Slide 1: 2007 half year results roadshow
2007 half year results roadshow 2007 half year results roadshow - August 2007 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: 2007 First Half Highlights
2007 First Half Highlights Strong performance across key metrics Improvement H1 07 v H1 06 H1 07 total Sales – total + 8.4% + CHF 4.0 bio CHF 51.1 bio Organic growth + 7.4% EBIT + 14.2% + CHF 0.9 bio CHF 6.9 bio EBIT margin + 60 bps 13.5% Net profit + 18.4% + CHF 0.8 bio CHF 4.9 bio Net profit margi
Slide 4: Creating shareholder value through profitable growth
Creating shareholder value through profitable growth Growing the business: Nutrition, Health & Wellness Ø Generating sales growth Ø Growing market shares Ø Enhancing mix Ø Driving margin Driving efficiencies: improving performance ØDrive simplicity across the businesses ØLeverage scale for competiti
Slide 5: Performance of major brands
Performance of major brands Key brands above market growth Organic Growth H1 2007 40 35 30 BAB's: 25 20 15 10 5 0 -5 5 2007 half year results roadshow - August 2007 Name of chairman
Slide 6: Powdered & Liquid Beverages
Powdered & Liquid Beverages Strong performance by all categories Performance Highlights H1 Sales CHF: 8.4 bio Ø Strong growth in all categories OG: 9.2% Ø Nespresso organic growth of 40% Mkt share*: ü Ø MILO renovation a catalyst for 10%+ growth Ø Nesquik performing well due to less/no sugar variant
Slide 7: Winning innovation: Nescafé Dolce Gusto off to good start
Winning innovation Nescafé Dolce Gusto off to good start Nescafé a Billionaire Brand, organic growth of 6.9% Nescafé Dolce Gusto: Extremely high consumer satisfaction & recommendations 229,000 machines sold to consumers; 84 million capsules sold to trade CHF 25 million in sales: 1pt RIG to Soluble C
Slide 8: Winning innovation: Milo renovation in 2006
Winning innovation Milo renovation in 2006 Ø A Billionaire Brand, organic growth of 10.6% Ø The Renovation - Nutrition Health & Wellness Improved mix of carbohydrates to claim "Go Further" No manufacturing cost increase Same great Milo taste Ø Malaysia relaunch success Mkt share (Powder) from 90.8%
Slide 9: Nestlé Waters
Nestlé Waters Double digit growth & margin improvement Performance Highlights H1 Sales CHF: 5.4 bio Ø Billionaire Brands, Pure Life and Poland Spring, achieve double digit growth OG: 10.3% Ø S. Pellegrino & Perrier, Nestlé Aquarel Mkt share*: ü also double digit Ø Five factories sold/closed in Europ
Slide 10: Focus & differentiation driving growth
Focus & differentiation driving growth STATUS FUNCTIONAL BASIC NUTRITION 10 2007 half year results roadshow - August 2007 Name of chairman
Slide 11: Dairy Products
Dairy Products Strong growth and margin improvement Performance H1 Sales CHF: 10.1 bio Highlights OG: 7.1% Milk products Mkt share* (MP): ü Ø Billionaire brands achieve double digit growth Mkt share* (IC): ü Dairy achieves 5%+ pricing but less RIG Ø Value added portfolio beneficial in inflationary e
Slide 12: Dairy Products: Response to input cost challenge
Dairy Products Response to input cost challenge Ø Strong brands allowed early action on prices (as much as 15%), with more to come Ø Operation Excellence 2007; SKU rationalisation Ø Pack size reduction and reduced-cost packaging Ø Reduction of demand generation activities – as lack of supply means d
Slide 13: Winning innovation in Ice cream
Winning innovation in Ice cream Nutrition, Health & Wellness Ø LTF in "standard", "no sugar added" and "yoghurt" ice cream variants Ø "No sugar added" for diabetics & weight conscious Ø With 6x normal milk content – launched in Chile Ø "Lactose-free" in Finland – sales twice expectations Ø Yoghurt i
Slide 14: Dreyer's Grand Ice Cream
Dreyer’s Grand Ice Cream A more profitable future Ø Higher margins through innovation, such as Häagen-Dazs Reserve, with 30% price premium to standard Häagen-Dazs Ø Optimizing pricing & trade promotion Brands Ø Creating "hyper-efficient" manufacturing & DSD systems DSD Innovation Ø Profitability to
Slide 15: Nestlé Nutrition
Nestlé Nutrition Double digit growth & positive EBIT trend Performance Highlights H1 Sales CHF: 3.4 bio Ø Strong growth in Infant & Healthcare OG: 10.5% Ø Billionaire brand, NAN, grows double digit Mkt share: ü Ø Growth is benefiting mix – premium etc Ø EBIT margin of base business improves – Jenny
Slide 16: Winning innovation in Nestlé Nutrition
Winning innovation in Nestlé Nutrition Project Bullet: Value enhancing growth Generating Top Line Growth on our Super-Premium and Premium Products* 1400 1.320 1300 1.220 1200 1.130 1100 1.040 (mio CHF) 210 NPS 1000 920 970 900 950 800 700 600 2004 2005 2006 2007 2008 *only the markets which introduc
Slide 17: Nestlé Nutrition: CHF10 billion sales in a high growth, high margin business
Nestlé Nutrition: CHF10 billion sales in a high growth, high margin business Acquisition of Novartis Medical Nestlé Nutrition & Novartis Medical (8% CAGR*) - Number 2 globally in an attractive category Acquisition of Gerber Nestlé Nutrition & Gerber (7% CAGR*) - Leadership in key markets * 3 year CA
