Nestle S.a. · SIX:NESN
Nestle — FY2008 Earnings Presentation
71 slides from Nestle's earnings presentation, Feb 19, 2009
Slide 1: Spring Press Conference: Nestlé Full Year Results
SPRING PRESS Nestlé Full CONFERENCE Year Results 2007 Paul Bulcke CEO 19 February 2009 SPRING PRESS CONFERENCE 2009 Name of chairman
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: Nestlé S.A. Executive Board
Nestlé S.A. Executive Board 2 October 23, 2008 Press conference, CEO Presentation 2 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 4: Change in Executive Board
Change in Executive Board Petraea Heynike as of 1 March 2009 Executive Vice President SBUs, Marketing & Sales, and Nespresso Joined Nestlé in 1972 International postings Malaysia, South Africa, USA Head of Ice Cream Nestlé Canada Head of Chocolate, Confectionery and Biscuits SBU 3 October 23, 2008 P
Slide 5: 2008 – Historic year
2008 – Historic year SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 6: Momentum - Key Nestlé figures 2008
Momentum - Key Nestlé figures 2008 Sales of CHF 109.9bn, organic growth 8.3% EBIT margin improvement (+50 bps in constant currencies) Net profit CHF 18 billion (incl. profits from sale of 24.8% of Alcon) 2008 share buyback: CHF 8.7 billion for a total of CHF 13.1 billion Dividend proposal 14.8% incr
Slide 7: Nestlé Model outperformed in 2008
Nestlé Model outperformed in 2008 8.3% organic growth Sales EBIT margin 14.3% Improving capital efficiency / EBIT business ROIC / cash returns to shareholders 6 October 23, 2008 Press conference, CEO Presentation 6 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 8: Jim Singh, Chief Financial Officer
Jim Singh Chief Financial Officer 7 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 9: 2008 Full Year Highlights
2008 Full Year Highlights • Successful delivery of the Nestlé Model Organic Growth of 8.3% - above target EBIT margin +50bp constant currencies; +30bp reported • Strong performance by Food & Beverages 5 out of 6 primary segments combine strong OG with EBIT margin improvement OG 8.2%; EBIT margin +40
Slide 10: 2008 Full Year Highlights: Cash Flow and Returns
2008 Full Year Highlights • Operating cash flow of CHF10.8bn Free cash flow of CHF5.0bn • Net profit of CHF18bn Includes net profit from sale of 24.8% of Alcon • Underlying EPS up 10.9%, constant currencies • Proposed dividend up 14.8% to CHF 1.40 • Total cash returned to shareholders: CHF13.3bn Div
Slide 11: Strong Like-for-Like Growth Group and Food & Beverages
Strong Like-for-Like Growth Group and Food & Beverages Total Group Food & Beverages CHF 109.9 bn CHF 102.4 bn + 2.8% RIG + 9.9 % + 2.3% + 10% + 8.3% CC CC + 8.2% OG Pricing + 5.9% OG + 5.5% + 2.2% + 2.1% total total + 1.7% Acq./Div. + 1.7% - 7.8% - 7.8% Exchange Rates + CHF 2.4 bn + CHF 2.1 bn CC =
Slide 12: Total Food & Beverages Broad-based Performance
Total Food & Beverages Broad-based Performance 13.1 % Organic Growth 8.8 % RIG 5.3 4.7 2.0 1.5 x.x Sales Europe* Americas* Asia, Oceania, Africa* CHF bn 39.1 43.8 19.5 Emerging markets achieve 15.4% OG on CHF35bn of sales * each region includes sales of Food & Beverages, Nestlé Waters and Nestlé Nut
Slide 13: Zone Europe
Zone Europe EBIT 12.2% + 20 bp • Positive RIG in Western Europe • All key markets achieved positive organic growth • Increased pricing: Chocolate & Soluble 5.6 Coffee, • EBIT margin: growth, efficiencies, Chocolate 1.4 % Organic Growth % RIG 12 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 14: Zone Americas
Zone Americas EBIT 16.5% + 20 bp • A strong year – double digit OG 10.3 • North America finished year well • Latin America maintained double- digit OG • PetCare, Ambient Dairy, Chocolate, 2.7 Biscuits performed well % Organic Growth % RIG 13 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 15: Zone AOA
Zone AOA EBIT 16.5% + 20 bp 12.2 • A strong year – double digit OG • Almost all categories have high OG • Soluble, Culinary, Powdered Beverages, PetCare achieve strong RIG 3.7 • China & Japan had a slow end to '08 % Organic Growth % RIG 14 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 16: Nestlé Waters
Nestlé Waters EBIT 6.0% - 220 bp • No change in trading environment • Share gain in USA; share gain versus branded in Europe -1.6 • Raw & packaging material pressure -3.9 • Good achievement on savings • Disposal of UK HOD business • Major reduction in Capital expenditure % Organic Growth % RIG 15 SP
Slide 17: Nestlé Nutrition
