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Earnings Call Transcript Submission
• Date of Submission: July 29, 2024 • Company: Hindustan Unilever Limited • Quarter Ending: June 30, 2024 • Regulatory Compliance: Submitted to BSE and NSE in accordance with SEBI regulations • Availability: Transcript available on the company's website • Signatory: Dev Bajpai, Executive Director, Legal & Corporate Affairs, and Company Secretary
Hindustan Unilever Limited Earnings Call Summary (Q1 FY 2024)
Overview • Earnings call held on April 24, 2024, for the quarter ending March 31, 2024. • Key participants: CEO Rohit Jawa, CFO Ritesh Tiwari, VP of Finance A. Ravishankar. • Transcript submitted to BSE and NSE, available on the company website. • Communication signed by Dev Bajpai, Executive Director, Legal & Corporate Affairs.
Financial Performance • Sales Growth: 3% underlying sales growth; 2% volume growth. • Net Profit: Exceeded 10,000 crores. • Market Share: Slight dip due to competition, but retained gains from previous years. • EBITDA Margins: Strong at 23.4%, improved to 23.8% for the financial year.
Strategic Focus • Brand Superiority: 19 brands generating over INR 1,000 crores each, accounting for 80% of turnover. • Product Initiatives: Enhanced product superiority through the "6Ps" framework. • Market Investment: 75% of incremental media spending directed towards market-making and premiumization.
Beauty Segment Transformation • Focus on e-commerce and modern trade to meet changing consumer needs. • Expansion of e-B2B app, Shikhar, with 1.3 million stores onboarded. • Increased on-shelf availability in modern trade and online platforms.
Digital Transformation and Sustainability • Commitment to climate, nature, plastics, and livelihoods. • Enhanced organizational structure for digital and sustainability leadership.
Segment Performance • Home Care: 1% growth with mid-single-digit volume growth. • Beauty and Personal Care: 2% decline in underlying sales; 10% drop in Personal Care. • Foods and Refreshment: Mid-single-digit growth driven by pricing.
Future Outlook • Anticipation of gradual improvement in FMCG demand. • Low single-digit price growth expected in the near term. • Commitment to investing in brand capabilities while maintaining EBITDA margins.
Q&A Highlights • Dishwash Liquids: Account for 25% of sales; HUL maintains leadership in the liquids category. • Rural Consumer Spending: Challenges acknowledged, but optimism for recovery with improved monsoon conditions. • Functional Nutrition: High growth potential in underpenetrated markets, particularly in South and East India. • Market Share and Attrition: Improving attrition levels; maintaining volume market share gains since 2021.
Promotional Activities • Investment of $40-50 million in promotional efforts, focusing on market penetration. • Premium segment in Beauty and Wellbeing growing robustly; mass segment facing challenges.
Ice Cream Business Strategy • Plans to separate the ice cream business by 2025, focusing on execution during peak season.
Hindustan Unilever Limited Earnings Call Summary (Q4 2023)
Submission and Overview • Date of Submission: January 25, 2024 • Earnings Call Date: January 19, 2024 • Key Executives: CEO Rohit Jawa, CFO Ritesh Tiwari • Structure: 25-minute presentation followed by a one-hour Q&A • Transcript Availability: Accessible on the company's website
Operating Environment • Challenges: Uneven monsoon affecting agricultural yields and rural incomes • Market Trends: Stable FMCG demand; urban growth outpacing rural growth • Volume Growth: 2% underlying volume growth reported
Financial Performance • Sales Growth: Underlying sales growth flat due to negative price growth • Segment Performance: • Home Care and Beauty & Personal Care recovering • Foods & Refreshment segment saw a decline • Profitability: • EBITDA margin improved slightly • Net profit grew by 1%
Strategic Initiatives • Organizational Changes: Creation of two independent business units in Beauty & Personal Care • Sustainability Commitment: Focus on ESG achievements and community initiatives like ‘Prabhat’ • Premiumization Strategy: Growth in premium products outpacing mass portfolio
Market Dynamics • Competitive Landscape: Resurgence of small and regional players affecting market share • Pricing Strategy: Price cuts in commodity-linked categories led to negative price growth • Segment Margins: Healthy margins across segments (Home Care: 18%, BPC: 26%, F&R: 19%)
Future Outlook • Market Recovery: Cautiously optimistic about recovery influenced by government spending and rural income growth • Innovation Focus: Emphasis on new product launches and premium offerings • Leadership Transition: Announcement of changes in the Investor Relations team
Q&A Highlights • Rural Demand: Premiumization is growing in rural areas despite overall slowdown • Volume Performance: Seasonal factors affecting winter care portfolio; strong growth in hair care • Local Competition: Price corrections and strategic adjustments anticipated to stabilize the detergent market • Marketing Strategy: Balanced use of ATL and BTL strategies to drive growth
Key Concerns Addressed • Distribution Margin Structure: Importance of distributor relationships and investments • Horlicks Performance: Dairy inflation impacting growth, but optimism for recovery • EBITDA Margin: Current margins healthy; focus on innovation and market development
