Slide 1: Half-year results 2020
STAN fe SH SSN Nestl€ Good food, Good life Half-year results 2020
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: Half-year results 2020 – Mark Schneider, CEO
Half-year results 2020 Mark Schneider, CEO
Slide 4: Key messages
Key messages • Resilient business model based on a diversified portfolio across geographies, product categories and channels • First half organic growth of 2.8% led by strong growth in the Americas, Purina Petcare and Nestlé Health Science • Underlying trading operating profit margin increase of 30
Slide 5: On a continued path towards attractive high-growth categories
On a continued path towards attractive high-growth categories 2020 activity Sold Under strategic review Acquired or invested Canadian Nestlé North American Waters Nestlé Health Science Pure Life business* U.S. ice cream Charcuterie Purina PetCare Rice porridge Peanut milk * Pending deal closure 5 Ju
Slide 6: Exploring strategic options for North American Waters
Exploring strategic options for North American Waters Review North American Waters business • Sales: ~ CHF 3.4 billion in 2019 • Scope includes regional brands, ReadyRefresh and Nestlé Pure Life • ~ 7 000 employees and 27 factories Retain and grow iconic international and premium mineral water brand
Slide 7: Developing solutions to meet fast-changing consumer needs
Developing solutions to meet fast-changing consumer needs Trends changing Trends accelerating with COVID-19 with COVID-19 At-home consumption Affordability Safety Localness Health and nutrition E-commerce Digital engagement Retail Out-of-home 2018 2019 2020 7 July 30, 2020 Nestlé half-year results 2
Slide 8: Refreshing our company purpose statement
Refreshing our company purpose statement We unlock the power of food to enhance quality of life for everyone, today and for generations to come • Reflects our business focus following the divestiture of Nestlé Skin Health • Reinforces our commitment to serve consumers at all price points • Emphasize
Slide 9: 2020 guidance
2020 guidance • Full-year organic sales growth between 2% and 3% • Underlying trading operating profit margin to improve • Underlying earnings per share in constant currency and capital efficiency to increase • This guidance is based on our current knowledge of COVID-19 developments, and assumes no
Slide 10: Half-year results 2020 – François-Xavier Roger, CFO
Half-year results 2020 François-Xavier Roger, CFO
Slide 11: Half-year financial results
Half-year financial results Sales (in CHF) Organic Underlying Underlying Growth TOP margin EPS 41.2 bn +2.8% +30 bps +0.5%* -9.5% on a reported basis 17.4% of sales -5.9% on a reported basis * In constant currency 13 July 30, 2020 Nestlé half-year results 2020
Slide 12: Half-year sales growth
Half-year sales growth OG +2.8% +0.2% +2.6% -5.3% -7.0% 45.5 Reported sales growth -9.5% 41.2 -30 HY-2019 sales RIG Pricing Net M&A Foreign HY-2020 sales CHF bn exchange CHF bn 12 July 30, 2020 Nestlé half-year results 2020
Slide 13: Contrasted momentum by channel
Contrasted momentum by channel Organic Growth Retail Out-of-home* HY-2019 HY-2020 HY-2019 HY-2020 6.3% 3.6% 4.3% -34.6% * Includes Nestlé Professional, foodservice activities of Nespresso, Starbucks products and water, travel retail and Blue Bottle 13 July 30, 2020 Nestlé half-year results 2020
Slide 14: Strong momentum in the Americas
Strong momentum in the Americas AMS EMENA AOA Sales 18.4 bn 12.1 bn 10.7 bn (in CHF) RIG 6.0% 1.8% -2.0% Pricing 0.2% -0.1% 0.4% OG 6.2% 1.7% -1.6% Each geography includes Zones, Nespresso, and Nestlé Health Science 14 July 30, 2020 Nestlé half-year results 2020
Slide 15: Strong growth in developed markets
Strong growth in developed markets Developed Emerging Sales (in CHF) 24.0 bn 17.2 bn % of Group sales 58% 42% RIG 4.9% -0.4% Pricing -0.8% 1.5% OG 4.1% 1.1% 15 July 30, 2020 Nestlé half-year results 2020
