investor presentation 20 09 2018 - hul.co.in
TRANSCRIPT
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JP MORGAN 2018 INDIA INVESTOR SUMMIT | 20 SEP 2018
RE-IMAGINING HUL
Sanjiv Mehta, Chairman & Managing Director
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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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RAPID PACE OF CHANGE : LAST 5 YEARS
Market Context
2012 2013 2014 2015 2016 2017
Market Growth
2012 2013 2014 2015 2016 2017
Urban – Rural Growth
Urban Rural
Rural Growth subdued till 2017
GST: Biggest Tax
Disruptions & Climate Extremities
Growing affluence reform in India and aspirations
481Mn Foods safety
Rapid increase in 130Mn Internet and
Demonetization of mobile usage 86% currency in
Consumers & Competition
20172012 No. of Internet users In India* circulation
Increased competitive Floods and Droughts intensity
*Source : IAMAI
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PERFORMANCE IN THE LAST 6 YEARS
Net Sales
~$1.9bn added^
EBITDA
~$573 Mn added
~$37bn* added
Market Capitalization
All nos compared with FY’11-12 which is reinstated to reflect key IND AS accounting impact ^Not adjusted for GST accounting impact & hence the net sales number looks deflated * Difference in market capitalization converted to USD based on rate as of 7th Sep 2018
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A FEW EXAMPLES OF CONSISTENT HIGH PERFORMANCE
Laundry Hair Care Tea
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LAUNDRY – LAST 6 YEARS
Consistent Growth in Topline & Bottom line
Turnover
1.8 X
Profitability
3.7 X
All nos are basis internal management reporting & compared with FY’11-12
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HAIR CARE – LAST 6 YEARS
Consistent delivery on all fronts powered by strong portfolio
Turnover
1.9 X
Market Share
~700bps
All nos are basis internal management reporting & compared with FY’11-12. Market share increase is as of MAT July18
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TEA – LAST 6 YEARS
No. 1 Tea Company in India
Turnover
1.8 X
Profitability
2.0 X
All nos are basis internal management reporting & compared with FY’11-12
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BEING RECOGNISED
Best Performing # 3 Company globally Economic Times – #8 Globally and Corporate Citizen of
Unilever Business for building leaders Company of the year #1 in India the year 2014 2015 2018 20182014
‘Dream Employer’ for 9 years in a row among top Indian universities
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HUL SHARE PERFORMANCE
2011 2012 2013 2014 2015 2016 2017 2018
BSE FMCG
BSE SENSEX
HUL
Performance vs Indices
$ 12 billion 2012
$ 49 billion
Current*
4.1 X
HUL among the top 5 most valuable companies in India*
Market Capitalization
Markets rewarding our Consistent, Competitive, Profitable and Responsible Growth
USD to INR conversion rate used as of 7th Sep 2018 *Based on market capitalization as of 7th Sep 2018
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THE WORLD AROUND US IS CHANGING..
With dramatic disruptions …
A 20 word tweet can start a revolution today !
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IT’S AN AGE OF CHANGE AND DISRUPTION
There is a thrill of purpose
Changing family dynamics Millennials / Gen Z
Digital disruptions Globally connected but Uncertainties and Volatility reshaping business models there is a search for
are the new normal authenticity
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AND HENCE THERE IS A NEED FOR...
Consumer Centricity Speed & Agility Digital Connectivity Being Glocal
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FMCG CONTINUES TO BE A BIG OPPORTUNITY IN INDIA
PER CAPITA FMCG CONSUMPTION
INDIA INDONESIA CHINA PHILIPPINES
~2X INDIA ~4X INDIA ~ 5X INDIA US$ 29
To tap this big opportunity, we need more money in the hands of more people i.e. Inclusive Growth
Source: Nielsen as of MAT March’18 14
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MARKETS SHOWING EARLY SIGNS OF REVIVAL
1.3X
1X
2013 Q218
Rural Growth Indexed
Urban Growth
Rural vs Urban value growth
Currency & Crude Tailwinds
Good monsoon
Increasing MSP*
Upcoming elections
1.5X
1X
2013 Q218
Rural Growth Indexed
Urban Growth
Rural vs Urban volume growth
Rural growth on an upward trajectory; Gradual improvement in demand
* MSP : Minimum Support Price Source: Nielsen
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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INDIA IS A HETEROGENOUS COUNTRY
Varied affluence levels
Different media habits
Differential category adoption
Diverse demographics
Multiple languages 8 Major religions
LSM 7+ = 9% nationally (Range of 5-48%)
Market share in adjacent states also not the same
Mobile internet penetration: Rural- 18%*; Urban- 59%*
*A report published jointly by the Internet and Mobile Association of India (IAMAI) and KANTAR-IMRB: March’18 20
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WINNING IN MANY INDIAS (WiMI)
Madhya Pradesh, Chhattisgarh,
Rajasthan
14 Consumer Clusters
WiMI in action
Distinctive strategy at a cluster level
Empowered Cluster Heads enabling faster decision
Customized product making closest to
propositions & the point of action
media deployment for every cluster
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CCBTs: 15 MINI-BOARDS IN ACTION
Building a stronger sense of empowerment & ownership
Multi functional representations in CCBTs
Customer Marketing Development
Supply Finance
Chain
Research & Development
Responsible for delivering in-year P&L
