Slide 1: 2004 Full Year Results Roadshow
2004 Full Year Results Roadshow 2004 full year roadshow - March 2005 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: Agenda
Agenda • Business review • GLOBE implementation update • Technical update: buybacks & accounting changes • Industry outlook • Questions & answers 3 2004 full year roadshow - March 2005 Name of chairman
Slide 4: 2004: Focus on profitable growth
2004: Focus on profitable growth • RIG accelerates to 2.9%, organic growth of 4.5% - strong performances in Americas, AOA and Alcon - achieved despite negative growth in Europe (weather) - good market share performances: robust growth vs. industry • EBITA margin up 10bps, 40bps in constant currency
Slide 5: 2004 performance creates new options for management of capital structure
2004 performance creates new options for management of capital structure • 2004 operating cash flow of CHF10.4 billion & free cash flow of CHF 6.6 billion - despite impact of currencies • Net debt of CHF 10.2 billion - helped by currency allocation • Management of capital structure - dividend increa
Slide 6: Tactical reinvestment
Efficiencies enable higher marketing spend, recovery of costs & improved EBITA margin Margin improvement comparable - 20 bp Acquisitions structure + 30 bp Operating efficiencies Increased input costs/ Tactical reinvestment Divestitures + 40 bp growth +30 bp - 30 bp FX mix + 30 bp Margin 2004 Market
Slide 7: Zone Europe: slowdown from 2003
Zone Europe: slowdown from 2003 -1.3% RIG, -0.4% Organic growth, 12.2% EBITA margin • Ice cream distorted performance of Zone - impact on sales and margin (weather) • Market share maintained in challenging market - increased or held shares in 7 out of 10 categories • Good progress in cost improvemen
Slide 8: Zone Americas: acceleration from 2003
Zone Americas: acceleration from 2003 4.8% RIG, 7.7% Organic growth, 14.9% EBITA margin • EBITA margin increased 40 bps, net of US Ice cream • US delivered over 4% RIG - Frozen Food, Nutrition & Culinary products strong • Market share & margin increases in PetCare NA - innovation in products & commu
Slide 9: Zone AOA: acceleration from 2003
Zone AOA: acceleration from 2003 4.6% RIG, 6.9% Organic growth, 17.4% EBITA margin • Most markets & products improve organic growth • Japan challenging despite coffee relaunch - competitive pricing pressure in soluble coffee • Double digit profitable growth continues in China - all categories contri
Slide 10: Nestlé Waters: slowdown from 2003
Nestlé Waters: slowdown from 2003 2.4% RIG, 0.6% Organic growth, 8.3% EBITA margin • Poor European sales in line with branded players - but Nestlé Aquarel delivers over 40% RIG • Strong performance in North America - 14.8% RIG, share gains in retail PET - US HOD sales flat, but good margin performan
Slide 11: Product groups - some highlights
Product groups - some highlights • Successful relaunch in Soluble coffee - with share gains in many markets (incl UK & Germany) - specialities and Nespresso also performing well • Shelf stable dairy's margin resilient - in tough raw material environment - 1+, 3+, 6+ nutrition system & move from comm
Slide 12: Product groups - some highlights
Product groups - some highlights • Frozen food performed well - particularly Lean Cuisine in the US - Hot Pockets successfully launched in Europe • Chilled Culinary strong in Europe - innovation in chilled dough and pasta • Culinary particularly strong in AOA and Americas - China, Malaysia/Singapore
Slide 13: Agenda
Agenda • Business review • GLOBE implementation update • Technical update: buybacks & accounting changes • Industry outlook • Questions & answers 13 2004 full year roadshow - March 2005 Name of chairman
Slide 14: GLOBE Program Status
GLOBE Program Status • Continues on track and on budget • GLOBE Program Objectives unchanged - Implement harmonized Nestlé Best Practices - Implement data standards/data management - Implement standardized information systems and infrastructure • All markets implementing first two objectives ("Busin
Slide 15: Nestlé Business Excellence: Examples
Nestlé Business Excellence: Examples • Accelerated Close (South East Africa): from 14 days to 5, reduced cost, better management information • Intermarket Supply (Waters (NA & Europe) reduced stocks & write-offs • Demand planning (Ice Cream in Brazil): improved forecasting, customer service level up
