Slide 1: Half Year Results 2004 - Roadshow
Half Year Results 2004 - Roadshow 1 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 2: Forward looking statements
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. Potential
Slide 3: Agenda
Agenda • Introduction to Zone Asia, Oceania and Africa • Performance 2003 & 1st Half, 2004 • Key markets: strategic overview • Other opportunities for Zone AOA • Conclusion 3 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 4: Zone AOA: great diversity
Zone AOA: great diversity 3 continents 126 countries 15 time zones All major world religions Innumerable languages 40 structured markets Operationally: 17 Regions; 1 Zone Petcare Unit 4 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 5: Nestlé commercial presence
Nestlé commercial presence Turkey Lebanon Syria 1909 1948 1957 Tunisia Egypt Japan 1928 1941 1913 Morocco 1927 China 1908 Hong Kong Senegal 1911 1961 Philippines India 1911 1912 Ivory Coast Ghana Thailand 1959 1957 1924 Indonesia Nigeria Malaysia 1919 1961 1905 South Africa Australia 1916 1880's 5 H
Slide 6: Agenda
Agenda • Introduction to Zone AOA • Performance 2003 & 1st Half, 2004 • Key markets: strategic overview • Other opportunities for Zone AOA • Conclusion 6 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 7: Zone AOA: sales in 2003 CHF 14'432 mio
Zone AOA: sales in 2003 CHF 14'432 mio Main markets: Key products: Japan 2'200 Shelf stable dairy 3'500 Oceania 1'800 Soluble coffees 3'000 Greater China 1'400 Culinary 1'500 Philippines 1'200 Chocolate/Confect. 1'400 Malaysia/Singapore 950 Infant nutrition 1'300 South/East Africa 900 Powdered bever
Slide 8: 2003: managing in turbulent times
2003: managing in turbulent times HIV / AIDS Forex Volatility Middle East tensions Japan slowdown Sept 11 War in Iraq BSE Bali Bombing Australian 4 year Drought Ivory Coast Obesity SARS unrest North Korea Trade Reform Global Equity Bird Flu Markets Nosedive 8 Half Year Results 2004 - Roadshow - Augu
Slide 9: 2003: resilient performance despite challenges
2003: resilient performance despite challenges Zone AOA 2002 2003 Sales (CHF mio) 14'880 14'432 RIG 3.6% 1.8% Organic Growth N/A 4.5% EBITA* (CHF mio) 2'564 2'508 EBITA* % 17.2% 17.4% *before unallocated items Performance in 2003 influenced by : • Exchange rate variation: - 8.7% • Issues: Japan, Phi
Slide 10: 2003: resilient performance despite challenges
2003: resilient performance despite challenges Group Zone AOA % of Group Sales (CHF mio) 87'979 14'432 16.4 % RIG 2.2% 1.8% Organic Growth 5.1% 4.5% EBITA (CHF mio) 12'538* 2'508* 20.0 %* EBITA % 14.3%* 17.4%* *before unallocated items Important contribution to the Group results: • Positive growth i
Slide 11: 2004: sure and steady return to normalcy
2004: sure and steady return to "normalcy" • The present and the future looks promising and stable • Japan's turnaround • China's continued momentum • Revival of South East Asia • Although, not without 'typical AOA' signs of turbulence • The Iraq war is over but reconstruction and stability in the r
Slide 12: 2004 1st half: strong performance in Zone AOA
2004 1st half: strong performance in Zone AOA Zone AOA H1 H1 2003 2004 Sales (CHF mio) 6'834 7'181 RIG 0.9% 5.0% Organic Growth 3.5% 7.3% EBITA (CHF mio) 1'210 1'280 EBITA % 17.7% 17.8% Positive results driven by: • High RIG delivery on most categories • Improvement in productivity • Exchange rate v
Slide 13: Agenda
Agenda • Introduction to Zone AOA • Performance 2003 & 1st Half, 2004 • Key Markets: Strategic Overview • Other Opportunities for Zone AOA • Conclusion 13 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 14: Japan: performing in adverse conditions
Japan: performing in adverse conditions Market dynamics: • Highly complex business environment • F&B industry: Low levels of 'consolidation' • Decade of stagnant growth & recession • Deflation, pressure on selling prices Nestlé Business: • Impact of macroeconomic factors • Performance under pressure
Slide 15: Japan: strong revival in 2004
Japan: strong revival in 2004 The Opportunities: • Economic and Consumer Revival • Perhaps, world's most sophisticated & demanding consumers • The 'Ageing Ageless': Wealthy, Healthy Seniors Opportunity Nestlé Strategies: • New strong leadership in place • Defending EBITA% - Improve or phase out unde
