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Hindustan Unilever

BSE: 500696|NSE: HINDUNILVR|ISIN: INE030A01027|SECTOR: Personal Care
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Chairman's Speech (Hindustan Unilever) Year : Mar '19

Dear Shareholders,

I am pleased to share with you an update on your Company’s performance for 2018-19; a year which has seen remarkable all-round progress. The FMCG opportunity in India continues to remain very attractive, bolstered by ongoing structural reforms such as the Goods and Services Tax. Our deep understanding of consumers, a strong portfolio of brands and distinctive capabilities across the value chain have enabled us to deliver broad-based superior performance across all our Divisions.

We continue to place purpose at the heart of our business as we believe that brands with purpose grow, companies with purpose last and people with purpose thrive. I am delighted that the year has been a testament to the fact that embedding purpose in the business, drives superior performance.

In the year under review, we crossed several milestones. We delivered over Rs. 8,500 crores of EBITDA, our EBITDA margins are at its highest ever at 22.9% and our profit crossed the Rs. 6,000 crore mark for the first time. Our Domestic Consumer business on comparable* basis, grew by 12% with 10% Underlying Volume Growth and Comparable* EBITDA margin improvement was 130 bps. Profit after tax before exceptional items, PAT (bei), grew by 18% to Rs. 6,080 crores and Net Profit at Rs. 6,036 crores was up by 15%. Our strong track record of cash generation was sustained. The Board of Directors have proposed a final dividend of Rs. 13 per share, subject to the approval of the shareholders at the Annual General Meeting. Together with the interim dividend of Rs. 9 per share, the total dividend for the financial year ending 31st March, 2019 amounts to Rs. 22 per share.

In Beauty & Personal Care, the growth was driven by focusing on strengthening core brands, accelerating premiumisation of the portfolio, entering new segments and scaling up our play in naturals. Growth in Skin Care was driven by good momentum led by Fair & Lovely and Pond’s. In Skin Cleansing, premium brands such as Dove and Pears delivered a strong performance. In Haircare, your Company saw robust growth in TRESemme, Dove and Indulekha. During the year, Dove became India’s No. 1 Haircare brand. Lakme continued its dream run, growing across the portfolio with consumer-focussed innovations.

The Home Care business continued its strong volume-driven profitable growth during the year. The Fabric Wash business delivered exceptional performance on the back of continuing premiumisation with Surf excel and Rin, whilst growing the mass segment led by Wheel. During the year, flexible packs were introduced in detergent liquids and fabric conditioners to make them more affordable for consumers and further drive consumption and penetration.

The Foods & Refreshment division delivered strong growth across categories. In Foods, we continued to grow steadily in the core portfolio of Jams and Ketchups while investing in market development to drive penetration in nascent categories. In Refreshment, we delivered strong and broad-based volume-led growth across Tea, Coffee, Ice Creams and Frozen Desserts backed by successful innovations.

During the year, we acquired Adityaa Milk to expand our ice creams business. This acquisition will also enable us to pilot low-cost business models and enhance our ice cream supply chain and ‘go to market’ capabilities. As you are aware, last year we also proposed a merger of GlaxoSmithKline Consumer Healthcare (GSK CH) business into HUL, subject to obtaining requisite approvals. This is in line with our ambition to build one of the largest Foods & Refreshment businesses in the country. GSK CH India is the market leader in the Health Food Drinks category, with iconic brands such as Horlicks and Boost. The amalgamation of the two Companies - the combined knowledge and the strong portfolio, will give us a strong competitive edge.

Our brands continued to live our purpose of making sustainable living commonplace. Brands such as Lifebuoy, Domex and Pureit with their initiatives in the areas of hygiene, sanitation and safe drinking water, have cumulatively reached over 150 million people across the country. Recognising the significant role we can play in driving behaviour change in communities, we launched the campaign, ‘Start a Little Good’. Through this initiative, we urged consumers to take small actions in the areas of water conservation, plastic waste management, and teaching good hygiene habits. Our brands such as Surf excel, Brooke Bond Red Label and Hamam continued to drive positive social change through their purpose-driven and impactful advertising.

We remain committed to Unilever Sustainable Living Plan’s (USLP) vision of reducing our environmental footprint and at the same time, creating a positive social impact. During the year, we took significant steps to further reduce waste, water consumption, energy usage and CO2 emissions in our factories and offices. We increased the renewable energy share in our manufacturing to 43%. To address the challenges of depleting water resources, Hindustan Unilever Foundation, along with its partners, has created a cumulative water conservation potential of over 700 billion litres. During the year, your Company, along with its partner, has been able to process approximately 15,000 tonnes of plastic waste and convert it into electricity. In addition to this, approximately 5,000 tonnes of post-consumer use plastic waste was collected with the help of NGOs and disposed safely.

Your Company continued to focus and drive ‘Project Shakti’, aimed at providing livelihood opportunities as micro-entrepreneurs in rural India. Your Company now has more than one lakh Women Shakti Entrepreneurs across the country, who make a living by distributing HUL products.

Our world-class supply chain maintained its relentless focus on driving quality, customer service and cost effectiveness across the value chain. Our belief remains firmly embedded in ‘delighting consumers everyday’. During the year, our On-Shelf-Quality improved by 30% over the previous year.

Leveraging technology and data-led decision-making continues to be a big thrust for HUL. We are ‘re-imagining HUL by embedding technology across the value chain to make us future-ready. Our e-commerce channel continued its strong growth trajectory with a dedicated team working closely with our key partners to create competitive advantage for the business.

I would like to take this opportunity to thank each and every employee as well as those working with our partners across our value chain for their commitment and service to HUL.

Most importantly, I would like to thank you, our shareholders, for your overwhelming trust, support and confidence in Hindustan Unilever Limited.

Warm regards,

Sanjiv Mehta

Chairman and Managing Director

Source : Dion Global Solutions Limited
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