Slide 1: 2008 Full Year Results Roadshow
2008 Full Year Results Roadshow 1 2008Year Full Full 2008 Year Results Roadshow 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: Agenda
Agenda • Jim Singh Highlights 2008 Driving profitable growth in 2009 • Paul Bulcke The 4x4x4 roadmap in action 3 2008 Full Year Results Roadshow Name of chairman
Slide 4: 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 5: 2008 Full Year Highlights
2008 Full Year Highlights • Operating cash flow of CHF 10.8bn Free cash flow of CHF 5.0bn • Net profit of CHF 18bn Includes 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: CHF 13.3bn Div
Slide 6: Management of the Portfolio in 2008
Management of the Portfolio in 2008 • Pruning (over CHF 1bn of 2007 sales) Non-core Family Frost (Ge) – Ice cream street sales Gerber Baby Care (US) – Feeding accessories Geti-Wilba (Ge) – Frozen food Underperforming Dry pasta and bread substitutes (It) HOD Water (UK) Chilled dairy (Aus) • Strengthe
Slide 7: Nestlé Waters in 2008
Nestlé Waters Nestlé Waters in 2008 Action plan/ Priorities '09 • Market trends soft • HOD UK exited • Organic growth -1.6% • Defend market shares • Market share gains • Accelerate efficiencies • Emerging Mkts double digit • Leverage Group services/ • 6% EBIT margin GLOBE • Accelerated savings • Fur
Slide 8: Total Performance Framework 2008
Total Performance Framework 2008 DRIVING PERFORMANCE ACHIEVING SIMPLICITY ► Operational Efficiency : CHF 1bn+ ► Businesses with annualised sales > CHF 1bn ► High quality Working Capital divested ► SKU Rationalisation : reduced by 5 % ► PPP : over CHF 5.0 bn (+ 27%) ► Factories : reduced by 5% ► Trad
Slide 9: Raw Materials, Business Environment, Driving Profitable Growth 2009
2009 Raw Materials Business Environment Driving Profitable Growth 9 2008 Full Year Results Roadshow Name of chairman
Slide 10: Main Agricultural Commodities Index
Market price index of Nestlé's Basket of Main Agricultural Commodities (MAC) MAC Basket: •140 • Milk solids •130 • Green coffee • Cocoa •120 • Sugar •Price Index •110 • Grains •100 • Oilseeds • Approx CHF 9bn •90 Main Agricultural Commodities Index of CHF 22.5bn raw •80 MAC including Milk Solids mat
Slide 11: Nestlé Country Default Risk Profile
Nestlé Country Default Risk* Profile % 2008 Avg. Stimulus Consumer GDP F&B Australia Growth Packages Exp. 2009 2009 Sales Switzerland Korea Higher Nordics - 1.5% - 3.0% 65% Euro area OG + 4.4% $2’000 bn to to Risk UK USA / Canada + 1.0% + 1.7% Ukraine Austral America Southern Africa Czech / Slovak P
Slide 12: Nestlé Relatively Under-Exposed to Category Price Risk
Nestlé Relatively Under-Exposed to Category Price Risk Competitive Price Risk Private Label Intensity Soluble Coffee Medium Medium High Ice Cream Medium High High Frozen Entrees Medium High Low Frozen Snacks Low Medium Low Frozen Pizza Low Medium Low Refrigerated Entrees Medium High High Seasonings
Slide 13: Six Levers to Manage Downsides & Exploit Upsides
Six Levers to Manage Downsides & Exploit Upsides Managing the downsides Exploiting the upsides Market Access to capital Sales volume and prices Gaining Leverage market uncertainty under pressure market shares opportunities SCENARIO CAPITAL OPERATIONAL PRODUCT R&D EXCELLENCE PORTFOLIO PLANNING DISCIP
Slide 14: Six Levers to Manage Downsides & Exploit Upsides
Six Levers to Manage Downsides & Exploit Upsides Managing the downsides Exploiting the upsides Market Access to capital Sales volume and prices Gaining Leverage market uncertainty under pressure market shares opportunities SCENARIO CAPITAL OPERATIONAL PRODUCT R&D EXCELLENCE PORTFOLIO PLANNING DISCIP
Slide 15: Six Levers to Manage Downsides & Exploit Upsides
Six Levers to Manage Downsides & Exploit Upsides Managing the downsides Exploiting the upsides Market Access to capital Sales volume and prices Gaining Leverage market uncertainty under pressure market shares opportunities SCENARIO CAPITAL OPERATIONAL PRODUCT R&D EXCELLENCE PORTFOLIO PLANNING DISCIP
Slide 16: Six Levers to Manage Downsides & Exploit Upsides
Six Levers to Manage Downsides & Exploit Upsides Managing the downsides Exploiting the upsides Market Access to capital Sales volume and prices Gaining Leverage market uncertainty under pressure market shares opportunities SCENARIO CAPITAL OPERATIONAL PRODUCT R&D EXCELLENCE PORTFOLIO PLANNING DISCIP
Slide 17: Driving Profitable Growth in 2009
