Slide 1: 2009 Full Year Results
2009 Full Year Results 1 19 February 2010 2009 full year results 23 February 2010 2009 Full Year Results Roadshow
Slide 2: 2009 Full Year Results – James Singh, CFO
2009 Full Year Results James Singh Chief Financial Officer 2 19 February 2010 2009 full year results 23 February 2010 2009 Full Year Results Roadshow
Slide 3: 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 4: Agenda
Agenda 2009 Business Environment How we managed the business in 2009 What we achieved in 2009 2010 Business Environment Making progress in 2010 M&A update Use of cash 4 19 February 2010 2009 Full Year Results Roadshow 23 February 2010 2009 Full Year Results Roadshow
Slide 5: The Economic Dashboard as it looked going into 2009
The Economic Dashboard as it looked going into 2009 5 23 February 2010 2009 Full Year Results Roadshow
Slide 6: 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 Protect financial Optimise business Drive profitable performance performance
Slide 7: 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 8: 2009 Full Year Highlights
2009 Full Year Highlights 4.1% OG outperformed industry: again an excellent broad-based performance building on momentum throughout the year EBIT margin increased 40 basis points (CC) whilst increasing investment in growth Nestlé Continuous Excellence: over CHF 1.5 billion efficiencies In an
Slide 9: Total Performance Framework
Total Performance Framework DRIVING PERFORMANCE ACHIEVING SIMPLICITY ► Organic Growth 4.1%; F&B 3.9% ► Divested businesses, annualised sales > CHF 0.8 bn ► PPP: CHF 8.8 bn (OG +12.7%) ► SKU Rationalisation: reduced by -16% ► Growth with Top Ten Customers ► Admin Costs: +30 bps (Pensions, FX) ► Facto
Slide 10: The Economic Dashboard at year-end 2009
The Economic Dashboard at year-end 2009: composite leading indicators show signs of improvement in most OECD countries 10 23 February 2010 2009 Full Year Results Roadshow
Slide 11: Big Government at centre stage
Big Government at centre stage Regulations and regulatory environment Taxation and revenue sourcing International trade / protectionism Tensions between “Growth-haves” and “Growth-have-nots” Anti-trust 11 23 February 2010 2009 Full Year Results Roadshow
Slide 12: Savings ratios remain mixed around the world but in reasonably good shape
Savings ratios remain mixed around the world but in reasonably good shape % of disposable income 45.0 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 - -5.0 France Germany Japan USA UK Brazil Russia India China 2005 2009 12 23 February 2010 2009 Full Year Results Roadshow
Slide 13: Consumer confidence is coming back but USA lagging other countries
Consumer confidence is coming back but USA lagging other countries Jan 2005 Jul 2007 Jan 2009 Jan 2010 Source: Eurostat, Federal Reserve Bank of St. Louis 13 23 February 2010 2009 Full Year Results Roadshow
Slide 14: The World Economy is stabilising but recovery is expected to be slow
The World Economy is stabilising but recovery is expected to be slow 2009 World Bank Forecasts 2010 Nov ’08 Jan ‘10 GDP growth % 3.0 1.1 0.9 -1.7 -2.2 2.7 Recession Moderate Severe Crisis Moderate Inflation % 1.5 – 2.5 2.4 0 – 0.5 2.0 – 3.0 Source: World Bank The outlook for GDP is positive but grow
Slide 15: Government support programs are expiring
Government support programs are expiring Mar 31 ’10 TALF (ABS) Feb 1 ’10 CPFF PDCF AMLF Sep 18 ’09 MMFTG Oct 30 ’09 TSLF Jun 30 ’10 TALF Guarantee MMIFF Guarantee (CMBS) Sep-09 Dec-09 Mar-10 Jun-10 Jan 27 ’10 Mar 16 ’10 Apr 28 ’10 Federal Reserve Federal Reserve Federal Reserve Meeting Meeting Meeti
Slide 16: Outstandings ($Billions)
