Slide 1: Welcome to the Full-Year 2016 Conference
Welcome to the Full-Year 2016 Conference 1 | February 16, 2017 | Nestlé Full-Year Results 2016
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 2016 Results – Mark Schneider, CEO
Full-Year 2016 Results Mark Schneider, Nestlé CEO 3 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 4: Key messages
Key messages ˙ 2016 – Organic Growth at higher end of industry, at lower end of our expectations – Solid operating margin improvement ˙ 2017 and mid-term – Continuity and change – Organic Growth remains key to long-term value creation – Continued focus on operating efficiency 4 | February 16, 2017 |
Slide 5: 2016 performance highlights
2016 performance highlights Sales Organic Real Internal TOP Growth Growth Margin CHF 89.5 bn +3.2% +2.4% +30 bps in constant currency 5 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 6: Continuity and change
Continuity and change – Nutrition, Health and Wellness strategy – Committment to long-term value creation – Prudent approach to M&A – Focus on people and leadership – Transparency with all stakeholders – Making choices, fast execution 6 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 7: Organic Growth key to long-term value creation
Organic Growth key to long-term value creation Expect mid-single digit Organic Growth by 2020 – Invest selectively to support fast-growing categories and regions – Address low-growth businesses – Product and business model innovation – Embrace digital opportunities – Portfolio management 7 | Februar
Slide 8: Continued focus on operating efficiency
Continued focus on operating efficiency – Leverage existing efficiency culture – Expect increasing restructuring cost – At least 200 basis points structural cost savings* target by 2020 - partial reinvestment to drive Organic Growth – Focus areas: • Non-customer facing structural costs • Capacity ut
Slide 9: Outlook 2017
Outlook 2017 – Organic Growth of 2 to 4% – Increased restructuring cost of CHF ~500 mio to drive future profitability – As a result, stable Trading Operating Profit margin* in 2017 – Underlying EPS* growth and improved capital efficiency *In constant currency 9 | February 16, 2017 | Nestlé Full-Year
Slide 10: Full-Year 2016 Results – François-Xavier Roger, CFO
Full-Year 2016 Results François-Xavier Roger, Nestlé CFO 10 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 11: Increasing RIG, margin expansion, strong cash flow
Increasing RIG, margin expansion, strong cash flow Growth TOP Margin* Free Cash Underlying Flow EPS* OG +3.2% +30 bps CHF +3.4% 10.1 bn RIG +2.4% +20 bps reported 11.3% of sales +2.7% reported *In constant currency 11 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 12: Quality growth: Organic Growth driven by RIG
Quality growth Organic Growth driven by Real Internal Growth 5% % OG 4% 3% % Pricing 2% 1% % RIG 0% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q16-16 Q2-16 Q3-16 Q4-16 12 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 13: Quality growth: broad-based RIG and OG across geographies
Quality growth Broad-based RIG and OG across geographies AMS EMENA AOA Sales 40.2 bn 26.8 bn 22.5 bn (in CHF) RIG +2.0% +2.4% +3.0% OG +4.5% +1.9% +2.8% Each geography includes Zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health 13 | F
Slide 14: Quality growth: developed and emerging markets
Quality growth Growth in Developed and Emerging markets Developed Emerging Sales (in CHF) 52.1 bn 37.4 bn % of group sales 58% 42% RIG 2.3% 2.4% FY15 2.2% 2.2% OG 1.7% 5.3% FY15 1.9% 7.0% 14 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 15: Quality growth: innovation and renovation
Quality growth 30% of sales come from products innovated or renovated in the last 3 years Premiumisation Nutrition and Added-value Science Les Recettes de l’Atelier Nescafé Gold Barista Nido FortiGrow ProNourish Nespresso Vertuoline Coffee-mate Natural Bliss Milo ready-to-drink Wyeth Illuma 15 | Feb
Slide 16: Quality growth: leading in eCommerce
Quality growth Leading in eCommerce eCommerce as a % of Group Sales 4.9% eCommerce Sales (FY15 vs FY16) 2.9% Group +18% Group (Excluding Nespresso) +34% 2012 2016 16 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 17: Zone AMS