Driving Profitable Growth in 2009 Overall principles • Consistent strategy; challenge priorities; enhance speed & flexibility • Accelerate all initiatives – efficiency & growth drivers • Increase focus on working capital & cash management • Revisit assumptions, hurdle rates for capital expenditure &
Slide 18: Driving Profitable Growth in 2009
Driving Profitable Growth in 2009 • This is not the first time for Nestlé Operating since 1867 In Emerging Markets since early 1900's • Business as usual – with acceleration Driving our competitive advantages Leveraging our 4 growth drivers Executing our 4 strategic pillars • Opportunity to drive ur
Slide 19: The 4x4x4 Roadmap in Action
Paul Bulcke Chief Executive The 4x4x4 Roadmap in Action 19 2008 Full Year Results Roadshow Name of chairman
Slide 20: The 4x4x4 Roadmap to Value Creation
The 4x4x4 Roadmap to Value Creation • Four competitive advantages • Four growth drivers • Four strategic pillars Created in buoyant markets Appropriate for today's environment 20 2008 Full Year Results Roadshow Name of chairman
Slide 21: The 4x4x4 Roadmap – Appropriate for '09
The 4x4x4 Roadmap – Appropriate for '09 • Short-term environment is tough, but offers opportunities • The mission is to be vigilant & flexible short-term in responding to issues & seizing opportunities but to stay focused on the long-term • Long-term demographic & economic trends are positive for Ne
Slide 22: Nestlé's Four Competitive Advantages
Nestlé's Four Competitive Advantages Product & brand portfolio Comprehensive geographic presence Industry-leading research and development People, culture and values 22 October 23, 2008 Press conference, CEO Presentation 22 2008 Full Year Results Roadshow Name of chairman
Slide 23: Competitive Advantages: Product and Brand Portfolio
Competitive Advantages Product and Brand Portfolio Trusted brands proven to outperform in tough times... ...consumers reluctant to switch. We can build on that loyalty... 23 2008 Full Year Results Roadshow Name of chairman
Slide 24: Multi-Price Point Strategy Captures All Market Opportunities
Multi-Price Point Strategy Captures All Market Opportunities Price: 308 Price: 196 Price: 223 Price: 160 Price: 164 Price: 100 Price: 100 24 2008 Full Year Results Roadshow Name of chairman
Slide 25: Multi-Price Point Strategy Captures All Market Opportunities
Multi-Price Point Strategy Captures All Market Opportunities 473 131 100 80 792 75 Index based on price per cup 396 25 2008 Full Year Results Roadshow Name of chairman
Slide 26: Multi-Price Point Strategy Captures All Market Opportunities
Multi-Price Point Strategy Captures All Market Opportunities Consumers are able to trade up and down... Super Premium 175 Premium 120-130 Mainstream 100 ...without trading out Affordable of Nestlé products 70-80 26 2008 Full Year Results Roadshow Name of chairman
Slide 27: Competitive Advantages: Comprehensive Geographic Presence
Competitive Advantages Comprehensive Geographic Presence Emerging markets in 2008 Opportunities in 2009 • Sales of CHF 35bn • Markets growing • 15.4% Organic Growth • Stimulus packages – • Margins above average drive local consumption • 218 factories • Accelerate PPP & NHW launches • Enhance local d
Slide 28: Competitive Advantages: Comprehensive Geographic Presence
Competitive Advantages Comprehensive Geographic Presence Developed markets in 2009 • Need to grow where the growth is Channels, in-home • With right products and brands Lower cash outlay – smaller packs of existing products PPP and value-priced products • Accelerate innovation; build brand-equity De
Slide 29: Competitive Advantages: Industry Leading R&D Capability
Competitive Advantages Industry Leading R&D Capability Protection Digestive Comfort Opportunity in 2009 • Focus on easy-to-understand, Growth and Development Healthy Recovery consumer-relevant nutrition propositions • Five year pipelines Healthy Ageing Weight • Accelerated roll-outs Management • Tec
Slide 30: Competitive Advantages: People, Culture, Values
Competitive Advantages People, Culture, Values • People Multi-cultural, multi-disciplined, multi-talented • Culture Seeking greater speed, efficiency, achievement Individual responsibility - delegation of decision- making • Values Longer-term thinking with shorter-term performance Creating shared va
Slide 31: Nestlé's Four Growth Drivers
