Nestle S.a. · SIX:NESN

Nestle — H1 2011 Earnings Presentation

38 slides from Nestle's earnings presentation, Aug 10, 2011

  1. Slide 1: 2011 First Half Results

    2011 First Half Results James Singh Chief Financial Officer Roddy Child-Villiers Head of Investor Relations August 10th, 2011 Half Year Roadshow

  2. Slide 2: Disclaimer

    Disclaimer This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements.

  3. Slide 3: Performance Highlights

    Performance Highlights „ Short-term delivery with commitment to long-term Marketing spend up, record year for cap-ex, exciting acquisitions and partnerships Nestlé Health Science now operational „ Extremely challenging operating environment Political malaise Economical & financial crisis Unending st

  4. Slide 4: 2011: Solid Half Year Performance

    2011: Solid Half Year Performance At constant As reported exchange rates Sales 41 bn Organic Growth +7.5% OG momentum driven by gradual increase in Real Internal Growth +4.8% price, with industry Trading Operating Profit 6.2 bn outperforming RIG Trading Operating Profit Margin 15.1% +20 bps +40 bps

  5. Slide 5: Operating Profit Margin Up 20 bps, 40 bps*

    Operating Profit Margin Up 20 bps, 40 bps* Continuing operations „ Big impact from input costs, but Nestlé TOP 15.1% Continuous Excellence delivers efficiencies +20 bps TOP 14.9% +10 „ Input cost guidance reconfirmed +40 -10 „ Efficiencies & mix benefit distribution costs -180 +150 „ Marketing down,

  6. Slide 6: Strengthening of the Swiss Franc

    Strengthening of the Swiss Franc Weighted Average Exchange Rates Currency Impact on Translation Trading CHF per 1H 2010 1H 2011 (%) Underlying Operating Balance Sales Operating EPS Cash Flow Sheet Profit US Dollar (1) 1.09 0.90 -17 CHF 600mn -13.8% -20bps ~ -15% to ~CHF 5bn CHF 700mn Euro (1) 1.44 1

  7. Slide 7: Key Elements of Sales

    Key Elements of Sales RIG „ Strong operating performance +7.5% +4.8% OG Pricing +2.7% „ RIG – a differentiating level of performance -6.6% Acq./Div. „ Pricing up & on rising trend -12.9% total Exchange Rates „ Big impact from FX -13.8% „ Alcon weighs heavy in divestitures (over -8%) OG = Organic Gro

  8. Slide 8: All Regions Contribute...

    All Regions Contribute... „ Good growth everywhere in H1 13.3 „ Europe accelerates RIG & pricing 10.1 „ Americas: Pricing up; RIG down on comparatives „ AOA: Pricing up; RIG down due 5.8 5.7 mainly to normalisation after strong 4.6 Q1 in Japan 2.2 Europe Americas AOA Sales* 12.8 18.1 10.1 CHF bn * E

  9. Slide 9: ...to Global Growth

    ...to Global Growth 13.3 13.3 13.1 7.5 4.4 3.9 Group Emerging BRIC PPP Developed Portugal, Italy, Markets Markets Greece & Spain % OG 8 August 10th, 2011 Half Year Roadshow

  10. Slide 10: FX Impact on All Businesses

    FX Impact on All Businesses USD/CHF negative impact in H1... (%) 1Q11 HY11 Nestlé Waters -11.5 -15.8 Zone Americas -9.4 -15.1 Nestlé Nutrition -10.5 -15.0 …with a similar pattern Zone AOA -8.1 -13.4 for the EUR/CHF Other -9.9 -12.7 Zone Europe -10.8 -11.5 Total -9.8 -13.8 9 August 10th, 2011 Half Ye

  11. Slide 11: Strong, Broad-based Operating Performance

    Strong, Broad-based Operating Performance 11.7 11.5 9.7 8.8 8.8 6.5 5.6 5.8 4.8 4.1 2.7 1.1 Zone Zone Zone Nestlé Nestlé Other Europe Americas AOA Waters Nutrition Sales 7.5 12.8 7.5 3.4 3.7 6.1 CHF bn rounded % OG % RIG 10 August 10th, 2011 Half Year Roadshow

  12. Slide 12: Zone Americas

    Zone Americas Sales CHF 12.8 bn TOP Margin 17.3% -10 bps OG 5.6% RIG 1.1% „ North America subdued: „ Good performance in Latin America consumer sentiment in US „ Most markets and categories „ Frozen category remains weak; are double-digit but successful launches help share in Pizza and Stouffer’s „

