There is little doubt on the excellent calibre of the management at HUL. HUL has done an amazing job in withstanding the intense competition - witness the ad budget of around 2500 crores. Like the situation Colgate was in - the competition waned and the results thereafter tell a good story. Hope something similar is replicated at HUL.

I never understood why HUL is not growing despite having so many products in consumer market. In grocery stores, you can see HUL presence in almost every category. Soaps, Hair products, ice creams,noodles, ketchup, toothpastes you name it.  Is it because most of it comes from soaps which is already penetrated?  But even if thats true, their products in other segments are very good. Take took paste for example. they  have pepsodent and close up which can take Colgate on.
On the other hand,  if you compare to ITC, its one of the favs in investor community. And nobody talks about HUL. (Though ITC sales has almost doubled in last 4 yrs, the eps growth is flat/negative). I will not compare to Nestle since it has monopoly in some of the products.

Conference Call      
          Hindustan Unilever
Despite high inflation and price hike, significant downtrading is not yet seen


Hindustan Unilever (HUL) held conference call to discuss the results for the quarter ended September 2011.

Highlights of the meet
As regards overall FMCG market management said that it has seen double digit growth in Q2, a price driven growth particularly in soap and detergent segment. The competitive scenario still remains high in FMCG. Rising inflation is cause of concern. It has not seen any significant downtrading in any of its category. Also the rural market was good, slightly ahead of urban growth. Overall FMCG market remains strong and expects to grow.
The company's strategy remain consistent: competitive growth, profitable growth and sustainable growth.
The net sales for Q2 has increased by 18% to Rs 5610.48 crore. Domestic Consumer Business (FMCG + Water) grew by 18.5% with both HPC and Food business growing by 17%. The volume growth for Domestic Consumer business was 10%. All segments have delivered double digit growth for the third consecutive quarter. OPM has inclined by 116 basis points to 14.7%. The company has seen cost of inflation in its key commodities up by 25%. The net profit has increased by 22% to Rs 688.92 crore
The management said that the strong growth is a result of the new innovations led by Lux, coupled with Pond's, Fair & Lovely, Vaseline, Dove and flavoured tea bags; market development initiatives esp. in personal products; and continued emphasis on enhancing distribution.
Inflation and commodity costs continued to be high. Cost pressures were managed dynamically through aggressive savings programmes coupled with judicious pricing. Cost of Goods Sold is up by 340 bps due to high input costs, especially in Soaps & Detergents.
The key commodities like palm oil, crude oil and coffee has seen rise of 20%, 45% and 52% y-o-y respectively in Q2. The currency depreciation will have an adverse impact going forward.
The overall competitive intensity remained high and A&P spends at 11.8% of sales was maintained at competitive levels. Brand investment was stepped up in Personal Products, Beverages and Packaged Foods while spends in Soaps and Detergents were recalibrated in line with industry trends. The business continues to focus on driving buying efficiencies, cost saving programmes and return on marketing investments, with good results.
Drop in advertisement expenditure and other expenditure aided the EBITDA margin expansion. The lower other expenditure was on a high base when spends on packaging moulds to support innovations had led to an increase in the cost. Therefore, the benefits from higher base of other expenditure would flow in during 3QFY13e as well.
Soaps and Detergents grew by 22%. The growth in laundry business was ahead of market, underpinned by double digit growth in Rin, Surf and Wheel. Vim was relaunched during the quarter.
Skin Cleansing had one of its strongest quarters with all segments of the portfolio performing well. Lux and Lifebuoy grew in double digits.. Lux was relaunched with superior product and salient advertising.
Personal Products grew by 18%. The growth in Skin Care accelerated with Fair & Lovely, Vaseline and Pond's growing in strong double digits. Fair & Lovely has been modernized and is yielding good results. Vaseline and Pond's continue to build segments of future with differentiated benefits and aspirational offerings - Vaseline Total Moisture was relaunched with 3 variants and Pond's White Beauty was extended with Naturals range during the quarter. The face washes range was expanded with introduction of Dove Face Wash.
Hair and Oral delivered double digit growth amidst heightened competitive intensity. Hair segment shown good growth but marginally behind the market. Nourishing Oil care range and Re. 1 sachets were introduced under Dove during the quarter to expand the consumer franchise.
Beverages grew by 15%, with all brands delivering double digit growth. Tea delivered a broad based growth with strong performance in premium and popular segment. All brands in Tea segment grew in double digits. New range of flavored and green tea bags was launched under Taj Mahal.
Packaged Foods growth at 21% was broad based. Kissan range was relaunched. Knorr Soupy Noodles range was extended with an accessible Rs 5 pack. It will be soon be present in multi sized packets. Kwality Walls continued its strong growth momentum led by innovations and distribution expansion. The company has enter Juice segment, which is in test market.
Pureit continues to expand its portfolio with the latest entry into fast growing "RO water purifier" segment with "Marvella RO". Distribution across modern electronic retail chains is being scaled up and "Go to Market" integration is expected to be completed by the year end.