Hindustan Lever Limited Economy

Transcription

1 Hindustan Lever Limited February

2 the company 2

3 H i n d u s t a n L e v e r...leadin consumer products company Financials - Turnover Net Profit EPS (Re 1) Rs110 bln Rs16 bln Rs7.46 Market Capitalisation Rs475 bln (Jan 2002) 3

4 our corporate purpose Our purpose is to meet the everyday needs of people everywhere to anticipate the aspirations of our customers and consumers and to respond creatively and competitively with branded products and services which raises the quality of life 4

5 Ice Cream 1% Foods 7% Exports 16% Chemicals/ Others 6% business profile Soaps & Dets 37% Beveraes 13% Personal Prod 20% Net Turnover Rs110 bln 5

6 the indian consumer 6

7 the emerin face of india Population (millions) 846 1,012 1,087 Population < 25 years of ae Urbanisation (%) Literacy Level (%) Half the population is below 25 years ae......a youn country with opportunity 7

8 chanin consumer Youn ae profile 35% population below 14 years Media reach (urban 80%, rural 40%) rowin rapidly Literacy levels at 65%; female literacy risin More money; new mindset 8

9 chanin income distribution Sement Income Class (PPP$) Household mln Current 2005 Destitute 0 3, Aspirants 3,000 6, Climbers 6,500 10, Consumin Class 10,000 13, Rich 13, Absolute number of destitute/aspirants projected to be constant till 2005 Households above $10,000 projected to double from 16 mln to 31 mln

10 rowin opportunity Per capita consumption India Brazil USA Personal Wash (k) Fabric Wash (k) Toothpaste (ml) Shampoo (ml) ,018 Scope for increasin consumption 10

11 rowin opportunity Per capita consumption India Pak USA Edible Fats (k) Ice Cream (lt) Tea (k) (UK) Scope for increasin consumption 11

12 the competition 12

13 active, polarised competition Stron local competitors with lare scale, low cost structures Most major multinationals present P&G, Colate, L'Oreal, Nestle Market responsive to innovation, and demandin of value 13

14 Market Leader Personal Wash 60% Fabric Wash 42% Household Care 62% Skin Care 53% Hair Care 63% Talcum Powders 65% Branded Tea 35% Ice Creams 25% Jams & Squashes 78% R&G Coffee 56% Branded Staples 15% Branded Salt 18% Cookin Fats & Oils 29% market Stron Number 2 position Oral 36% Hair Oils 14% Instant Coffee 36% Ketchup 39% 14

15 the economy 15

16 indian economy...snapshot GDP 2000 : USD 450 bln; USD 1890 bln in PPP terms 5th in world rowth 6% p.a. Risin share of services sector (47%) Exports contribution still low at 10% software exports still buoyant (+25% p.a.) Areate fiscal deficit over 10% of GDP Infrastructure constraints; power, telecom, roads Inflation maintained at sinle diit Intellectual capital to leverae knowlede industries 16

17 economics...implications As economy opens, key input prices lobally determined Lowerin of tariff barriers - new challene of low cost imports Critical mass of hih income consumers - market for hiher end products service an opportunity area Rural markets: revival followin improved production Lare income disparities, price sementation important 17 Growin reional economic differences and localised competition: appropriate business strateies

18 economic slowdown GDP rowth decelerates to 4% continuin Fiscal deficit continues to be under pressure; however, inflation continues to slide Rupee depreciated by 2.7% in SH 01; FY 01: 3.3% Overall markets remain depressed in ; demand declines in several FMCG cateories Economic outlook for 2002 evolvin with ood monsoon, aricultural production expected to row softer prices could offset part of the recovery rowth also dependent on proress in infrastructural investment 18

19 market rowth Growth % 2000 Toilet soaps 6.1 (9.6) Deterents cake/bars 2.5 (6.0) Washin powder Toothpaste Shampoo Skin cream Tea 0.3 (6.5) FMCG 6.6 (1.9) Key cateories have declined; intense competition for share of wallet 19 Source: ORG Value

20 strateic objectives & thrusts 20

21 stratey recap proress aainst stratey on course Growth throuh focus on 30 power brands in FMCG Improvin Foods Profitability Securin future of the Non-FMCG businesses 21

22 power brands lead sales rowth Growth % MQ JQ SQ DQ Year Overall (FMCG) Power Brands HPC Foods 1.0 (3.3) 6.3 (3.3)

23 Growth % and outpace market rowth Market Growth in HPC HLL Group Power Brands Personal Wash (9.6) (2.9) 5.3 Fabric Wash (2.1) Dishwash Toothpaste Shampoo Skin (excl. Talc) Talcum Powder (0.6) Market rowth source: ORG Value