Nestlé Nutrition EBIT 17.3% + 10 bp • Infant Nutrition very strong • Acquisitions integration complete 7.7 – savings on track • Mix improvements/RIG impact from SKU rationalisation • Slowdown due to Jenny Craig 1.8 % Organic Growth % RIG 16 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 18: Other F&B
Other F&B EBIT 17.5% 23.5 + 170 bp 20.1 • Mainly Nespresso, CPW, BPW • Nespresso sales exceed over CHF2bn for first time • Nespresso growth continues at high level • CPW & BPW performed well % Organic Growth % RIG 17 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 19: Powdered & Liquid Beverages
Secondary Reporting Powdered & Liquid Beverages EBIT 22.1% 12.8 - 30 bp • Strong growth from all categories • Nescafé, Milo, Nesquik, Nestea, 7.4 Nespresso all high OG • Key catalysts: Innovation; Nutrition, Health & Wellness; PPP • EBIT margin 22.1% despite raw material cost pressure & increased ma
Slide 20: Dairy Products, including Ice Cream
Secondary Reporting Dairy Products, including Ice Cream EBIT 11.5% + 40 bp • Dairy: PPP, NHW core strategies 9.2 • Pricing level reduced during year • Ice Cream market slow, shares OK • Premium/NHW strong • Good cost management and efficiencies in both businesses 1.2 • Both businesses contributed to
Slide 21: Prepared Dishes and Cooking Aids
Secondary Reporting Prepared Dishes and Cooking Aids EBIT 12.8% - 20 bp • Culinary, Maggi, performing well • US Frozen slow due to pricing... • ...but over 7% OG by Hot Pockets 6.1 • Europe: frozen pizza & Herta strong • EBIT margin improved during year but impacted by input costs 1.1 % Organic grow
Slide 22: Confectionery
Secondary Reporting: Confectionery EBIT 13.1% + 150 bp • A good performance – OG & EBIT • Kit Kat achieves 13.1% OG 8.0 • 150 products are No 1 or 2 in their market • EBIT margin improvement: benefits of growth, mix, restructuring & cost efficiencies 1.4 % Organic growth % RIG 21 SPRING PRESS CONFER
Slide 23: PetCare
Secondary Reporting: PetCare EBIT 15.7% + 20 bp 12.1 • All regions perform well • Strong innovation driving growth • Beneful, Bakers, Cat Chow, Dog Chow among double-digit OG brands 5.2 • Many brands 7-8% RIG • Cost pressure as "minors become majors" – specially in the US • Good margin performance i
Slide 24: Pharmaceutical Products
Secondary Reporting Pharmaceutical Products EBIT 34.1% + 80 bp • Strong growth and EBIT margin 8.8 8.4 performance from key constituents (Alcon, Galderma, innéov) • Minorities increased following partial Alcon disposal % Organic growth % RIG 23 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 25: 2008 Full-Year Results Key Factors of Margin Improvement
2008 Full-Year Results Key Factors of Margin Improvement GROUP EBIT MARGIN +30 bp (+50 constant currencies) F&B EBIT MARGIN +20 bp (+40 constant currencies) + Efficiencies + Efficiencies + Mix + 5.9% F&B Pricing + Leverage/Fixed costs + Mix + Pricing - Input costs -10 14.3 % +50 +30 14.0 % +50 Const
Slide 26: Total Performance Framework 2008
Total Performance Framework 2008 DRIVING PERFORMANCE ACHIEVING SIMPLICITY ► Operational Efficiency : CHF1bn+ ► Businesses with annualised sales > CHF1bn ► High quality Working Capital divested ► SKU Rationalisation : reduced by 5 % ► PPP : over CHF5.0bn (+ 27%) ► Factories : reduced by 5% ► Trade sp
Slide 27: Summary
Summary 2008 • A strong operating performance creates momentum for 2009 2009 • Focus is on "Acceleration" of initiatives that drive efficiencies and growth • In challenges lie opportunities – organisation is aligned • EBIT margin improvement constant currencies and OG at least approaching 5% 26 SPRI
Slide 28: Paul Bulcke, CEO
Paul Bulcke CEO 27 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 29: Nestlé's growing billionaire brands
Nestlé’s growing billionaire brands 28 October 23, 2008 Press conference, CEO Presentation 28 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 30: Nescafé and KitKat
Nescafé and KitKat Established brands Nescafé & KitKat growth ~10% 29 October 23, 2008 Press conference, CEO Presentation 29 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 31: KitKat
KitKat KitKat renovated in 2008 - crispier wafer - smoother chocolate …the best KitKat ever! 30 October 23, 2008 30 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 32: KitKat Senses web 2.0 comms, UK
KitKat Senses web 2.0 comms, UK 31 October 23, 2008 Press conference, CEO Presentation 31 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 33: KitKat promotions, France