  13. Slide 13: Zone Europe

    Zone Europe Sales CHF 7.5 bn TOP Margin 16.4% +200 bps OG 4.1% RIG 2.7% „ The Zone: strong second quarter for RIG & OG Innovation driving growth „ Western Europe achieved positive growth in most key markets and categories „ PIGS deliver – PPPs, Nescafé, Ice cream, Maggi „ Strong share performances i

  14. Slide 14: Zone AOA

    Zone AOA Sales CHF 7.5 bn TOP Margin 19.5% +50 bps OG 11.7% RIG 8.8% „ A very strong first half despite high impact events „ RIG down as Japan normalises „ Greater China growing over 20% – PPPs „ Central West Africa a highlight – dairy & powdered beverages „ South Asia region (inc India) over 20% –

  15. Slide 15: Nestlé Nutrition

    Nestlé Nutrition Sales CHF 3.7 bn TOP Margin 21.1% -90 bps OG 8.8% RIG 6.5% Infant nutrition: growing double-digit & growing share „ Emerging markets dynamic – Europe, AOA & Americas „ US market share now at 17% „ Delivering better innovation, communication, distribution, consumer preference, compet

  16. Slide 16: Nestlé Waters

    Nestlé Waters Sales CHF 3.4 bn TOP Margin 8.6% -140 bps OG 5.8% RIG 4.8% „ RIG high in many markets „ Pricing has turned positive „ France: double-digit growth & share gains „ Emerging markets: double-digit „ Perrier & S. Pellegrino, Vittel, Acqua Panna, Nestlé Pure Life all high-single to double-di

  17. Slide 17: Other

    Other Sales CHF 6.1 bn TOP Margin 17.5% -140 bps OG 11.5% RIG 9.7% Professional building momentum „ EMs double-digit, China 20%+ „ North America and Europe both growing Nespresso accelerates slightly from Q1 „ High level of marketing spend – global Pixie launch „ New boutique openings continue Nestl

  18. Slide 18: All Categories Growing

    All Categories Growing 12.5 9.5 8.5 4.9 4.9 4.2 2.9 2.4 2.0 1.1 Powdered & Milk Products Prepared Dishes Confectionery PetCare Liquid Beverages & Ice Cream & Cooking Aids Sales 8.9 8.1 6.8 4.1 4.8 CHF bn rounded % OG % RIG 17 August 10th, 2011 Half Year Roadshow

  19. Slide 19: Powdered & Liquid Beverages

    Powdered & Liquid Beverages Sales CHF 8.9 bn TOP Margin 24.3% -20 bps OG 12.5% RIG 8.5% Nescafé grows double-digit „ Aligned innovation: Nescafé Dolce Gusto, 3-in-1, Green Blend „ Highlights: Iberia, France, Germany, Indochina, Central West Africa, China, Philippines, US, Mexico, Powdered beverages

  20. Slide 20: Milk Products & Ice cream

    Milk Products & Ice cream Sales CHF 8.1 bn TOP Margin 14.1% +100 bps OG 9.5% RIG 4.9% Milk Products accelerates – RIG & price „ Growing double-digit: predominantly an emerging markets business „ Innovations driving market share gains in all zones „ Growth is balanced between RIG and price Ice cream

  21. Slide 21: Prepared Dishes & Cooking Aids

    Prepared Dishes & Cooking Aids Sales CHF 6.8 bn TOP Margin 13.4% +30 bps OG 4.9% RIG 2.9% Frozen Food „ Strong performance of Pizza (Buitoni, Wagner, DiGiorno) Chilled „ Good growth, primarily Herta and Toll House Culinary „ Maggi has a strong H1 – many highlights: India, China, Central West Africa,

  22. Slide 22: Confectionery

    Confectionery Sales CHF 4.1 bn TOP Margin 16.1% +230 bps OG 4.2% RIG 2.0% „ Good market share performance generally „ Successful Easter season – strong Q2 „ Highlights include UK, Japan, Brazil, Canada, Ukraine, China „ Skinny Cow launch looks promising 21 August 10th, 2011 Half Year Roadshow

  23. Slide 23: PetCare

    PetCare Sales CHF 4.8 bn TOP Margin 20% -120 bps OG 2.4% RIG 1.1% „ Momentum building from Q1 „ Europe performing well – 2010 innovations & Eastern European launches „ Share gains in all three zones, though market subdued „ Double-digit growth in Latin America „ Outpacing category growth globally by

  24. Slide 24: P&L As % of sales

    P&L As % of sales Difference in June 30 June 30 basis points/% 2010 2011 Continuing (rounded) Trading operating profit 14.9 15.1 +20 Net other operating income/expense (0.1 ) (0.1) 0 Operating profit 14.8 15.0 +20 Net financial income/expense (0.9) (0.8) +10 Profit before taxes and associates 13.9 1