24 and in foods Growth % Market Growth HLL Group Power Brands Packet Tea (6.5) (11.7) (5.9) Coffee (3.3) Vanaspati (5.1) Culinary Jams (13.4) (7.0) (7.0) Ketchup (1.8) (6.0) (6.0) Atta (Branded) N.A. (15.4) (15.4) Salt 3.7 (5.1) (5.1) 24 Market rowth source: ORG Value

25 foods profit doubles Operatin profit doubles Gross marin up 500 basis points Further cost reduction planned throuh supply chain reconfiuration restructurin initiatives Potential for value added products 25

26 new homes for non-core Divestments completed AFS Quest Nickel Catalyst Adhesives Transfer of Seeds, Leather, Mushroom to subsidiaries for potential JV/divestment 26

27 rowth in new channels New consumption opportunities for Tea, Coffee, Ice Cream Out-of-Home business unit in Banalore to lead activity Dedicated resources to row institutional business in 3 reions Aressive expansion in our 100 crore Food Service business Wholesale channel opportunity 27

28 Investments in IT drive our supply costs down even further Media scale and efficiency benefits further optimised Expandin Shared Services total system cost Tiht control on overheads includin Corporate Centre costs 28

29 the new culture A pro-active, flexible, fast movin oranisation 7 smaller Cateory Business Units allows empowerment & freedom to et on with delivery Attractive reward for actual Performance throuh Variable Pay bonuses & Stock-related schemes 29

30 results 30

31 hihlihts of Power Brands row by 6.5% in the year to deliver company topline rowth of 3.5% 31

32 hihlihts of Power Brands row by 6.5% in the year to deliver company topline rowth of 3.5% Operatin marin for the year improves from 14.8% to 16.1% and Foods profit doubles 32

33 hihlihts of Power Brands row by 6.5% in the year to deliver company topline rowth of 3.5% Operatin marin for the year improves from 14.8% to 16.1% and Foods profit doubles PAT rowth 17.6% for the year 33

34 hihlihts of Power Brands row by 6.5% in the year to deliver company topline rowth of 3.5% Operatin marin for the year improves from 14.8% to 16.1% and Foods profit doubles PAT rowth 17.6% for the year Exceptional income: Rs1 bln (net) 34

35 hihlihts of Power Brands row by 6.5% in the year to deliver company topline rowth of 3.5% Operatin marin for the year improves from 14.8% to 16.1% and Foods profit doubles PAT rowth 17.6% for the year Exceptional income: Rs1 bln (net) EPS Rs7.46 per share of Re1 (+25.2%) 35

36 hihlihts of Power Brands row by 6.5% in the year to deliver company topline rowth of 3.5% Operatin marin for the year improves from 14.8% to 16.1% and Foods profit doubles PAT rowth 17.6% for the year Exceptional income: Rs1 bln (net) EPS Rs7.46 per share of Re 1 (+25.2%) Final dividend of Rs2.50 per share; total Rs5.00 per share (PY: Rs3.50 per share) 36

37 results for Rs bln FY FY 2000 Growth% Net Sales Other Income Costs 1 (94.11) (92.84) 1.4 PBT Tax (incl. Deferred Tax) (4.02) (3.55) 13.2 PAT Exceptional Items (net) 1.00 Net Profit incl restructurin cost of Rs0.48 bln (PY: Rs1.09 bln) 37

38 like-to-like comparison IN Lakme Lever Lipton Exports Bestfoods Aviance OUT Quest Animal Feeds Nickel Catalyst Adhesives % Growth Published Comparable Net Sales PAT

39 shareholder will be delihted Rs 2000 Interim Final (Proposed) Total Dividend per share of Re1 dividend includes distribution from exceptional income 39

40 a stron balance sheet Rs bln Dec Dec 2000 Share Capital Reserves Loan Funds Total Fixed Assets Investments & Deposits Other Current Assets (net) (7.64) (7.46) Deferred Tax 2.46 Total

41 and hih profitability continues Rs bln FY FY 2000 Growth% Net Sales Operatin Profit Operatin Marin % Return on Net Worth % ROCE %

42 42 Company exceptional items Rs bln Profit on disposal of Quest & AFS business 1.42 Profit on disposal of Nickel Catalyst/ Adhesive Businesses One time reduction in tax liability arisin from amalamation of IBL Less Provision for estimated costs for discontinuance of thermometer operations Provision for fixed asset write-off and estimated related costs: Ice Cream (0.11) (0.43) Provision for fixed asset write-off: Culinary (0.19) Additional liability for retirement benefits arisin from fall in interest rates (0.63) (1.36) Deferred tax credit 0.48 (0.88) Exceptional Items (net) 1.00