Industrial Segment Liquidity Mix change in favour of longer term maturities U.S. CP Outstandings (Industrials) $ Bn 215 200 The Nestlé Group had Outstandings ($Billions) 185 170 Down $9bn in USCP as at 155 50% vs. 31st Dec 2009 which 140 Dec 2008 represents 9.5% of 125 110 Non-Financial Issuers. 95
Slide 17: Inflation is on the rise & will be difficult to suppress
Inflation and higher Interest Rates are a risk Inflation is on the rise & will be difficult to suppress Input costs increase – Commodities that face limited supply are already contributing – Energy costs will be higher on average vs. last year Labour rates face increasing pressure Probability
Slide 18: Making Progress in 2010 Nestlé Food & Beverage Business
Making Progress in 2010 Nestlé Food & Beverage Business Organic Growth above 2009 level EBIT margin improvement in constant currencies 18 23 February 2010 2009 Full Year Results Roadshow
Slide 19: 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 20: Nestlé's M&A strategy
Nestlé's M&A strategy Clear strategic focus Food & Beverages Nutrition, Health & Wellness Adjacencies to existing businesses Clear criteria for transactions Enhancing to key metrics Strong market positions, brands, capabilities Ease of integration (culture) Global scope but focus on bolts-ons
Slide 21: Acquisitions have been in developed & emerging markets
Acquisitions have been in developed & emerging markets 2007* 2008* 2009* Emerging 23% Developed Emerging Emerging Developed 38% Developed 62% 47% 53% 77% Developed market transactions are often multi-market Emerging market deals are generally local and therefore smaller, but very quickly integra
Slide 22: Alcon disposal
Alcon disposal: Likely deal closure end Q3 2010 F&B will continue to deliver profitable growth Treasury management & performance Capital preservation: counter-party & instrument risks The Share buy-back to have a major positive incremental impact in 2010 and 2011 Growth in underlying ear
Slide 23: Net debt increased by CHF 3.5bn, mostly due to exclusion of Alcon's Net position
Net debt increased by CHF 3.5bn, mostly due to exclusion of Alcon’s Net position Decline in Working Capital contributed CHF 4.8bn +12.1 -5.0 -7.0 14.6 -0.1 -0.6 15.2 -2.9 18.1 FY08 Free Dividend Share Others Acqu. FY09 Alcon FY09 Net debt Cash-Flow Buy-back Net Net debt Disc. Net debt of Divest. exc
Slide 24: Net Debt Outlook (CHF bn)
Net Debt Outlook (CHF bn) 2009 2009 2010 2012/2013 with Alcon Alcon Discontinued Net Cash Net debt Net debt Already announced: 15.2 Alcon +CHF28bn XX.X 18.1 Kraft Pizza -CHF4bn Dividend -CHF5.6bn Share Buy-back -CHF10bn Gold Standard Credit Quality 24 23 February 2010 2009 Full Year Results
Slide 25: Priorities for use of cash
Priorities for use of cash Capital expenditure & support for RIG M&A ‒– Kraft Pizza: CHF 4 billion ‒– Bolt-ons Dividend 2010: CHF 5.6 billion Share buy-backs CHF 10 billion 2010, CHF 5 billion 2011 Net debt could be 2009 level by end 2012 25 19 February 2010 23 2009 Full Year Results Roadsho
Slide 26: Dividends
Dividends At 51.8% of underlying EPS, Nestlé is sharing a significant part of its returns from its progress with its shareholders This pattern is consistent: CHF 2005 2006 2007 2008 2009 Underlying EPS 2.15 2.41 2.80 2.82 3.09 Dividend 0.90 1.04 1.22 1.40 1.60 Payout ratio 41.9% 43.2% 43.6% 49.6
Slide 27: Conclusion
Conclusion 2009 Broad-based performance All operating segments contributed Nestlé continuous Excellence exceeds targets Total Performance Framework EBIT margin improvement; increased brand investments Underlying Net Profit, ROIC, CF improvement Performance improvement shared with share
Slide 28: Nestlé: Opportunities for growth for years to come
Nestlé: Opportunities for growth for years to come Paul Bulcke Chief Executive Officer 28 19 February 2010 2009 full year results 23 February 2010 2009 Full Year Results Roadshow