Slide 16: Zone AMS
Zone AMS Sales CHF 16.7 bn Organic growth 5.3% Real internal growth 5.1% Underlying TOP margin 18.9% vs LY +60 bps • Increased organic growth, based on strong RIG. Pricing turned positive in the second quarter • North America reported mid single-digit growth, led by Purina PetCare, coffee and frozen
Slide 17: Zone EMENA
Zone EMENA Sales CHF 10.0 bn Organic growth 2.4% Real internal growth 2.8% Underlying TOP margin 18.3% vs LY +40 bps • Solid RIG-based organic growth despite sharp sales declines in the out-of-home channel • All regions saw positive growth, with strong momentum in Russia • Purina PetCare, coffee and
Slide 18: Zone AOA
Zone AOA Sales CHF 10.1 bn Organic growth -2.2% Real internal growth -2.7% Underlying TOP margin 22.7% vs LY - 20 bps • Negative organic growth, turning positive in the second quarter • China saw a sales decline, turning almost flat in the second quarter with broad-based improvement • Other regions
Slide 19: Other Businesses
Other Businesses Sales CHF 4.4 bn Organic growth 6.1% Real internal growth 5.5% Underlying TOP margin 22.2% vs LY + 260 bps • Nespresso maintained mid single-digit organic growth, driven by e-commerce, despite a sharp sales decline in the out-of-home channel and boutique closures • Nestlé Health Sci
Slide 20: Contrasted category dynamics
Contrasted category dynamics Organic Growth % 12.5% 7.0% 5.1% 2.8% 1.3% 1.2% Water Confectionery Total Group Powdered and PetCare Nutrition and Prepared dishes Milk products Liquid Beverages Health Science and cooking aids and Ice cream -4.1% -10.4% 20 July 30, 2020 Nestlé half-year results 2020
Slide 21: Underlying trading operating profit margin by category
Underlying trading operating profit margin by category In % of sales 23.3% 22.9% 22.8% 22.0% 18.4% 17.4% 9.4% 8.4% Change in bps +30 -10 +190 +30 +110 +390 -360 -240 vs HY-2019 Total Group* Powdered and PetCare Nutrition and Prepared dishes Milk products Water Confectionery Liquid Beverages Health S
Slide 22: Continued margin expansion
Continued margin expansion On a reported basis, including Nestlé Skin Health 17.4% 17.4% 17.1% 17.1% +170 bps -130 bps -10 bps • Nestlé Skin Health divestiture • Nestlé Skin Health divestiture • Nestlé Skin Health divestiture • COVID-19 related costs • COVID-19 related costs • Lower structural costs
Slide 23: Continued margin expansion
Continued margin expansion Excluding Nestlé Skin Health 17.4% +60 bps +10 bps 17.0% -30 bps • COVID-19 related costs • COVID-19 related costs • Lower structural costs • Commodity inflation • Lower structural costs • Reduced in-store activation • Lower structural costs • COVID-19 related costs -30 Ma
Slide 24: Significant increase in net profit margin
Significant increase in net profit margin % of sales HY-2020 vs HY-2019 Underlying trading operating profit 17.4% +30 bps Restructuring +50 bps Impairment of assets +30 bps Onerous contracts, litigation and other operting income / expenses +30 bps Trading operating profit 16.9% +140 bps Impairment o
Slide 25: Free cash flow
Free cash flow 9.3 % of sales 8.9% of sales In CHF billion 4.1 +0.3 3.8 +0.2 -0.8 -0.5 3.3 Free cash flow Adjusted Working CAPEX and Free cash flow Associates Free cash flow HY-2019 EBITDA* capital expenditure on HY-2020 HY-2020 intangible Adjusted for delayed assets dividend payment * Adjusted EBIT
Slide 26: Half-year results 2020 – Q&A
Nestl€ Good food, Good life Half-year results 2020 Q&A
Slide 27: Supporting slides
Half-year results 2020 Supporting slides
Slide 28: HY-2020 Operating segments – topline summary
HY-2020 Operating segments – topline summary HY-2020 sales Reported Sales RIG Pricing OG Net M&A F/X sales growth (CHF m) % % % % % % Zone AMS 16 674 5.1 0.2 5.3 -5.3 -7.7 -7.7 Zone EMENA 10 029 2.8 -0.4 2.4 -0.5 -7.0 -5.1 Zone AOA 10 062 -2.7 0.5 -2.2 0.0 -6.3 -8.5 Other Businesses 4 387 5.5 0.6 6.