Conclusion • Growth Potential: Long-term growth potential in Health Food Drinks category • Market Share Strategy: Focus on maintaining and improving market share through product superiority and innovation • Rural Market Resilience: Confidence in recovery despite inflation and unemployment challenges
Hindustan Unilever Limited Earnings Call Summary (Q3 2023)
Submission Details • Date of submission: October 26, 2023 • Earnings call date: October 19, 2023 • Key executives: CEO Rohit Jawa, CFO Ritesh Tiwari • Transcript available on the company's website • Signed by: Dev Bajpai, Executive Director, Legal & Corporate Affairs
Company Performance Highlights • 90th Anniversary: Rohit Jawa celebrated HUL's resilience and commitment. • Financial Metrics: • Record quarterly turnover: Over Rs. 15,000 crores • Underlying sales growth: 4% • EBITDA margin improvement: 24.6% • Market Trends: • Stable demand trends with high single-digit market volume growth • Subdued rural demand but recovery noted with 8% volume growth
Strategic Focus Areas • Sustainability: Aiming for net-zero emissions by 2030; partnerships for low-carbon products. • Digitalization: Enhancing e-commerce for small retailers. • Community Empowerment: Shakti program for women entrepreneurs. • Future Growth Strategies: • Focus on core brands and new product categories • Resetting cost structure for reinvestment in growth • Emphasis on digital strategies and innovation
Financial Performance Insights • EBITDA Margin: Increased from 15% to 23% • Net Profit Growth: 10% CAGR over the last decade • Segment Performance: • Beauty and Personal Care (BPC): Leading growth • Home Care: Grew by 3% • Foods and Refreshment (F&R): Challenges in coffee and health food drinks
Market Challenges and Opportunities • Consumer Trends: Shift towards lower-priced products due to inflation. • Tea Market Dynamics: Increased competition from small players; shift to lower-priced loose tea. • Advertising and Promotions: Increased A&P expenditure from 7.2% to 11.4% year-over-year to maintain market share.
Outlook and Future Considerations • Volume Recovery: Cautious optimism due to moderating inflation and festive season. • Challenges: Uneven monsoons and rising global commodity prices. • Long-term Potential: Focus on addressing nutritional gaps and growth in premium segments.
Q&A Session Highlights • Sustainability of Growth: Confidence in Skin Care and Color Cosmetics despite rural demand challenges. • Advertising Strategy: Focus on maintaining a strong market presence through strategic A&P investments. • Competitive Pricing: Emphasis on maintaining a competitive price-value equation without aggressive price cuts.
Conclusion • HUL remains focused on disciplined growth strategies while navigating current market challenges, with a strong emphasis on sustainability, digitalization, and community empowerment.
Hindustan Unilever Limited Earnings Call Summary (Q2 2023)
Company Overview • Date of Call: July 26, 2023 • Key Executives: CEO Rohit Jawa, CFO Ritesh Tiwari, Group Finance Controller A. Ravishankar • Context: Discussion of performance in a challenging operating environment
Market Performance • Volume Growth: • Mid-single-digit growth in urban areas • Positive recovery in rural markets after previous declines • Total volume growth slightly negative on a two-year CAGR basis • Inflation Impact: • Year-on-year inflation moderating, but high inflation persists in certain commodities, especially in Foods & Refreshment (F&R)
Financial Highlights • Sales and Profit: • 7% increase in underlying sales • 3% rise in underlying volume growth • EBITDA margin improved to 23.6% • Profit after tax before exceptional items rose by 9% • Segment Performance: • Home Care: 10% growth • Beauty & Personal Care (BPC): 4% growth • Foods & Refreshment: 5% growth
Strategic Initiatives • Sustainability: • Establishment of sanitation centers in Mumbai • Partnerships to support minority-owned businesses • Innovation: • New product launches across various categories
Challenges and Outlook • Operating Environment: • Volatile due to erratic weather patterns and high inflation • Anticipated flattening of price growth with increasing competitive intensity • Future Growth: • Focus on maintaining volume growth and delivering value to consumers • Optimism about long-term growth prospects despite current challenges
Segment-Specific Insights • Beauty and Personal Care: • Focus on A&P investments to recover margins • Strong performance in Skin Care and Color Cosmetics • Oral Care: • Close-up brand growth attributed to effective consumer activations
Consumer Behavior and Market Dynamics • Inflation Effects: • 22% price increase over two years leading to 5% volume growth • Discretionary categories more affected; focus on kitchen essentials • Market Development: • Emphasis on premiumization and addressing underserved areas
Cost Management • Expense Management: • Year-on-year increase in other expenses due to one-off items and royalty costs • Frugal approach to cost management while investing in capabilities
Conclusion • Management Confidence: • Executives express optimism about leveraging strengths for future growth • Anticipation of volume recovery in rural markets despite potential weather-related risks