Slide 16: GLOBE "Live" Markets (as of February 2005)
GLOBE "Live" Markets (as of February 2005) Twelve markets have implemented all three objectives (Processes, Data and Systems) - Switzerland, Chile/Peru/Bolivia, Malaysia/Singapore, Thailand, Poland, Indonesia, Canada, Philippines, NPPE UK, South Africa, Austria, Pakistan, the Centre, R&D Switzerland
Slide 17: Major 2005 GLOBE Go-Lives
Major 2005 GLOBE Go-Lives South Africa (completed) Russia Austria (completed) Nestlé Waters HOD UK Pakistan (completed) Mexico The Centre (completed) UK/Ireland Germany Oceania South Asia 17 2004 full year roadshow - March 2005 Name of chairman
Slide 18: Agenda
Agenda • Business review • GLOBE implementation update • Technical update: buybacks & accounting changes • Industry outlook • Questions & answers 18 2004 full year roadshow - March 2005 Name of chairman
Slide 19: Detailed flow: second trading line on virt-x
Detailed flow: second trading line on virt-x I./II. Sale of Nestlé SA shares by Federal taxes shareholders on the first WHT trading line (I) or direct to Swiss Institutions (II). hg * Swiss III. Potentially purchase of shares Institutions by banks on the first trading Price less WHT WHT (65%) (35%)
Slide 20: New IFRSs effective 01.01.2005
New IFRSs effective 01.01.2005 • IFRS 3 Business combinations IAS 36 Revised Impairment of Assets IAS 38 Revised Intangible Assets • IFRS 2 Share Based Payments • IAS 16 Revised Property Plant & Equipment • IFRS 5 Assets Held for Sale and Discontinued Operations 20 2004 full year roadshow - March 20
Slide 21: IFRS 3 business combinations, IAS 36 Impairment of Assets, IAS 38 Intangible Assets
IFRS 3 business combinations, IAS 36 Revised Impairment of Assets, IAS 38 Revised Intangible Assets Current Future Consequences Amortisation of goodwill Goodwill Volatility of impairment losses Brands, intellectual, but 200 bp improvement on Impairment test property etc. under goodwill net profit be
Slide 22: IFRS 2 Share Based Payments
IFRS 2 Share Based Payments Current Future Consequences No expense Expensed over vesting period Lower EBITA. (most Nestlé plans: 3 years) Including impact of switch from current share option plan to restricted stock unit plan as from 2005. Impact -25 to -30 bp 22 2004 full year roadshow - March 2005
Slide 23: IAS 16 Revised Property Plant & Equipment
IAS 16 Revised Property Plan & Equipment Current Future Consequences Depreciation by asset types Depreciation by asset More complexity in (e.g. whole production line) component (each machine, determining depreciation conveyor, etc.) but no material impact 23 2004 full year roadshow - March 2005 Name
Slide 24: IFRS 5 Assets Held for Sale and Discontinued Operations
IFRS 5 Assets Held for Sale and Discontinued Operations Current Future Consequences Disclosure by segment in Disclosure by business More disclosure published accounts Assets held for sale no longer Overstate results of assets depreciated held for sale but no material impact 24 2004 full year roadsho
Slide 25: Future years - IASB projects
Future years - IASB projects • Reporting Comprehensive Income (Discussion Paper 2nd half 2005) – One statement encompassing all gains and losses currently carried to equity or two statements, i.e., one income statement and one comprehensive statement – Risk of disappearance of the income statement.
Slide 26: Agenda
Agenda • Business review • GLOBE implementation update • Technical update: buybacks & accounting changes • Industry outlook • Questions & answers 26 2004 full year roadshow - March 2005 Name of chairman
Slide 27: A consistent strategy for improved performance
A consistent strategy for improved performance • 2005: business environment • From acquisitions to capital structure management 27 2004 full year roadshow - March 2005 Name of chairman
Slide 28: Questions & Answers
Questions & Answers 2004 full year roadshow - March 2005 Name of chairman
Slide 29: Conclusion: sustainable improvement in EBITA margin while investing in top line growth
Conclusion: sustainable improvement in EBITA margin while investing in top line growth • A strong sales performance in industry context • Efficiencies exceed target, with CHF1.3 billion • EBITA margin up: reported & constant currency • Brand-building investment continued despite tough input cost env
Slide 30: 2004 Full Year Results Roadshow
2004 Full Year Results Roadshow 2004 full year roadshow - March 2005 Name of chairman