Nestlé's Four Growth Drivers Nutrition, Health & Out-of-home Wellness Emerging consumers Premium PPP and luxury 31 October 23, 2008 Press conference, CEO Presentation 31 2008 Full Year Results Roadshow Name of chairman
Slide 32: Growth Drivers: Nutrition, Health and Wellness
Growth Drivers Nutrition, Health and Wellness • Nutrition a key area of growth in 2009 Nutrition & Health a driver of growth in PPP: 30% of world population affected by 4 micronutrient deficiencies Iodine Iron Zinc Vitamin A N, H, W enhances "value" proposition & differentiates in developed markets
Slide 33: Nutrition, Health and Wellness
Nutrition, Health and Wellness Nestlé Nutrition in 2008 Nestlé Nutrition in 2009 • Sales of CHF 10.4bn • Full innovation pipeline • 7.7% OG; 17.3% EBIT margin • Continued strong • Infant Nutrition near 10% OG performance in Infant • Jenny Craig over 10% OG Nutrition • Strong market share • Focus on
Slide 34: Growth Drivers: Popularly Positioned Products
Growth Drivers Popularly Positioned Products PPPs in 2008 18% 70% • 27% Organic Growth growth • Good EBIT margins 67% PPPs in 2009 • Will drive profitable growth 2007 2008 • Accelerated roll-out % Contribution of PPP SKUs (in value) to Nescafé • Central/Eastern Europe in the Philippines part of CHF
Slide 35: Growth Drivers: Nestlé Professional (Out-of-home)
Growth Drivers Nestlé Professional (Out-of-home) Nestlé Professional in 2008 • Sales of CHF 6.2bn • 6.1% Organic Growth Nestlé Professional in 2009 • Risk: out-of-home consumption declines • Opportunity: exploit market fragmentation – strategy to action / innovation PPP vending • Opportunity: our sk
Slide 36: Growth Drivers: Premiumisation
Growth Drivers Premiumisation Nespresso in 2008 • Sales of CHF 2.2bn • 38% OG, high margins • Presence in 39 countries • 44 new boutiques opened • Promising Chocolate launch Premium Food in 2009 • Under pressure... • ... or an affordable moment of pleasure? • Our conviction: an opportunity for profi
Slide 37: Nestlé's Four Pillars
Nestlé's Four Pillars Innovation & Renovation Operational efficiency 51.8% 43.1% Whenever, wherever, however Consumer communication 37 October 23, 2008 Press conference, CEO Presentation 37 2008 Full Year Results Roadshow Name of chairman
Slide 38: Four Pillars: Innovation & Renovation
Four Pillars Innovation & Renovation in 2008 13% OG 4 market launch 40% MS in Tripled sales 4 months, 21% OG in UK Mexico 10% MS in Mexico after 4 months Nestlé Professional: I&R; USD50m customer intimacy, services & solutions 2009: Accelerate Innovation/Renovation process 38 2008 Full Year Results
Slide 39: Four Pillars: Operational Efficiency
Four Pillars Operational Efficiency Operational efficiency in 2008 • Launch of Nestlé Continuous Excellence • Savings of over CHF 1bn The concept of Acceleration in 2009 • Operational efficiency • Seizing commercial • War on Waste opportunities • HQs/admin costs • Adapting models • Redeployment • Co
Slide 40: Four Pillars: Whenever, Wherever, However
Four Pillars Whenever, Wherever, However Top 10 customers in 2008 • About 20% of F&B sales • 10% growth Hard discounters in 2008 • About 2% of F&B sales • 9% growth Emerging markets in 2008 • About 35% of F&B sales • 15% organic growth BRIC markets in 2008 • About 10% of F&B sales • 13% organic grow
Slide 41: Four Pillars: Consumer Communication
Four Pillars Consumer Communication Communication in 2008 • Marketing spend* up 7.5% Communication in 2009 • Understand changing shopper patterns • POS key in current environment • Media rates softer • Leverage scale to increase campaign opportunities • Drive brand equity *Constant currencies 41 200
Slide 42: Conclusion
Conclusion • 2008: a good year for Nestlé, despite challenges • 2009: Nestlé has momentum – will be a growth leader • Drive acceleration – efficiencies, innovation, mindset • Focus on most relevant, biggest opportunities • Nestlé has the opportunity – it's all about execution • 2009: another year of
Slide 43: The Nestlé Model
The Nestlé Model • Organic Growth 5 - 6% Sales • Increased EBIT margin constant currencies EBIT • Improved capital efficiency 2009: At least close to 5% organic growth and an improvement in the EBIT margin constant currency 43 October 23, 2008 Press conference, CEO Presentation 43 2008 Full Year Res
Slide 44: 2008 Full Year Results Roadshow
2008 Full Year Results Roadshow 44 2008 Full Year Results Roadshow Name of chairman