Merger of Brand Development & Brand Building
*CCBT: Cluster Category Business Teams
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LIBERATING THE MANAGEMENT COMMITTEE TO FOCUS ON LONGER TERM GOALS
Build new business models
Greater focus on talent & capabilities
Explore Inorganic growth opportunities
Coach & Mentor CCBTs
*CCBT: Cluster Category Business Teams
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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STRENGTHENING THE CORE
Offering multiple Focus on driving Constantly Focused SKUs at value additions penetration & innovating and cluster level to Making the core across the core weighted renovating the address demands more aspirational
portfolio distribution core of all Indias
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CREATING CATEGORIES OF THE FUTURE
Opportunities to premiumize and up trade; huge headroom to grow
India Nascent Category Penetration %
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1
Penetration
Consumption
Up-Trading
Bo
dy
Wa
sh
*
Dis
hw
as
h
Liq
uid
s
So
up
s*
Ha
ir
Co
nd
itio
ne
r
Wa
shin
g
Liq
uid
s
Bo
dy
Lo
tio
n
Fa
ce W
ash
Ins
tan
t C
off
ee
Ha
nd
Wa
sh
*
Source: IMRB As of MAT June’18 (Urban + Rural) ; *Urban only 26
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MARKET DEVELOPMENT & PREMIUMIZATION
Powered by education demos and sampling
X 8X
2014 2017
Consumer contacts
Growing at ~2X HUL Average
Business Results Science of Sampling
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Pioneering Trends BB cream
Male grooming range co-created with Amazon
Building the Anti Perspirant category
BRIDGING PORTFOLIO GAPS
No 1 in Green Tea
Toilet cleaning powder made for Indian toilets
Tailormade for the Indian skin tones
Making Traditional Ingredients
Contemporary
India’s No.1 Fabric Conditioner brand
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BUILDING NATURALS
Naturals portfolio growing ~2.5X of overall HUL average
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X
5x
MQ 17 JQ 17 SQ 17 DQ 17 MQ 18 JQ 18
Turnover
BUILDING SPECIALIST BRANDS - INDULEKHA
Growth exceeding our acquisition business case
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Tap into Distribution and Unlock Portfolio Synergies
EXPANDING ICE CREAM PORTFOLIO
Acquisition
Innovations Rs. 10* Access Packs
*Equivalent to $0.14
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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BUILDING BRANDS WITH PURPOSE
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CONSISTENTLY EVOLVING BRAND COMMUNICATION
2005 2011 2013 2017
Pride Loyalty & Forgiveness Empathy and Love Learning from Failure
2008 2010 2014 20172005
A cup of motherly love
A cup with little sips of life
Health & Taste
Surf AV
Taste & Togetherness
Taste & Togetherness
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BUILDING ICONIC ENGAGEMENT PLATFORMS
Lux Golden Rose Awards
Lakmé Fashion Week
FAL Foundation Lifebuoy help a child
reach 5
Surf Excel Haar Ko Harao
Rin Career Academy Red Label Taste and
Togetherness Kissan Tiffin
Timetable
Lakmé Fashion Week AV
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BUILDING DIFFERENTIATED CONTENT
LFW* Content Social Media PR & Influencers Ecommerce Digital Video
Massive outreach with bloggers &
influencers
*LFW : Lakmé Fashion Week
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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GENERAL TRADE WILL CONTINUE TO REMAIN BIG
More throughput from more stores
All GT channels will remain relevant Driving effective coverage & assortment
Wholesale
Aids Width of distribution
Retail
Accessibility at arm’s reach of desire
EFFECTIVE COVERAGE ASSORTMENT
2015 2018 2015 2018
X X
1.7X1.8X
Shakti
Deep Rural distribution
In a country of ~600k villages & 10Mn outlets, GT even after 10 years, will remain an important channel
*Effective coverage is measured as no. of outlets with monthly average billing >INR 500 ($7.0); 2018 nos are as of July’18
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BUILDING CHANNELS OF THE FUTURE
Modern Trade ECommerce
Driving visibility across Modern Trade Exclusive male grooming range co-
created with partner
Our Growth & Profitability in ECommerce > Modern Trade > Traditional Trade
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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TECHNOLOGY AVAILABLE TODAY, OPENS UP A LOT OF OPPORTUNITIES
Internet of Things Cloud Technology Artificial intelligence
Distinctive Technology giving Competitive Advantage
Appropriate Large Part
of the Value Chain
Consumer Need/ Unmet
Problem
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OUR DATA STRATEGY
What data do we have today and
what more we need to meet
the business strategy
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WE CHOSE TO DISRUPT THAN BE DISRUPTED
Insights
Distribution Communication Consumer
Journey
R&D Manufacturing
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RE-IMAGINING HUL: OUR VISION
“Re-imagine HUL of the future by choreographing a holistic approach across the value chain to completely transform the way we do business in a connected world”
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RE-IMAGINING SUPPLY CHAIN
• Integrated e-• 1 Day Planning
Plan
Cycle (real-time)
Source
tendering
Make
• Digital Factory • New Logistic models
• Realtime Forecast • Smart Robotics • Integrated S&OP • Efficient
• Segmentation • Smart Inventory • Network redesign Fulfilment Centres modelling 2.0
Deliver
Robotization AV 45
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RE-IMAGINING MARKETING
