Annual Report Analysis
Story through key words = environment, plastic, sustainable, digital, waste, technology, hygiene etc.Key message is its expectation of significant volatility and uncertainty in the near-term –both in terms of demand (was already decelerating, demand planning even tougher now) and commodity (volatility, global trade dynamics). We like HUL’scontinued focus on four pillars –(1) growth segments (strengthen core brands, accelerate premiumisation and market development), (2) growth channels (large portfolio enables strong positioning across all channels), (3) growth engines (new marketing models, de-averaging opportunities using WiMi, building future formats and benefits and leveraging M&A to expand portfolio) and (4) purpose-led brands (enable connect with customers).
We believe that HUL remains well-placed to tackle the current situation through agility, ability to leverage technology (‘Reimagining HUL’ takes additional prominence) and focus on getting closer to consumer and their needs (re-planning innovations, adjusting to consumers buying in different channels). Maintain (relative) outperformer view. ADD.
‘Reimagining HUL’ to give competitive edge (quotes)
* Picking up consumer signals real-time through the People Data Centre, which analyses consumer sentiments and conversations about our brands and categories
* Driving precision marketing to identify consumer needs and direct targeted content
* HUL’s Connected Stores Programme is coming of age, creating a complete ecosystem across shoppers and retailers covering demand generation, demand capture and demand fulfilment
Near-term demand trends and HUL’s response:
* Health and hygiene essentials have seen an upswing with household stocking and increased awareness
* Consumption trend in other essentials such as Fabric Solutions, Coffee, Oral Care is fairly neutral
* The Out-of-Home channel is closed, resulting in near cessation of consumption in food services, Ice Creams and Life Essentials
* The impact on discretionary categories is more accentuated as it comes on the backdrop of a slowing market growth
* Many categories and brands have moved quickly to re-plan innovations, adjust to consumers buying in different channels, and re-work brand communication to make sure that it remains consumer relevant
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