Slide 16: China: more than four-fold growth in 6 years
China: more than four-fold growth in 6 years Market dynamics: • China will continue to grow • Ripple effect on other economies in Asia & the World • Demanding business environment Index Nestlé Business: • Sustained profitable growth over past few years • Robust fundamentals helped withstand SARS • A
Slide 17: China: double digit growth continues in 2004
China: double digit growth continues in 2004 The Opportunities: • Economic progress will 'enable' millions of more consumers • Strengthen Nestlé as the No. 1 Health, Wellness, Nutrition Company • Investing in and partnering China's growth Long term commitment: • CHF 1.2 billion cumulative FDI • 17 w
Slide 18: Philippines: no. 1 Food & Beverage company
Philippines: no. 1 Food & Beverage company Market dynamics: • Living with challenges Sales in PhP (billion) 60 People Power 2 Estrada out! 50 Asian financial crisis 40 People Power at EDSA 30 Marcos ousted! 20 Aquino assassination 10 Energy crisis 0 84 82 83 85 86 87 88 89 90 91 92 93 94 95 96 97 98
Slide 19: Philippines: 2004 continues on track
Philippines: 2004 continues "on track" The Opportunities: • Economy should stabilize with re-elected administration • GDP growth expected at 4% ; Population at 2.3% • Overall, consumption of packaged, convenience goods is still low • High potential for Out of Home channel • Young population Nestlé S
Slide 20: Middle East: promising future despite turbulence
Middle East: promising future despite of turbulence The Market: • GDP growth 4-5%, led by oil prices and investments • Growing awareness of need for reforms • Land of stark contrasts Nestlé Business: • Operating in the shadow of uncertain times • Negative impact of US $ devaluation : price increases
Slide 21: Middle East: strong performance in 1st half
Middle East: strong performance in 1st half 2004 The Opportunities: • Economic growth • Iran & Iraq: 95 million new consumers • 60% population below 25 years • Increasing globalisation and access to 'the world' • Strengthen Nestlé as the No. 1 Health, Wellness, Nutrition Company Nestlé Strategies: •
Slide 22: Agenda
Agenda • Introduction to Zone AOA • Performance 2003 & 1st Half, 2004 • Key Markets: Strategic Overview • Other Opportunities for Zone AOA • Conclusion 22 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 23: Opportunity: India
Opportunity: India • Significant consumer population opportunity • Strong GDP growth rates and stable economy • Benefits of liberalisation visible but process needs to be accelerated • Structural and political stability will further strengthen potential • Nestlé operations are well established with
Slide 24: Opportunity: people
Opportunity: people The potential of 60% of humanity By 2010, Asia will have: • 120 million additional people who can afford packaged goods on a regular basis (+6% vs 2000) • 630 million additional people for whom convenience and pleasure in food products matters (+95% vs 2000) • 100 million additio
Slide 25: Conclusions
Conclusions • The future is exciting and it is now • Tremendous potential and opportunities in Zone AOA • To harness these opportunities, continue focus on - medium & long term Innovation & Renovation pipeline - based on solid Consumer Insight - supported by strong alignment of R&D - channel based a
Slide 26: Half Year Results 2004 - Roadshow
Half Year Results 2004 - Roadshow 26 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 27: First half summary
First half summary • Reported sales, EBITA and net profit all increase • Record First Half cash flow generation • Challenging markets in Zone Europe; Waters affected by y-o-y weather comparison • Good performances in Americas* & Zone AOA • Like-for-like constant currency EBITA margin up 20bps, despi
Slide 28: Full Year 2004: Europe
Full Year 2004: Europe • Competitive retail environment • Ice cream: difficult Q3 comparisons • GB: improved growth, chocolate & coffee • France: Sarkozy effect, chocolate launches • Germany: relaunch of Mövenpick • Eastern Europe: to continue strong • Nescafé: 18 country roll-out • Hot Pockets laun
Slide 29: France Germany
France Germany 29 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 30: Full Year 2004: Europe