Advanced Analytics & Decision Support System
Social Listening: Always on Conversation
Granular data analysis and tracking
Precision Marketing: Consumer Journey
Precision Targeting and Deployment
MAXIMA
Re-imagining Marketing AV 46
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RE-IMAGINING CUSTOMER DEVELOPMENT
Demand CaptureDemand Capture Demand Fulfilment Demand Generation
Providing superior customer service through vertical task specialization across the three pillars interlinked through modular IT capabilities
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Understanding
DEMAND CAPTURE
Salesman Chatbots
Enhance salesman
Advanced Analytics / AI
Driving better and All inclusive retailer productivity with chatbots sharper assortment engagement tool
User friendly Customer Algorithmic Smarter Product Know your Interface Engagement Segmentation recommendation Discovery Current QOC of Outlets
Retailer Product Answer Unlock Self-service Information Outlet Queries Potential
Learn @ Information Convenient Easy Policies your speed
Transparency Tracking behaviors
Shikhar app
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DEMAND FULFILMENT
Redistribution Stockist Demand Fulfilment
Depot Outlet
• Project Shogun: Deliver with speed to trade and ensure efficient fulfilment
• Impact App : A delivery interface to unlock benefits for retail stockist Eliminate RS
delivery cost Improved quality
of delivery Leverage technology
for automation
Project Shogun AV 49
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DEMAND GENERATION
Demand Generation
• Scaling up B2C (HumaraShop)
• Leverage technology to improve shelf presence
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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GENERATING FUEL FOR GROWTH BY CONSTANT REINVENTION
Powered by
End to end cost focus
Leveraging Technology
Investing back into virtuous cycle of growth
2014 2015 2016 2017
x
1.7x
Savings as a % of Turnover
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RE-IMAGINING HUL
Re imagining our structure
Re imagining our portfolio
Re imagining magic in marketing
Re imagining the value chain
Re imagining fuel for growth
Re imagining culture of the organisation
Re imagining our trade channels
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ENGRAINING NEW STANDARDS OF LEADERSHIP
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BRINGING AN ORGANIZATION WIDE CHANGE
Building an Owner’s mindset
Nurturing an experimentation culture
Diversity and Inclusion
ESOP
Holistic Wellbeing
Distinctive Technology giving Competitive Advantage
Appropriate Large Part
of the Value Chain
Consumer Need/ Unmet
Problem
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FOCUSSED ON WELLBEING, DIVERSITY & INCLUSION
Physical, Mental, Emotional & Purposeful Wellbeing
Leadership commitment to gender balance; Gender
neutral policies
Embracing inclusion beyond gender - hire the best PwD*
talent
Embracing inclusion and diversity in all forms
Driving cultural interventions to break
Adopting technology for unwanted stereotypes Wide ranging initiatives health improvement
*Persons with Disabilities
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WHILE WE RE-IMAGINE HUL, WHAT WE
WILL NOT CHANGE IS
OUR PURPOSE & VALUES
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LEGACY OF DOING WELL BY DOING GOOD
Founder’s Vision in the 19th century
Our Purpose today
“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
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UNILEVER SUSTAINABLE LIVING PLAN
Health & Wellbeing Sustainable Sourcing
80,000+ Shakti 100%
Water Conservation
entrepreneurs TOMATOES are network
sourced from sustainable
sources 1.7 million people
benefitted 450 billion litres >67 million people reached - of water potential Lifebuoy Handwashing created 52% TEA is Programme Over 420,000
sourced from people trained estates certified 83 billion litres of safe drinking as sustainable water provided by Pureit
200,000 women ~1.1 million people impacted
enrolled through Domex Toilet Academy
Enhancing Livelihoods
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THOUGHT LEADERSHIP ON PLASTICS
Our Commitment
• All our plastics packaging to be reusable, recyclable or compostable by 2025
• 25% of our plastic usage to come from recycled sources by 2025
• Reduce the weight of the packaging we use by one third by 2020
• Factory and packaging
wastage reduced by 54% &
33% respectively
• >1800 tons of plastic laminates collected and safely disposed
• ~23000 tons of plastic waste converted to energy
in last 12 months
Progress Way Forward
• Co-create with the Government - National Framework for Extended Producers Responsibility (EPR) for plastics
• Create a Model segregation / collection / waste movement value chain
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IN SUMMARY
The external context is fast Focussed on Leveraging Building
evolving and FMCG The new structure delivering consistent, technology to re- capabilities and in India continues to (WIMI, CCBTs) has competitive, imagine our ways re-imagining our
be an immense made HUL more profitable and of working across culture to be opportunity agile and resilient responsible growth the value chain future ready
Our purpose and values remain unchanged
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HUL IS RE-INVENTING ITSELF TO BE FUTURE READY!
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For more information & updates THANK YOU For More Information
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