Nestle S.a. · SIX:NESN
Nestle — Bernstein Conference 2018
23 slides from Nestle's conference presentation, Sep 27, 2018
Slide 1: Nestlé's long-term value creation model
Nestlé’s long-term value creation model François-Xavier Roger EVP, Chief Financial Officer Nestlé, S.A. Bernstein Conference London, September 2018 September 27, 2018 | Bernstein Conference | 1
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: Balanced and diversified portfolio in fast-growing geographies / categories
Balanced and diversified portfolio in fast-growing geographies / categories Water Powdered 2017 Sales: CHF 89.6 billion 8% and Liquid Beverages 23 % AOA Confectionery 26% 10 % AMS Milk products 45% and Ice cream 15 % Nutrition and Health Science 17 % Prepared dishes EMENA and cooking aids 29% 13% Pe
Slide 4: First half 2018 performance
First half 2018 performance Organic growth Market share1 UTOP2 margin Underlying EPS growth3 +2.8% trend improving +20 bps +9.2% 9.2% 57% 2.8% 16.1% 15.9% 54% 4.7% 2.4% 2017 H1 2018 2017 H1 2018 H1 2017 H1 2018 2017 H1 2018 1. Number of business cells gaining and holding market 2. Underlying Trading
Slide 5: Our long-term value creation model
Our long-term value creation model Maximize Top Line Growth: Margin Expansion: Prudent Approach Long-Term mid-single digit 17.5% - 18.5% Toward Capital Shareholder growth by 2020 by 2020 Allocation and M&A Value 1. Invest in high-growth 6. On track to deliver more 8. Capital allocation: categories /
Slide 6: 1. Invest selectively in high-growth categories
Top line Margin Capital allocation 1. Invest selectively in high-growth categories High-growth categories: High-growth categories: Organic growth 57% of Group sales 64% of Group UTOP2 H1 2018 H1 2018 H1 2018 3.5% Coffee, Coffee, Other Petcare, Other Petcare, 2.8% categories Water, categories Water,
Slide 7: Increase footprint in emerging markets with prudent capital allocation
Top line Margin Capital allocation Increase footprint in emerging markets with prudent capital allocation EMs sales in % of total Organic growth UTOP1 margin EMs DMs 43% 4.8% 4.3% 32% 1.5% EMs DMs 0.7% 2007 H1 2018 2017 H1 2018 2017 H1 2018 EMs: Emerging markets 1. Underlying Trading Operating Profi
Slide 8: 2. Address underperformers
Top line Margin Capital allocation 2. Address underperformers Organic growth Launch of organic range • Significant progress made in past two years • Developed convincing growth strategies 2017 H1 2018 Visual transformation • Regained competitive cost structure • Exploring strategic 2016 options Sept
Slide 9: 3. Product and business model innovation
Top line Margin Capital allocation 3. Product and business model innovation Accelerating business cycles Premiumization New business models Premium products grew > 2x Direct to Consumer as fast as Group in H1 2018 channel (DTC) Growth 22% 8.2% 6.0% % of Group sales % of Group sales 11% Time 2012 H1
Slide 10: Leveraging on evolving consumer trends
Top line Margin Capital allocation Leveraging on evolving consumer trends Science-based Organic / Natural Food Intolerance Plant-based Local origins Ready-to-Drink Personalized Nutrition Convenience September 27, 2018 | Bernstein Conference | 10
Slide 11: 4. Embracing digital opportunities
Top line Margin Capital allocation 4. Embracing digital opportunities Spending where consumer are E-commerce intensity E-market share1 Digital as % of media spend In % of Group sales H1 2018 71% of on-line business cells2 35% gaining and holding share versus year before 6.9% 13% 55% of 2.9% on-line
Slide 12: 5. Actively manage our portfolio
Top line Margin Capital allocation 5. Actively manage our portfolio Sell Acquire US Confectionery Merrick Blue Bottle Sweet Earth Chameleon Terrafertil Atrium Innovations Tails.com Starbucks - Consumer and Foodservice products Under strategic review September 27, 2018 | Bernstein Conference | 12
Slide 13: Building a unique coffee portfolio with three iconic brands
Top line Margin Capital allocation Building a unique coffee portfolio with three iconic brands Annual sales: > CHF 5 bn Annual sales: ~ CHF 2 bn1 Annual sales: ~ CHF 10 bn • Stylish, coffee connoisseur • Iconic coffee shop brand, • World’s preferred coffee brand brand, European flair, American lifes
Slide 14: Starbucks transaction: a significant growth opportunity
Top line Margin Capital allocation transaction: a significant growth opportunity • Worldwide, perpetual license for • Transaction Consumer & Foodservice products • Up-front payment of USD 7.15 bn • ~ 15x 2018 pro forma EBITDA • North America with solid growth • No material asset transfer • Large exp
Slide 15: Exploring strategic options for Nestlé Skin Health
Top line Margin Capital allocation Exploring strategic options for Nestlé Skin Health • Sales of CHF 2.7 bn with three business units: Consumer care, Aesthetics and Prescription • Significant progress made in past two years • Developed convincing growth strategies • Regained competitive cost structu
Slide 16: 2020 underlying TOP margin improvement target
Top line Margin Capital allocation 2020 underlying TOP margin improvement target + 150 bps to + 250 bps1 17.5% to 18.5% 16.5% 16.0% 2016 2017 2020 1. Increase versus 2016 September 27, 2018 | Bernstein Conference | 16
Slide 17: 6. Significant savings programs
Top line Margin Capital allocation 6. Significant savings programs Consumers do not pay for inefficiencies! Expected savings Savings delivered Savings identified (2020 over 20161) (2017) (2018-2020) Total savings (CHF bn) 2.0 – 2.5 0.5 1.7 0.6 – 0.8 Initiatives Manufacturing 0.1 0.3 Procurement 0.5
Slide 18: Freeing up resources
Top line Margin Capital allocation Freeing up resources Raise Reinvest Savings Efficiencies margins for growth Manufacturing Procurement General & R&D Marketing & Media Administrative September 27, 2018 | Bernstein Conference | 18
Slide 19: 7. Restructuring costs: an investment for the future with attractive returns
Top line Margin Capital allocation 7. Restructuring costs: an investment for the future with attractive returns 700 In CHF m 673 (estimate) 300 274 257 165 88 2012 2013 2014 2015 2016 2017 2018 September 27, 2018 | Bernstein Conference | 19
Slide 20: 8. Prudent Approach to Capital Allocation and M&A
Top line Margin Capital allocation 8. Prudent Approach to Capital Allocation and M&A • R&D, Innovation Investing in • Capex organic growth • Marketing investments • Constant review of portfolio M&A • Strategic M&A opportunities High cash returns • Dividends: 23 years of consecutive increases in CHF
Slide 21: On track to deliver our 2020 financial targets
On track to deliver our 2020 financial targets • Improved organic growth driven by volume at the high-end of F&B industry • Innovation with reduced time to market and accelerated cycles • Accelerated restructuring and improved operational efficiency • UTOP1 margin on track to meet 2020 goal • Substa
Slide 22: Thank you
Thank you September 27, 2018 | Bernstein Conference | 22
Slide 23: Abbreviations
Abbreviations OG Organic Growth AMS Americas EMENA Europe, Middle East, and North Africa AOA Asia, Oceania, and sub-Saharan Africa EMs Emerging Markets DMs Developed Markets EPS Earnings Per Share UTOP Underlying Trading Operating Profit September 27, 2018 | Bernstein Conference | 23