Nestle S.a. · SIX:NESN
Nestle — FY2014 Earnings Presentation
47 slides from Nestle's earnings presentation, Feb 19, 2015
Slide 1: Welcome to the Full-Year Results Conference
Welcome to the Full-Year Results Conference
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.
Slide 3: Full-Year Results Conference – Paul Bulcke, CEO
Full-Year Results Conference Paul Bulcke Nestlé CEO
Slide 4: Nestlé Group Highlights
Nestlé Group Highlights Sales CHF 91.6 bn Organic Growth 4.5 % Real Internal Growth 2.3 % Trading Operating Profit Margin + 30 bps in constant currencies 4 19 February 2015 Full-Year Results Conference
Slide 5: Full-Year Results Conference – Wan Ling Martello, CFO
Full-Year Results Conference Wan Ling Martello Chief Financial Officer
Slide 6: Resilient Performance Fuelled by Top Line Growth
Resilient Performance Fuelled by Top Line Growth Trading Free Underlying Organic Operating Profit Cash Flow Earnings Per Share Growth (in CCY) (in CCY) (in CCY) + CHF + 4.5% + 30 bps 14.7 bn + 4.4 % (FX - 5.5%) (+10 bps reported) (- 1.7% reported) (+ CHF 14.1 bn reported) CCY = Constant Currencies 6
Slide 7: Broad Based Regional Growth
Broad Based Regional Growth Asia, Americas Europe Oceania & Africa Sales 39.4 bn 25.9 bn 26.3 bn (in CHF) RIG +2.3% +2.4% +2.4% OG +5.4% +1.9% +5.7% Each region includes Zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso, NHSc, and NSH OG = Organic Growth, RIG = Real Internal Gro
Slide 8: Developed and Emerging Markets Growth
Developed and Emerging Markets Growth Developed Emerging Sales 51.4 bn 40.2 bn (in CHF) % of Group sales 56% 44% OG +1.1% +8.9% OG = Organic Growth 8 19 February 2015 Full-Year Results Conference
Slide 9: Zone Europe
Zone Europe Sales 15.2 RIG % 2.2 OG % 1.5 TOP % 15.3 in CHF bn Good growth driven by innovation and premiumisation despite deflationary environment Continued strong contributions from petcare, Nescafé Dolce Gusto, frozen pizza and premium soluble coffee Western Europe – Growth supported by Fra
Slide 10: Zone Americas
Zone Americas Sales 27.3 RIG % 1.1 OG % 5.0 TOP % 18.8 in CHF bn North America remained subdued, good organic growth in Latin America helped by pricing, reflecting inflationary pressures North America – Good growth in petcare, coffee creamers, super-premium ice cream – Frozen foods challenged, b
Slide 11: Zone Asia, Oceania & Africa
Zone Asia, Oceania & Africa Sales 18.3 RIG % -0.3 OG % 2.6 TOP % 18.7 in CHF bn Growth impacted by ongoing challenges in China and Oceania Emerging markets – Good performance in Philippines, South Asia, Indochina – Growth driven by innovations and NHW focus, e.g. fortified Bear Brand Milk Powder
Slide 12: Nestlé Waters
Nestlé Waters Sales 7.4 RIG % 6.3 OG % 5.4 TOP % 9.7 in CHF bn Broad-based growth across all geographies and brands – Pure Life continued to be a growth engine – International sparkling brands created value in premium segment – Good performance of local brands Developed markets: solid growth in
Slide 13: Nestlé Nutrition
Nestlé Nutrition Sales 9.6 RIG % 3.6 OG % 7.7 TOP % 20.8 in CHF bn Growth driven by infant formula, cereals, and emerging markets Emerging markets: strong growth driven by AOA Developed markets: impacted by soft category growth, and continued focus on value generation in the US Infant formul
Slide 14: Other Businesses
Other Businesses Sales 13.9 RIG % 5.6 OG % 7.1 TOP % 19.1 in CHF bn Nestlé Professional Growth driven by emerging markets Challenging out-of-home environment in North America and Europe Nespresso Broad-based strong growth in all regions, supported by innovation VertuoLine launch in North Ame
Slide 15: Products
Products % Real Internal Growth % Organic Growth 8.7 6.2 4.2 5.4 5.3 5.3 4.2 5.0 5.6 3.4 -1.0 -0.1 -0.1 -1.2 Powdered Water Milk products Nutrition Prepared dishes Confectionery PetCare and Liquid and and and Beverages Ice cream Health Science cooking aids Sales 20.3 6.9 16.7 13.0 13.5 9.8 11.3 (in
Slide 16: Trading Operating Profit Margin
