner, Kimberly-ClarkCorporation (KCC) 50:50 JV formed in 1995; Baby & Child Care and Feminine Care business in India under the brands ‘Huggies’and ‘Kotex’ Decision is in line with HUL objective to focus on core business HUL and KCC will work together to define the terms and the future operating model for the business In the interim, business operations continue as usual26
For more information & updatesVisit our websiteHUL Investor App27
Sampling on Pepsodent core underway to drive trials on ‘best ever flavor’ Colour Cosmetics: Lakme delivers strong innovation led growth on premium make-up Deo