Full Year 2004: Europe • Competitive retail environment • Ice cream: difficult Q3 comparisons • GB: improved growth, chocolate & coffee • France: Sarkozy effect, chocolate launches • Germany: relaunch of Mövenpick • Eastern Europe: to continue strong • Nescafé: 18 country roll-out • Hot Pockets laun
Slide 31: Half Year Results 2004
31 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 32: Full Year 2004: Europe
Full Year 2004: Europe • Competitive retail environment • Ice cream: difficult Q3 comparisons • GB: improved growth, chocolate & coffee • France: Sarkozy effect, chocolate launches • Germany: relaunch of Mövenpick • Eastern Europe: to continue strong • Nescafé: 18 country roll-out • Hot Pockets laun
Slide 33: Full Year 2004: Americas
Full Year 2004: Americas North America • Dreyer's: enhancer to organic growth • Frozen Food: higher RIG than H1: Q3 launches • PetCare: lower RIG than H1, but good growth • GLOBE: successful "go-live" in Canada Latin America • Brazil: higher RIG than H1 • Mexico: lower RIG than H1, but good growth •
Slide 34: Half Year Results 2004
34 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 35: Full Year 2004: Americas
Full Year 2004: Americas North America • Dreyer's: enhancer to organic growth • Frozen Food: higher RIG than H1: Q3 launches • PetCare: lower RIG than H1, but good growth • GLOBE: successful "go-live" in Canada Latin America • Brazil: higher RIG than H1 • Mexico: lower RIG than H1, but good growth •
Slide 36: Full Year 2004: Asia, Oceania & Africa
Full Year 2004: Asia, Oceania & Africa • Trading environment: improved over 2003 • Milk: costs remain high • Japan: Nescafé upgrades in H2 • Emerging markets: generally strong • Solid performance to continue in H2 • GLOBE: successful "go-live" in Philippines 36 Half Year Results 2004 - Roadshow - Au
Slide 37: Full Year 2004: Nestlé Waters
Full Year 2004: Nestlé Waters Europe • Q3 2003: heat wave & retail overstocking • Trading environment same as Zone North America • Performing well - profitable share gains • Wal*Mart partnership on Nestlé Pure Life successful Group • PET resin prices (oil) • Final quarter is key to Full Year growth
Slide 38: Full Year 2004: Product categories - Beverages
Full Year 2004: Product categories Beverages • Coffee launches in all three zones • Liquid to benefit from 2003 Japan restructuring Milk products, nutrition and ice cream • Southern hemisphere ice cream season to come • Milk cost driving pricing in Milk and Nutrition: to exceed 2003 Organic Growth 3
Slide 39: Full Year 2004: Product categories - Prepared dishes
Full Year 2004: Product categories Prepared dishes and cooking aids • Frozen Food US: Q3 launches for peak season • Hot Pockets to break into Europe • Emerging market business growing rapidly Chocolate, confectionery and biscuits • European launch programme - RIG ahead of 2003 • Kit Kat UK share gai
Slide 40: Full Year 2004: Product categories - PetCare
Full Year 2004: Product categories PetCare • North American RIG ahead of 2003 • New management in Latin America • Europe share gains, Beneful launch • Positive business momentum in AOA 40 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 41: Half Year Results 2004
41 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 42: Full Year 2004: Product categories - PetCare
Full Year 2004: Product categories PetCare • North American RIG ahead of 2003 • New management in Latin America • Europe share gains, Beneful launch • Positive business momentum in AOA 42 Half Year Results 2004 - Roadshow - August 2004 Name of chairman
Slide 43: EBITA margin development H1 2003 - H1 2004
EBITA margin development H1 2003 - H1 2004 Operational Tactical efficiencies reinvestment + + Growth Input costs t en stm s ing ve v Sa in Re + 20 bp Divestitures - 30 bp + 20 bp Acquisitions kag al, pac ateri ing Comparable + 20 bp th m structure + 10 bp ow Market R aw Gr mix Constant 12.2% 0 bp cu
Slide 44: Nestlé: Outlook 2004
Nestlé: Outlook 2004 • Zone Europe to be challenging, but some improved performance likely • Improving conditions in Americas • North America organic growth to benefit from Frozen food and Dreyer's • Good performance in AOA to continue • Organic growth to be within 5 - 6% range • Improvement in 2004
Slide 45: Half Year Results 2004 - Roadshow
Half Year Results 2004 - Roadshow 45 Half Year Results 2004 - Roadshow - August 2004 Name of chairman