Trading Operating Profit Margin -10 bps +30 bps -10 bps Trading Operating +20 bps Profit margin +30 bps in -20 bps constant currencies +10 bps +10 bps 15.5 Consumer facing +10 bps 15.3 marketing spend 15.2 +5.8% in constant +30 bps currencies TOP Other revenue COGS Distribution Marketing & R&D N
Slide 17: Income Statement
Income Statement Total Group 2013 2014 Difference % of sales % of sales bps Trading operating profit 15.2 15.3 10 Net other operating income/expenses (1.0) (3.4) -240 Operating Profit 14.2 11.9 -230 Net financial income/expenses (0.7) (0.7) 0 Profit before taxes, associates and JVs 13.5 11.2 -230 Ta
Slide 18: Free Cash Flow
Free Cash Flow in CHF bn -0.2 -1.5 +4.3 +1.0 14.1 14.7 10.5 3.6 FCF Operational Working CAPEX Other * FCF FCF (1 Jan 2014) Improvement Capital (31 Dec 2014) (31 Dec 2014) at CCY * Mainly impacted by the cash in from the partial disposal of L’Oréal shares 18 19 February 2015 Full-Year Results Confere
Slide 19: Continued Focus on Working Capital
Continued Focus on Working Capital Working capital variation, calculated on a quarterly average as a percentage of sales 2012 2013 2014 -80 bps -120 bps -200 bps 19 19 February 2015 Full-Year Results Conference
Slide 20: Evolution of CAPEX
Evolution of CAPEX 8.0 7.0 6.0% 6.0 CAPEX as % of sales 5.9% 5.0 5.3% 4.3% CAPEX in CHF bn 4.0 5.3 4.9 3.0 3.9 2.0 1.0% 2012* 2013 2014 *Restated following implementation of IFRS 11 and IAS 19 20 19 February 2015 Full-Year Results Conference
Slide 21: Group Net Debt Decreased by CHF 2.4 bn
Group Net Debt Decreased by CHF 2.4 bn Estimated figures in CHF bn +14.1 - 1.5 Proceeds from sale of L'Oréal shares - 1.7 Exchange +4.1 Acquisition rates & other - 6.9 net of disposals - 0.1 (incl. Minority) +10.0 - 1.5 Treasury Dividends Share buy-back shares program (net) Free Cash Flow - 14.7 2.4
Slide 22: Managing the Currency Challenge
Managing the Currency Challenge FY 2014 Currency Impact Sales Operating Underlying Free Cash Balance Performance EPS Flow Sheet - 5.5% - 20 bps - 6.1% - 0.6 bn + 3.0 bn SNB announcement to remove floor of the EUR vs CHF Natural hedge of the underlying business Sustainable dividend policy in CHF
Slide 23: Sustainable Dividend per Share in CHF
Sustainable Dividend per Share in CHF 2.50 2.20* 2.15 2.05 2.00 1.95 Dividend in CHF 1.50 1.00 0.50 0.00 * Proposed 23 19 February 2015 Full-Year Results Conference
Slide 24: Summary
Summary Delivery of Top Line and Bottom Line Growth in Emerging and Developed Markets Improved Operational and Capital Efficiency Making Choices to Divest, Fix and Accelerate Delivering in Short Term and Investing in Long Term 24 19 February 2015 Full-Year Results Conference
Slide 25: Outlook 2015
Outlook 2015 We aim to achieve organic growth of around 5% with improvements in margins, underlying earnings per share in constant currencies and capital efficiency. 25 19 February 2015 Full-Year Results Conference
Slide 26: Full-Year Results Conference – Paul Bulcke, CEO
Full-Year Results Conference Paul Bulcke Nestlé CEO
Slide 27: Delivering today… and building for the future
Delivering today… … and building for the future • Our intrinsic strengths • Challenges we face • Positioning Nestlé for the future 27 19 February 2015 Full-Year Results Conference
Slide 28: Delivering today… and building for the future
Delivering today… … and building for the future • Our intrinsic strengths • Challenges we face • Positioning Nestlé for the future 28 19 February 2015 Full-Year Results Conference
Slide 29: Our intrinsic strengths
Our intrinsic strengths • Our people : commitment and alignment • Foresight and courage : ideas and markets • Our organisation : local and global 29 19 February 2015 Full-Year Results Conference
Slide 30: Delivering today… and building for the future
Delivering today… … and building for the future • Our intrinsic strengths • Challenges we face • Positioning Nestlé for the future 30 19 February 2015 Full-Year Results Conference
Slide 31: The Swiss franc