KitKat promotions, France 32 October 23, 2008 Press conference, CEO Presentation 32 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 34: Products with BABs
Nutrition Products with BABs Products with BABs 20% growth to CHF 5 billion 33 October 23, 2008 Press conference, CEO Presentation 33 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 35: Branded Active Benefits
Nutrition Branded Active Benefits R R R R R Vitality / Intestinal Immunity & Heart Health Long-Lasting Protection Health Protection Energy R R R R R Building Growth & Easy Energy Release Cholesterol Stronger Bones Development Digestion Control R R R R R Long Lasting Feeling Good, "Refuelling" Helps
Slide 36: 60/40+ testing
60/40+ Products and brands on-going 60/40+ testing 15% of Nestlé products 35 tested in Press October 23, 2008 2008 conference, CEO Presentation 35 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 37: Nestlé Nutrition
Nutrition Nestlé Nutrition EBIT margin 17.3% 36 October 23, 2008 Press conference, CEO Presentation 36 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 38: Nestlé Professional – Out-of-home
Out-of-home Nestlé Professional – Out-of-home 2008 organisation to GMB (Globally Managed Business) Focus on • branded beverage solutions • customised food solutions 37 October 23, 2008 Press conference, CEO Presentation 37 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 39: Nestlé Professional in 2008
Out-of-home Nestlé Professional in 2008 Difficult economic environment 2008 Growth of 6.1% to CHF 6.2 billion Out-of-home concept evolving to include emerging economies, e.g.: • China +25% growth • Mexico +20% growth 38 October 23, 2008 Press conference, CEO Presentation 38 SPRING PRESS CONFERENCE 2
Slide 40: Nestlé Purina PetCare
Nestlé Purina PetCare Sales up to CHF 12.5 billion 39 October 23, 2008 Press conference, CEO Presentation 39 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 41: Mövenpick
Premiumisation Mövenpick Switzerland 8% Russia 40% 40 October 23, 2008 Press conference, CEO Presentation 40 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 42: Nespresso sales doubled in 2 years
Premiumisation Nespresso sales doubled in 2 years +2 billion +1 billion Sales in CHF 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 41 October 23, 2008 Press conference, CEO Presentation 41 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 43: Nespresso chocolates and boutiques
Premiumisation Nespresso chocolates and boutiques …launched in 2008 …44 added in 2008 42 October 23, 2008 Press conference, CEO Presentation 42 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 44: Emerging economies still expanding
Emerging economies still expanding Many emerging economies still growing Domestic stimulus by governments will stimulate consumption 43 October 23, 2008 43 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 45: Changing world = new opportunities
Changing world = new opportunities Diverse product & brand portfolio for all income groups 44 October 23, 2008 Press conference, CEO Presentation 44 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 46: World population and income growth
PPP World population and income growth Annual per capita income Growth% 2005-2015 Above USD 22 000 +40% Between USD 13 000–22 000 +11% Between USD 3 000–13 000 +31% 45 October 23, 2008 Press conference, CEO Presentation 45 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 47: PPP targeted to low incomes
PPP PPP targeted to low incomes Annual per capita income Growth% 2005-2015 Between USD 3 000–13 000 +31% 46 October 23, 2008 Press conference, CEO Presentation 46 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 48: PPP in emerging markets
PPP PPP in emerging markets Some Latin American regions 50% growth to CHF 500 million Southern and Eastern Africa, Middle East Regions: 40% growth 47 October 23, 2008 47 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 49: PPP solving micronutrient deficiencies
PPP PPP solving micronutrient deficiencies Micronutrients added to combat deficiencies in Iron, Iodine, Vitamin A, Zinc Nestlé is mapping fortification efforts across the globe 48 October 23, 2008 Press conference, CEO Presentation 48 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 50: PPP in Zone Europe
PPP PPP in Zone Europe Confetti - Russia 49 October 23, 2008 Press conference, CEO Presentation 49 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 51: PPP in Zone Europe