Slide 29: The Nestlé Roadmap: driving profitable growth
The Nestlé Roadmap: driving profitable growth 29 23 February 2010 2009 Full Year Results Roadshow
Slide 30: Captures the very essence of Nestlé and the promise we commit to
... captures the very essence of Nestlé and the promise we commit ourselves to everyday, everywhere as the leading Nutrition, Health and Wellness Company 30 23 February 2010 2009 Full Year Results Roadshow
Slide 31: Nutrition is about pleasure
Nutrition is about pleasure 31 23 February 2010 2009 Full Year Results Roadshow
Slide 32: Nutrition is about balance
Nutrition is about balance 32 23 February 2010 2009 Full Year Results Roadshow
Slide 33: Nutrition is about understanding
Nutrition is about understanding 33 23 February 2010 2009 Full Year Results Roadshow
Slide 34: Nutrition: three dimensions
Nutrition: three dimensions Pleasure Balance Understanding 34 23 February 2010 2009 Full Year Results Roadshow
Slide 35: Good Food, Good Life: Across categories, with R&D driven innovation
Good Food, Good Life Across categories, with R&D driven innovation 35 23 February 2010 2009 Full Year Results Roadshow
Slide 36: World population
World population Population, in million 6800 6000 4000 2000 1620 360 350 900 170 610 0 Year 1300 1700 1900 2010 1 2 3 4 5 6 7 8 9 0 1 1 1 2 3 4 1 5 1 6 7 1 8 1 9 36 23 February 2010 2009 Full Year Results Roadshow
Slide 37: Growing prosperity: income groups in world population 1998 – 2008 – 2018
Growing prosperity: income groups in world population 1998 – 2008 – 2018 Number of persons, million + 412 + 310 + 148 + 905 + 981 Income groups in PPP US$ per capita Sources: UN WIDER and World Bank (also for outlook on economic growth 2008-2018); analysis EIR 37 23 February 2010 2009 Full Year Resu
Slide 38: Higher incomes lead to higher added-value
Higher incomes lead to higher added-value Manufacturing value-added $ 800 in food consumption actual US$, per capita Convenience Nutrition Well-being Sustenance Pleasure and Health and diversity wellness Per-capita income US$ 2,700 US$ 14,000 US$ 22,000 US$ 30,000 Sources: UNIDO (value-added), World
Slide 39: The trends are positive for Nestlé
The trends are positive for Nestlé Populations are growing – more consumers, increased consumption Incomes are growing – greater potential from PPP to Premium And people increasingly care about what they eat – greater potential for added-value & Nutrition, Health & Wellness Nestlé's opportunit
Slide 40: The Developed World: Nestlé is accelerating its innovation
The Developed World Nestlé is accelerating its innovation All markets have growth potential... ... through insightful innovation that excites consumers ... through mastering distribution & customer service: traditional, discounters, speciality, OOH, on-line, ethnic... Nutrition, Health & Wellnes
Slide 41: NHW: Resource Senior Activ
NHW: Specific need-state: Resource Senior Activ: helping older adults regain strength & stay active Addresses malnutrition amongst older adults The first nutritionally complete oral supplement of its kind Introduced in Switzerland and to be rolled-out in Key European countries 41 23 February 2
Slide 42: NHW: Taste & Pleasure: The Skinny Cow
NHW: Taste & Pleasure: The Skinny Cow 42 23 February 2010 2009 Full Year Results Roadshow
Slide 43: NHW: Popularly Positioned Products in Europe
NHW: Popularly Positioned Products in Europe: Targeted to specific consumer groups Muslim & North African African Asian 4-5 million people 1 million people 0.7 million people Ethnic Target Group Ethnic Target Group ‘Religious’ ‘Nostalgic’ 43 23 February 2010 2009 Full Year Results Roadshow
Slide 44: NHW: Nescafé Green Blend