  25. Slide 25: Operating Cash Flow and Net Debt

    Operating Cash Flow and Net Debt Operating Cash Flow: CHF 1.7 bn Net Debt: CHF 14.5 bn „ Alcon „ Capital expenditure and M&A „ Currency translation & hedges „ Dividend „ Tactical increase in working capital „ Share buyback & treasury shares „ Treasury investments (medium to long-term) 24 August 10th

  26. Slide 26: Priority for Use of Cash

    Priority for Use of Cash Medium/ Capital Share long-term Net debt (In CHF bn) expenditure M&A Dividend buyback investment 2009 4.6 0.8 5.0 7.0 - FY 2009:18.1 bn 2010 4.6 5.6 5.4 10.1 2.0 FY 2010: 3.8 bn 2011 5.5 4–5 5.9 4.8 2.0 HY 2011: 14.5 bn (rounded) Committed Announced Paid Committed Invested 2

  27. Slide 27: Capacity Increases: CHF 5bn-5.5bn committed

    Capacity Increases: CHF 5bn-5.5bn committed Russia: Germany: Coffee, PetCare, Pizza, Infant Formula, Confectionery Nestlé Professional USA: France: Nutrition, PetCare, Hungary: Nestlé Professional Confectionery, Ice cream, PetCare Switzerland: China: Pizza Nespresso, NHSc, Confectionery, NIHS Noodle

  28. Slide 28: Recent M&A: CHF 4.5bn announced

    Recent M&A: CHF 4.5bn announced Sweden: UK: Q-Med (Galderma) Vitaflo (NHSc), Ukraine: USA: CM&D (NHSc) Denmark: Technocom Frozen Pizza (Food), Glycom (NHSc) (Culinary) Prometheus (NHSc), Adriatic: Turkey: China: Sweet Leaf Tea (Nestlé Waters), Centroproizvod Balaban Dashan (Water), Waggin’Train (Pet

  29. Slide 29: The Nestlé Roadmap

    The Nestlé Roadmap Competitive Advantages Driving Performance for Today and Tomorrow Operational Growth Pillars Drivers 28 August 10th, 2011 Half Year Roadshow

  30. Slide 30: Billionaire Brands: 8%+ organic growth

    Billionaire Brands: 8%+ organic growth Organic Growth Over 20% 10.1 to 20% 7.6 to 10% 5.1 to 7.5% 3.1 to 5% 0.0 to 3% Below 0% 29 August 10th, 2011 Half Year Roadshow

  31. Slide 31: Innovation as a Growth Driver

    Innovation as a Growth Driver 30 August 10th, 2011 Half Year Roadshow

  32. Slide 32: Innovations in 2011

    Innovations in 2011 31 August 10th, 2011 Half Year Roadshow

  33. Slide 33: 2011: another set of Challenges; another Opportunity to Outperform

    2011: another set of Challenges; another Opportunity to Outperform „ We understand the challenges we face „ We are taking a holistic, total value-chain approach to managing them „ Our innovation pipeline is rich – bringing differentiation & added value „ We have strong momentum with positive mix eff

  34. Slide 34: 2011: another set of Challenges; another Opportunity to Outperform

    2011: another set of Challenges; another Opportunity to Outperform „ We understand the challenges we face „ We are taking a holistic, total value-chain approach to managing them „ Our innovation pipeline is rich – bringing differentiation & added value „ We have strong momentum with positive mix eff

  35. Slide 35: Conclusion

    Conclusion „ Our H1 operational performance has demonstrated the strength of our business model and the appropriateness of our strategy in a challenging first half „ We have delivered in the more dynamic markets, but we have also delivered in the toughest environments „ The first half of 2011: A tru

  36. Slide 36: Appendix

    Appendix 35 August 10th, 2011 Half Year Roadshow

  37. Slide 37: Strong RIG Momentum as Pricing Increases

    Strong RIG Momentum as Pricing Increases OG 8.5% OG 6.2% OG 6.4% OG 6.4% 3.8 OG 6.0% OG 5.5% 1.5 1.7 1.8 1.6 1.6 4.5 4.6 4.9 4.7 3.9 4.4 Q1 Q2 Q3 Q4 Q1 Q2 2010 2011 OG = Organic Growth RIG = Real Internal Growth % RIG % Pricing 36 August 10th, 2011 Half Year Roadshow

  38. Slide 38: Net Debt Bridge

    Net Debt Bridge -1.5 1.9 14.5* CHF bn Exchange Rates & -0.3 Alcon +5.9 others Proceeds Free Cash Flow Invested LT +0.7 -0.1 Dividend Treasury Acquisitions Shares net of (net) disposals +4.0 Share buy- 3.9 back programme Net Debt Net Debt January 1st + CHF 10.6bn June 30 * Adjusted Net Debt including

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