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Hindustan Unilever (HLL.BO; Rs312.55; 2L)
Takeaways from Mumbai - Hindustan Unilever presented at the Citi India Investor
Conference in Mumbai. Below are the key takeaways.
FY12 revenue outlook will be driven by price hikes – This is reminiscent of
FY09, and in contrast to the revenue growth over the past two years, which was
driven by volumes. Mgmt noted that price hikes will fully reflect in 1QFY12. Cost
inflation continues to be intense, and HUVR has hiked prices in key categories to
offset cost pressures that stem from higher packaging costs and palm oil prices.
Competition continues to be intense – Consequently, A&P should remain
elevated. Mgmt didn't guide to a specific A&P / net sales ratio, but did indicate that
spends will be a function of a) HUVR's innovation and product launches, and, b)
ensure HUVR remains competitive from a share of voice / share-of-market
perspective.
An interesting perspective on modern trade (MT) - Modern trade accounts for
~10% of the retail landscape, and is forecast to increase to 18% in the next five
years. At present, MT is ~30% of retail in major cities. Mgmt noted that profitability in
MT is similar to general trade. Higher receivables are offset by higher inventory
turns.
Rural distribution - Mgmt noted that rural India accounts for around 40-45% of the
FMCG industry, and is a similar proportion of HUVR revenues. HUVR's thrust in
rural India has increased - it has tripled its direct reach in rural India.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Hindustan Unilever (HLL.BO; Rs312.55; 2L)
Takeaways from Mumbai - Hindustan Unilever presented at the Citi India Investor
Conference in Mumbai. Below are the key takeaways.
FY12 revenue outlook will be driven by price hikes – This is reminiscent of
FY09, and in contrast to the revenue growth over the past two years, which was
driven by volumes. Mgmt noted that price hikes will fully reflect in 1QFY12. Cost
inflation continues to be intense, and HUVR has hiked prices in key categories to
offset cost pressures that stem from higher packaging costs and palm oil prices.
Competition continues to be intense – Consequently, A&P should remain
elevated. Mgmt didn't guide to a specific A&P / net sales ratio, but did indicate that
spends will be a function of a) HUVR's innovation and product launches, and, b)
ensure HUVR remains competitive from a share of voice / share-of-market
perspective.
An interesting perspective on modern trade (MT) - Modern trade accounts for
~10% of the retail landscape, and is forecast to increase to 18% in the next five
years. At present, MT is ~30% of retail in major cities. Mgmt noted that profitability in
MT is similar to general trade. Higher receivables are offset by higher inventory
turns.
Rural distribution - Mgmt noted that rural India accounts for around 40-45% of the
FMCG industry, and is a similar proportion of HUVR revenues. HUVR's thrust in
rural India has increased - it has tripled its direct reach in rural India.
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