The Swiss franc • Natural hedge between revenue and cost ( ≈ 90 % locally produced and sold) • < 2 % of turnover in Switzerland But impact on Actions for competitiveness • Export from Switzerland (2/3 of production) • Supply & logistics reorientation • Structural cost in CHF (R&D, HQ) • Productivity
Slide 32: China
China • Changing consumer landscape • Changing trade landscape 32 19 February 2015 Full-Year Results Conference
Slide 33: China – adjusting to a changing landscape
China – adjusting to a changing landscape Consumers • Traditional and new • NHW awareness • Premiumisation Trade • Rebalancing push & pull • e commerce • Out-of-home 33 19 February 2015 Full-Year Results Conference
Slide 34: US Frozen food
US Frozen food High penetration Household 96 % Nestlé household 66 % Sizeable and growing Category sales 23 bn USD 2014 – 2019 + 3.2 % Leading positions Single & multi-serve meals 29.0 % Single serve diet meals 38.0 % Sandwiches & handheld snacks 18.0 % Pizza 43.0 % 34 19 February 2015 Full-Year Res
Slide 35: Enhancing the brands’ relevance to consumers
Enhancing the brands’ relevance to consumers • Innovate in fast-growing • New health dimensions • Winning at retail • Premiumise and offer segments and expand and culinary trends and in digital on-trend products the brand franchise 35 19 February 2015 Full-Year Results Conference
Slide 36: Delivering today… and building for the future
Delivering today… … and building for the future • Our intrinsic strengths • Challenges we face • Positioning Nestlé for the future 36 19 February 2015 Full-Year Results Conference
Slide 37: Expanding the boundaries of nutrition, health and wellness
Expanding the boundaries of nutrition, health and wellness Nutritional therapies that change the way Science-based solutions we approach the management of people’s health for the health of skin 37 19 February 2015 Full-Year Results Conference
Slide 38: Nestlé Health Science: Consumer Care, Medical Nutrition, Novel Therapeutic Nutrition
Consumer Care Medical Nutrition Novel Therapeutic Nutrition Healthy Ageing • Inborn errors of metabolism • Brain health • Physical and cognitive autonomy : • Paediatric care & allergy • Gastrointestinal health mobility, energy, body & mind, • Acute care • Diagnostics cognitive capacity • Metabolic &
Slide 39: Nestlé Skin Health
Prescription Self-medication Aesthetic & Corrective Well-being Genetics skin Nutrition Pharmaceutical Disease and non-disease Medical solutions and products prescribed by specific therapeutic skin services for minimally Environment healthcare professionals care solutions invasive aesthetic and corre
Slide 40: Nestlé Business Excellence
Nestlé Business Excellence 40 19 February 2015 Full-Year Results Conference
Slide 41: Nestlé Business Excellence… fuel for growth
Nestlé Business Excellence… fuel for growth Highly efficient support structures Speed and quality of execution Increased business focus 41 19 February 2015 Full-Year Results Conference
Slide 42: resilient, innovative, consistent
resilient, innovative, consistent 42 19 February 2015 Full-Year Results Conference
Slide 43: 19 February 2015 Full-Year Results Conference
43 19 February 2015 Full-Year Results Conference
Slide 44: Appendix
Appendix 44 19 February 2015 Full-Year Results Conference
Slide 45: Operating Segments
Operating Segments % Real Internal Growth % Organic Growth 7.7 7.1 6.3 5.6 5.0 5.4 1.5 3.6 2.2 2.6 1.1 -0.3 Zone Zone Zone Nestlé Waters Nestlé Nutrition Other Europe Americas Asia, Oceania, Businesses Africa Sales 15.2 27.3 18.3 7.4 9.6 13.9 (in CHF bn) TOP % 15.3 18.8 18.7 9.7 20.8 19.1 in bps +30
Slide 46: Currency Overview
Currency Overview Weighted average rate FY 2013 FY 2014 % Var. 1 US Dollar USD 0.93 0.92 -1.1 1 Euro EUR 1.23 1.21 -1.3 100 Chinese Yuan Renminbi CNY 15.06 14.88 -1.3 100 Brazilian Reais BRL 42.99 38.90 -9.5 1 Pound Sterling GBP 1.45 1.51 4.0 100 Mexican Pesos MXN 7.26 6.88 -5.2 100 Philippine Pesos
Slide 47: FX Impact
FX Impact FX impact FY 2014 Zone Americas -8.2% Zone Europe -3.6% Zone AOA -5.3% Nestlé Waters -3.1% Nestlé Nutrition -6.4% Other Businesses -3.3% Total -5.5% 47 19 February 2015 Full-Year Results Conference