Zone AMS Sales CHF 26.4 bn Organic growth 4.2% Real internal growth 1.3% Trading operating profit margin 19.3% (vs LY) (-10 bps) – Positive organic growth in nearly all markets – Growth in North America accelerated, driven by RIG – Latin America delivered high single-digit OG, supported by pricing –
Slide 18: Zone EMENA
Zone EMENA Sales CHF 16.2 bn Organic growth 2.0% Real internal growth 2.7% Trading operating profit margin 16.7% (vs LY) (+100 bps) – Good RIG momentum and market share gains across the Zone – Western Europe faced negative pricing in a deflationary environment – Central & Eastern Europe delivered bo
Slide 19: Zone AOA
Zone AOA Sales CHF 14.5 bn Organic growth 3.2% Real internal growth 2.9% Trading operating profit margin 19.0% (vs LY) (+60 bps) – Improving RIG momentum in Zone – China was supported by Nescafé and confectionery, while Yinlu was still dilutive – ASEAN sustained high single-digit growth through the
Slide 20: Nestlé Waters
Nestlé Waters Sales CHF 7.9 bn Organic growth 4.5% Real internal growth 4.5% Trading operating profit margin 11.9% (vs LY) (+110 bps) – Broad-based volume growth in developed and emerging markets – Perrier and S.Pellegrino grew twice as fast as mainstream brands – Local brands Poland Spring, Ice Mou
Slide 21: Nestlé Nutrition
Nestlé Nutrition Sales CHF 10.3 bn Organic growth 1.5% Real internal growth 0.9% Trading operating profit margin 22.7% (vs LY) (+10 bps) – Category affected by soft demand and limited pricing – Strong momentum in many emerging markets across Latin America and South East Asia – China soft due to inve
Slide 22: Other Businesses
Other Businesses Sales CHF 14.1 bn Organic growth 3.7% Real internal growth 3.4% Trading operating profit margin 15.2% (vs LY) (-50 bps) – Nespresso: Good broad-based growth; VertuoLine system continued to do well – Nestlé Professional: Growth was driven by emerging markets and solid US – Nestlé Hea
Slide 23: Broad-based growth across product groups
Broad-based growth across product groups 5.3 5.0 4.6 3.2 2.7 2.0 Pricing 1.8 1.6 RIG Total Group Powdered and Water Milk products Nutrition and Prepared dishes Confectionery PetCare Liquid and Ice cream Health Science and cooking aids Beverages 23 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 24: Trading operating profit across product groups
Trading operating profit across product groups in % of sales 20.8% 21.0% 18.4% 18.5% 15.3% 15.0% 13.7% 12.2% Reported bps evolution +20 -50 +100 +150 -110 +130 -30 +20 Total Group Powdered and Water Milk products Nutrition and Prepared dishes Confectionery PetCare Liquid and Ice cream Health Science
Slide 25: Trading Operating Profit +30 bps in constant currency
Trading Operating Profit +30 bps in constant currency +80 bps -60 bps +10 bps 13.7% Investments: Savings: - Marketing - NCE - Restructuring - Commodities 15.1% - Portfolio Management 15.4% +130 -30 +20 (+x) (+x) (+x) (+x) (+x) (+x) TOP COGS & Marketing & Currency TOP FY 2015 Distribution Administrat
Slide 26: Cost efficiencies and portfolio management driving gross margin
Cost efficiencies and portfolio management driving gross margin evolution Gross margin as a % of sales 50.6% 49.6% 48.1% 47.8% 47.1% 2012* 2013 2014 2015 2016 *Re-stated 26 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 27: Underlying EPS
Underlying EPS Underlying +3.4% EPS in constant currency 27 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 28: Continued focus on working capital
Continued focus on working capital Working capital as a % of sales, calculated on a 5-quarter average 8.5% 6.5% 5.3% 4.7% 2.8% 2012* 2013 2014 2015 2016 *Re-stated 28 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 29: CAPEX discipline in line with growth ambitions
CAPEX discipline in line with growth ambitions CAPEX as a % of sales 5.9% 5.3% 4.4% 4.5% 4.3% 2012* 2013 2014 2015 2016 *Re-stated 29 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 30: Consistent industry-leading free cash flow generation
Consistent industry-leading free cash flow generation Free cash flow as a % of sales 11.3% 11.2% 11.0% 10.9% 10.2% 2012* 2013** 2014*** 2015 2016 *Re-stated ** Adjusted for exceptional income due to Givaudan disposal (CHF 1.1 bn) 30 | February 16, 2017 | Nestlé Full-Year Results 2016 ***Adjusted for
Slide 31: Improving ROIC