Slide 29: HY-2020 Products – topline summary
HY-2020 Products – topline summary HY-2020 sales Sales RIG Pricing OG (CHF m) % % % Powdered and liquid beverages 10 740 1.2 0.1 1.3 Water 3 229 -8.9 -1.5 -10.4 Milk products and ice cream 5 392 5.7 1.3 7.0 Nutrition and Health Science 6 010 1.0 0.2 1.2 Prepared dishes and cooking aids 5 827 5.3 -0.
Slide 30: HY-2020 Historical eight quarters
HY-2020 Historical eight quarters Period RIG Pricing OG % % % Q3-2018 2.0 0.9 2.9 Q4-2018 2.8 0.9 3.7 Q1-2019 2.2 1.2 3.4 Q2-2019 3.0 0.9 3.9 Q3-2019 3.9 -0.2 3.7 Q4-2019 2.5 0.5 3.0 Q1-2020 4.7 -0.4 4.3 Q2-2020 0.5 0.8 1.3 30 July 30, 2020 Nestlé half-year results 2020
Slide 31: HY-2020 EPS reconciliation (1 of 2)
HY-2020 EPS reconciliation (1 of 2) From net profit to underlying net profit In CHF m HY-2019 HY-2020 Net Profit 4 972 5 883 Restructuring costs 306 66 Impairments of property, plant & equipment, goodwill and int. assets 333 493 Net result on disposal of businesses 95 (1 482) Other adjustment in Net
Slide 32: HY-2020 EPS reconciliation (2 of 2)
HY-2020 EPS reconciliation (2 of 2) From operating profit to underlying net profit In CHF m HY-2019 HY-2020 Operating Profit adjusted 7 773 7 156 Net financial income / (expense) (504) (447) Adjusted taxes (1 554) (1 435) Adjusted income from associates and joint ventures 734 618 Adjusted non-contro
Slide 33: HY-2020 Operating segments – revenue and results
HY-2020 Operating segments – revenue and results In CHF m Of which Underlying Net other impairment Trading Trading trading of property, Of which Depreciation Operating Operating income/ plant and restructuring and Sales Profit Profit (expense) equipment costs amortization Zone AMS 16 674 3 150 3 129
Slide 34: HY-2020 Products – revenue and results
HY-2020 Products – revenue and results In CHF m Underlying Of which Trading Trading Net other impairment of Of which Operating Operating trading income/ property, plant restructuring Sales Profit Profit (expense) and equipment costs Powdered and Liquid Beverages 10 740 2 456 2 420 (36) (4) (6) Water
Slide 35: HY-2020 Currency overview
HY-2020 Currency overview Weighted average rate HY-2019 HY-2020 Variation in % US Dollar 1 USD 0.999 0.966 -3.3% Euro 1 EUR 1.130 1.064 -5.8% Chinese Yuan Renminbi 100 CNY 14.720 13.729 -6.7% Brazilian Real 100 BRL 25.994 19.710 -24.2% Philippine Peso 100 PHP 1.916 1.908 -0.4% UK Pound Sterling 1 GB
Slide 36: Abbreviations
Abbreviations • OG Organic growth • RIG Real internal growth • AMS Zone Americas • EMENA Zone Europe, Middle East, and North Africa • AOA Zone Asia, Oceania, and sub-Saharan Africa • EPS Earnings per share • COGS Cost of goods sold • FCF Free cash flow • TOP Trading operating profit • UTOP Underlyin