NHW: Another breakthrough innovation in Soluble Coffee: Nescafé Green Blend True innovation is big steps, game-changing Its reward is profitable growth for years to come Renovation is small steps, updating, adapting, extending It enhances consumer relevance, sharpens competitive edge Nescafé: an inn
Slide 45: Nescafé: Three linked global priorities
Nescafé: Three linked global priorities Premiumisation Nutrition, Health & Popularly Positioned Wellness Products Over CHF 10 billion of sales growing over 7% Average consumption of coffee only a quarter a cup per day 45 23 February 2010 2009 Full Year Results Roadshow
Slide 46: The emerging markets
The emerging markets Populations are growing, people are becoming wealthier, more health-conscious, more brand-aware We are well-established with tailored business models, deep distribution, strong market positions, great brand recognition We are building on those strengths, accelerating our i
Slide 47: Increasing our R&D capabilities in emerging markets
Staying ahead of the trends in emerging markets: Increasing our R&D capabilities to drive growth 2008: China 2009: Côte d'Ivoire 2010: Chile 2012: India 47 23 February 2010 2009 Full Year Results Roadshow
Slide 48: Investing for growth in emerging markets through increased capital expenditure
Investing for growth in emerging markets through increased capital expenditure Expected capital expenditure: 2010-2012 BRIC: CHF 1.5 billion Asia: CHF 2 billion Africa: CHF 1 billion M&A also has a role to enhance growth 48 19 February 2010 23 2009 Full Year Results Roadshow
Slide 49: NHW: Milo (Asia)
NHW: Energy, activity, Milo (Asia). Strong nutrition credentials & link to youth sports Contains ACTIGEN-E®, a unique combination of 8 vitamins and 4 minerals: high in magnesium with enriched levels of Vitamins B, Vitamin C & Calcium Helps optimise the conditions for the release of energy from C
Slide 50: NHW: Maggi (Africa)
NHW: enhanced nutrition in traditional diets Maggi (Africa) 2003-09: cubes sold doubled to 24 billion in Central/West region 10yr CAGR: 11.5% Over 500,000 outlets in 2012 from 280,000 in 2009 Innovations to come – will accelerate growth 50 23 February 2010 2009 Full Year Results Roadshow
Slide 51: NHW: Maggi Magic Sarap (Asia)
NHW: balanced diets for low-income families: Maggi Magic Sarap (Asia) 2005 – 2009 The Philippines Penetration from 10% – 70% Market share from 12% – 46% Volume from 400 tons to 10,000 Communication linked to recipes promoting balanced diets 51 23 February 2010 2009 Full Year Results Roadshow 51
Slide 52: NHW: Nido international roll-out
NHW: Nido: enhanced milks for low-end consumers: International roll-out & driving deeper distribution Algeria China Caribbean Reg Q2-09 NME Bangladesh Q4-08 NEAR Q1-08 Q1-09 Q3-08 Morocco Q3-09 Mexico Central Am Cambodia Philippines Q3-07 Q2-08 Colombia Q3 09 Pakistan Myanmar New Recipe: Q1-09 Q2-09
Slide 53: NHW: balanced diets for low-income consumers (Brazil)
NHW: balanced diets for low-income consumers (Brazil) – driving deeper distribution, creating wealth 6,000 independent saleswomen selling in their own neighbourhoods Saleswomen sell mixed bags of product, often tailored to individual customers & linked to consumption moments: Chilled dairy C
Slide 54: Nestlé: Opportunities for growth for years to come
Nestlé: Opportunities for growth for years to come Nestlé's presence all over the world is an unparalleled foundation for growth The Nestlé Roadmap has laid the building blocks for growth by category and country – global strategy, local execution We are aligned behind our Roadmap, focused on a
Slide 55: The Nestlé Roadmap: driving profitable growth
The Nestlé Roadmap: driving profitable growth 55 23 February 2010 2009 Full Year Results Roadshow