Improving ROIC ROIC before Goodwill and intangible assets 30.1% 30.4% 31.7% 29.7% 29.9% 13.9% 12.7% 10.8% 10.9% 11.2% ROIC after Goodwill and intangible assets 2012* 2013 2014 2015 2016 *Re-stated 31 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 32: Net debt in line with AA credit rating
Net debt in line with AA credit rating In CHF bn -1.0 -1.5 +0.8 -6.9 +10.1 -15.4 -13.9 Net Debt Treasury Dividends M&A FX & Other Free Cash Net Debt (Jan 1, 2016) Shares (net) (net) Flow (Dec 31, 2016) 32 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 33: 2017 focus
2017 focus 2017 Priorities 2017 Guidance – Maintain volume growth – Organic Growth of 2 to 4% – Secure pricing – Increased restructuring costs to drive future profitability – Cost discipline – As a result, stable Trading – Capital efficiency Operating Profit margin* in 2017 – Underlying EPS growth*,
Slide 34: Full-Year 2016 Results – Discussion
Full-Year 2016 Results Discussion 34 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 35: Full-Year 2016 Results – Supporting slides
Full-Year 2016 Results Supporting slides 35 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 36: FY16 Results Summary, by operating segment
FY16 Results Summary, by operating segment Sales Trading Operating Profit (TOP) Sales RIG Price OG TOP TOP TOP (CHF bn*) % % % (CHF bn*) % (bps) Zone AMS 26.4 1.3 2.9 4.2 5.1 19.3 -10 Zone EMENA 16.2 2.7 -0.7 2.0 2.7 16.7 +100 Zone AOA 14.5 2.9 0.3 3.2 2.8 19.0 +60 Nestlé Waters 7.9 4.5 0.0 4.5 0.9
Slide 37: FY16 Results Summary, by product group
FY16 Results Summary, by product group Sales Trading Operating Profit (TOP) Sales RIG Price OG TOP TOP TOP (CHF bn*) % % % (CHF bn*) % (bps) Powdered and Liquid 19.8 3.7 0.9 4.6 4.1 20.8 -50 Beverages Water 7.4 5.0 0.0 5.0 0.9 12.2 +100 Milk Products and Ice cream 14.3 0.5 1.1 1.6 2.6 18.4 +150 Nutr
Slide 38: Quarterly Summary – by operating segment
Quarterly Summary – by operating segment Fourth Quarter 2016 Sales RIG % OG % (CHF bn) Zone AMS 7.6 0.6 3.5 Zone EMENA 4.1 2.5 1.4 Zone AOA 3.9 3.4 4.2 Nestlé Waters 1.8 4.8 5.9 Nestlé Nutrition 2.6 1.1 1.8 Other Businesses 4.0 1.9 1.5 Total Group 24.0 2.0 2.9 38 | February 16, 2017 | Nestlé Full-Ye
Slide 39: Quarterly Summary – historical quarters
Quarterly Summary – historical 10 quarters Period RIG % Price % OG % Q3 2014 1.2 2.9 4.1 Q4 2014 2.4 2.1 4.5 Q1 2015 1.9 2.5 4.4 Q2 2015 1.4 3.2 4.6 Q3 2015 2.7 1.0 3.7 Q4 2015 2.7 1.2 3.9 Q1 2016 3.0 0.9 3.9 Q2 2016 2.7 0.4 3.1 Q3 2016 1.9 1.3 3.2 Q4 2016 2.0 0.9 2.9 39 | February 16, 2017 | Nestlé
Slide 40: Currency overview
Currency overview Weighted average rate 2015 2016 Variation in % US Dollar 1 USD 0.96 0.99 +2.3 Euro 1 EUR 1.07 1.09 +2.1 Chinese Yuan 100 CNY 15.32 14.84 -3.2 Renminbi Brazilian Reias 100 BRL 29.00 28.58 -1.4 UK Pound Sterling 1 GBP 1.47 1.33 -9.7 Mexican Pesos 100 MXN 6.07 5.28 -13.1 Philippine Pe
Slide 41: FX Impact
FX Impact FX Impact 2016 Zone AMS -2.5% Zone EMENA -1.4% Zone AOA -1.8% Nestlé Waters -0.1% Nestlé Nutrition -2.6% Other Businesses -0.3% Total -1.6% 41 | February 16, 2017 | Nestlé Full-Year Results 2016
Slide 42: Detailed income statement
Detailed income statement 2016 2015 In CHF mio Sales 89'469 88'785 Other revenue 317 298 Cost of goods sold (44'199) (44'730) Distribution expenses (8'059) (7'899) Marketing and administration expenses (21'485) (20'744) Research and development costs (1'736) (1'678) Other trading income 99 78 Other
Slide 43: EPS Reconciliation (1 of 2)
EPS Reconciliation (1 of 2) From net profit to underlying profit 2015 2016 Net Profit 9’066 8’531 Restructuring costs 165 300 Impairments of property, plant & equipment, goodwill and int. assets 576 640 Net result on disposal of businesses 422 - Other adjustment in Net other income/(expense) 461 204
Slide 44: EPS Reconciliation (2 of 2)
EPS Reconciliation (2 of 2) From operating profit to underlying net profit 2015 2016 Operating profit adjusted 14’032 14’307 Net financial income / (expense) -624 -637 Adjusted taxes -3’704 -3’803 Adjusted income from associates and joint ventures 1’050 1’011 Adjusted non-controlling interests -401
Slide 45: Abbreviations
Abbreviations OG Organic Growth RIG Real Internal Growth TOP Trading Operating Profit FCF Free Cash Flow COGS Cost of Goods Sold AMS Zone Americas EMENA Zone Europe, Middle East, and North Africa AOA Zone Asia, Oceania, and sub-Saharan Africa EPS Earnings per Share 45 | February 16, 2017 | Nestlé Fu