Slide 18: Prepared dishes and cooking aids
Prepared dishes and cooking aids AOA and Americas deliver high growth Performance Highlights H1 Sales CHF: 8.8 bio Ø Maggi dynamic in AOA OG: 3.1% Ø Product group generally weak in Europe Mkt share*: χ Ø Slow start for Frozen in US except Lean Cuisine – acceleration expected Ø Hot Pockets yet to reg
Slide 19: Prepared dishes and cooking aids: Nutrition, Health and Wellness
Prepared dishes and cooking aids Nutrition, Health and Wellness BASIC REASSURANCE Delivering great taste with nutritional reassurance ENHANCED FEATURES Great taste with improved nutritional profile SPECIFIC SOLUTIONS Dedicated nutritional solutions for a health- related need of a specific consumer g
Slide 20: Confectionery
Confectionery Significant margin improvement Performance Highlights H1 Sales CHF: 5.3 bio Ø Good growth/double digit in emerging markets OG: 4.6% Ø Slowdown v H1 is normal after early Easter Mkt share: ü Ø Improving trends in UK and US Ø Regionalisation of manufacturing in Europe (York) starting to
Slide 21: Confectionery: Nutrition, health and wellness
Confectionery Nutrition, health and wellness Strengthened dark chocolate offerings Continued extension of dark chocolate ranges Portion control Extended range, leveraging existing brands Popularly positioned products Extending range, both leveraging existing products and through innovation 2007 half
Slide 22: PetCare
PetCare Good growth and margin improvement Performance Highlights H1 Sales CHF: 5.9 bio Ø Strong performance continues in all regions OG: 7.2% Ø Profitability helped by mix (Super-premium, dry and single serve performing well) Mkt share: ü Ø 17 new items launched in the US Ø Successful US roll-out o
Slide 23: PetCare: Innovation driving mix
PetCare Innovation driving mix Science-Based Targeted Nutrition Addressing specific needs – puppies' immune systems, extended life, probiotics (Longevis™ & OptiStart™ BAB’s ) Hyper-Premium Segment Ultimate taste & cosmetics to create human like recipes – Florentine, soufflés etc Natural Segment Capi
Slide 24: Nutrition, Health & Wellness
Nutrition, Health & Wellness In Nestlé Nutrition Ø Three acquisitions in last 12 months have created a global leader with over CHF10 billion of sales ØTargets of 10% organic growth and 20% margins In other Food and Beverage categories Ø Differentiation from competitors and share gains in key categor
Slide 25: Creating shareholder value through profitable growth
Creating shareholder value through profitable growth Growing the business: Nutrition, Health & Wellness Ø Generating sales growth Ø Growing market shares Ø Enhancing mix Ø Improving F&B margin Driving efficiencies: improving performance Ø Drive simplicity across the businesses Ø Leverage scale for c
Slide 26: Improving performance of Nestlé F&B
Improving performance of Nestlé F&B Focus areas 1. Drive simplicity across the businesses E.g. SKUs, structures, reporting 2. Leverage scale for competitive advantage E.g. GLOBE, Shared services, procurement 3. Tackle underperformers Investment phase, core, non-core, 4. Increase discipline/ executio
Slide 27: Drive simplicity across the businesses
Drive simplicity across the businesses SKU reduction Ø Nestlé Waters NA: 20% targeted for deletion Ø Zone AOA: 10% reduction per year Ø Zone Europe: 9% reduction at H1 Reduction in legal entities Ø Nestlé Waters: 50% liquidated by end '08 Ø Zone AOA: 20% liquidated by end '08 – half done Ø Zone Euro
Slide 28: Leveraging Scale: Nestlé Retail Operations Center
Leveraging Scale Nestlé Retail Operations Center “Creating competitive advantage at the moment of choice” Leverage retail sales execution for Nestlé in the USA Ø Cross-channel initiative Ø Improve speed to shelf & share of shelf space Ø Reduce out-of-stocks Generate over CHF 150 million incremental
Slide 29: Tackle underperformers
Tackle underperformers Ø Nestlé Waters: Reduction of five factories in H1 2007 Ø Dairy: disposals in Asia – Canned Liquid Milks, etc Ø Chocolate: Sale to Barry Callebaut of two facilities Ø Performance Nutrition: repositioning on track Ø EBIT margin: Zone Europe, UK Confectionery, Dreyer's trending
Slide 30: Value creation at Nestlé: share buyback
Value creation at Nestlé: share buyback A 3-year CHF 25 billion share buyback programme Ø An efficient capital structure that should provide enhanced returns whilst retaining flexibility Ø Appropriate in view of acquisition strategy following Gerber Ø Demonstrates the Board's confidence in the busin
Slide 31: Conclusion: The Nestlé Model reconfirmed for 2007
Conclusion The Nestlé Model reconfirmed for 2007 Ø The Nestlé Model reconfirmed for 2007: Above target organic growth driven by key brands EBIT margin to improve despite increased cost pressures to increase in H2 Continued progress on working capital expected Ø Share buy-back programme announced Thr
Slide 32: 2007 half year results roadshow
2007 half year results roadshow 2007 half year results roadshow - August 2007 Name of chairman