43 cash flow Rs bln Business Operations Disposal of business 1.12 Treasury Income 2.60 Cash Generated Capital Expenditure 2.89 Workin Capital Increase 0.18 Dividend Payment 9.90 Profit/Div Tax Payment 5.47 Surplus invested 3.61 Cash Deployed

44 business performance 44

45 soaps and deterents 45

46 rowth rate improves in SH Growth % FH SH FY Personal Wash (4.8) (1.4) (2.9) Fabric Wash Household Care Cateory Sales Growth Market Share % Dec 2000 Jun Dec Toilet Soaps Deterents (Powder + Bar) Dishwash ORG value share (urban+rural) 46

47 Group sales up 3% mass market brands lead rowth in soaps and deterents Fabric Wash sales up 7%; share ain in deterent bars; Wheel relaunched; ains market leadership Surf franchise relaunched Personal wash sales down 3%, althouh market share up Lifebuoy decline arrested; Active variant launched Fair & Lovely launched Lux franchise relaunched and expanded Mass market portfolio (Breeze +57% and Wheel +15%) crosses Rs10 bln mark; stratey to contain low price competition workin 47

48 personal products 48

49 record rowth in all cateories Growth % FH SH FY Oral Care (3.7) Hair Care Skin (excl. Talc) Talcum Powder Cateory Sales Growth Market Share % Dec 2000 Jun Dec Toothpaste Shampoo Skin (excl. Talc) Talcum Powder ORG value share (urban+rural) 49

50 power brands lead rowth Group sales up 14% Skin care cateory leads rowth (+21%) Fair & Lovely franchise expanded; reisters stron rowth Shampoo continues healthy rowth trend (+16%); Clinic, Sunsilk and Lux reister double diit rowth Toothpaste sales back on rowth track (+6%); SH rowth 20% Pepsodent relaunched; rows 13% (24% in SH) Close-Up rows 5% (26% in SH) 50

51 beveraes 51

52 portfolio rationalisation impacts tea sales; stron rowth in coffee Growth % FH SH FY Packet Tea (14.5) (8.6) (11.7) Coffee tea market remain bearish Cateory Sales Growth Market Share % Dec 2000 Jun Dec Packet Tea Coffee ORG value share (urban+rural) 52

53 step chane in beveraes profitability Focus on profitability; Gross marin up 850 basis points Taj rows in the face of all round downtradin Bru rows 20% in a market which declined by 3% 53

54 foods 54

55 foods sales rowth led by modern and dalda Growth % FH SH FY Culinary (7.1) 1.5 (3.3) Oils & Fats Modern Branded Staples (13.0) (10.3) (11.6) Group sales up 14% Cateory Sales Growth Marins up 100 basis points 55

56 continuin thrust on innovation Dalda Activ Ready to eat Chapati Knorr Flavoured Spreads 56

57 ice cream business to be repositioned Group sales down 4%; losses continue Focus stratey for business turnaround comprehensive plan to cover: distribution width product portfolio rationalisation supply chain and sourcin arranements fixed cost base bein sinificantly reduced 57

58 other business 58

59 HPC products lead export thrust Continued thrust on exports opportunities in core cateories; manufactured exports up 11% HPC exports up 36% Tea exports volumes up but value down 2% due to decline in commodity prices Marine (+57%) and Leather (+43%) exports record stron rowth; Thermometer operations closed Traded exports sinificantly rationalised due to unviability Golden Superstar Tradin House status conferred 59

60 confectionery venture takes off Max rane of confectionery test market successful National roll out started in DQ No1 position in the sement within 6 months in Tamil Nadu 60

61 61 Company major initiatives in manufacturin and IT Fast track implementation of Manufacturin Stratey 7 Units commissioned with an investment of Rs1.62 bln in record time partially makes up for loss of tax holiday which ends in sites set up earlier Enhanced connectivity in HPC Supply Chain RS Net covers 600 stockists accountin for 40% sales; 80% coverae by Jun 02 Feel the Pulse initiative launched 10,000 retailers, 4,000 consumers and 800 supplier contacts by Company manaers across all functions 3 factories receive TPM Excellence Award from JIPM, Japan

62 Growth % FY Sales Company FMCG Power Brands in summary PAT 17.6 EPS

63 trends 63

64 Rs bln CAGR 8.8% net sales

65 Rs bln net profits CAGR 30.8% after exceptional items

66 net marins %Sales after exceptional items

67 returns ROCE & RONW Percentae ROCE RONW RONW based on PAT (bei)

68 Rupees per Share CAGR 27.6% earnin trends

69 Rupees per Share CAGR 31% dividend trends

70 thank you February