PPP PPP in Zone Europe Confetti - Russia Maggi - France 50 October 23, 2008 Press conference, CEO Presentation 50 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 52: PPP growth figures
PPP PPP growth figures Europe 30% AMS 25% AOA 27% Worldwide, defined and tracked PPP: CHF 5 billion 51 October 23, 2008 Press conference, CEO Presentation 51 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 53: Channel diversification
Channel diversification 52 October 23, 2008 Press conference, CEO Presentation 52 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 54: Nespresso - new site in Avenches
Nespresso - new site in Avenches Total investment CHF 300 million 400 000 m3 building size Maximum capacity 4.8 billion capsules 18 months’ construction time 53 October 23, 2008 Press conference, CEO Presentation 53 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 55: Anderson, Indiana USA
Anderson, Indiana USA Investment USD 360 million 880 000² foot LEED certification 54 October 23, 2008 Press conference, CEO Presentation 54 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 56: Eau Claire, Wisconsin USA
Eau Claire, Wisconsin USA Investment USD 150 million 250 000² foot expansion 55 October 23, 2008 Press conference, CEO Presentation 55 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 57: New capacity in Russia, M.East & Asia
New capacity in Russia, M.East & Asia Jebel Ali (Dubai) Shah Alam (Malaysia) Shimada (Japan) Pant Nagar (India) Timashevsk (Russia) 56 October 23, 2008 Press conference, CEO Presentation 56 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 58: Acceleration and evolution
Acceleration and evolution Nestlé is constantly evolving Company-wide focus on acceleration Same resources, increased impact The only constant is change! 57 October 23, 2008 Press conference, CEO Presentation 57 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 59: Nestlé's ambition
Nestlé’s ambition 58 October 23, 2008 Press conference, CEO Presentation 58 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 60: Roadmap – strategy & performance
Roadmap – strategy & performance October 23, 2008 Press conference, CEO Presentation 59 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 61: Nestlé's four competitive advantages
Nestlé's four competitive advantages Unmatched Unmatched geographic R&D capability presence Unmatched People, product culture, values, portfolio and attitude October 23, 2008 Press conference, CEO Presentation 60 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 62: Nestlé's four growth drivers
Nestlé's four growth drivers Emerging markets and Out-of-home popularly leadership positioned products Nutrition, health and Premiumisation wellness October 23, 2008 Press conference, CEO Presentation 61 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 63: Nestlé's four growth pillars
Nestlé's four growth pillars Whenever, Operational wherever, efficiency however Innovation Consumer & renovation communication October 23, 2008 Press conference, CEO Presentation 62 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 64: Roadmap – platform for growth
Roadmap – platform for growth 63 October 23, 2008 Press conference, CEO Presentation 63 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 65: CSV - Creating Shared Value
CSV - Creating Shared Value 64 October 23, 2008 Press conference, CEO Presentation 64 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 66: SAM Gold Class, Food Producers
SAM Gold Class, Food Producers 2008 65 October 23, 2008 Press conference, CEO Presentation 65 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 67: CSV priorities
CSV priorities CREATING SHARED VALUE Nutrition, Water, Rural Development SUSTAINABILITY Protect the future COMPLIANCE Laws, Business Principles, Codes of Conduct 66 October 23, 2008 Press conference, CEO Presentation 66 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 68: L'Oréal
L’Oréal 67 October 23, 2008 Press conference, CEO Presentation 67 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 69: Concluding remarks
Concluding remarks 68 October 23, 2008 Press conference, CEO Presentation 68 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 70: History
History 1867 1866 1929 1938 1947 1960s Henri Nestlé 1970s 1866 1980s 1990s 2000s 69 SPRING PRESS CONFERENCE 2009 Name of chairman
Slide 71: Question and answer session
Question and answer session 70 October 23, 2008 Press conference, CEO Presentation 70 SPRING PRESS CONFERENCE 2009 Name of chairman