Slide 1: Half-year results 2017
Half-year results 2017 1 | July 27, 2017 | Nestlé half-year results 2017
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 2017 – Mark Schneider, CEO
Half-year results 2017 Mark Schneider, CEO 3 | July 27, 2017 | Nestlé half-year results 2017
Slide 4: Half-year results 2017 – François-Xavier Roger, CFO
Half-year results 2017 François-Xavier Roger, CFO 4 | July 27, 2017 | Nestlé half-year results 2017
Slide 5: Half-year performance highlights
Half-year performance highlights Sales (in CHF) Organic growth Real internal TOP margin growth 43.0 bn +2.3% +1.4% -20 bps -0.3% on a reported basis +0.9% pricing In constant currency 5 | July 27, 2017 | Nestlé half-year results 2017
Slide 6: Underlying trading operating profit
Underlying trading operating profit Sales − Cost of goods sold = Gross Margin + Other Revenue − Distribution, Marketing & Administration, R&D Underlying business Underlying Trading Operating Profit performance and trends − Net other trading income/ (expenses) (includes mainly restructuring, impairme
Slide 7: Resilient RIG in an environment of weak consumer demand
Resilient RIG in an environment of weak consumer demand 5% % Organic growth 4% % Pricing 3% 2% % Real internal growth 1% 0% Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 Q1-17 Q2-17 7 | July 27, 2017 | Nestlé half-year results 2017
Slide 8: Broad-based growth across geographies
Broad-based growth across geographies AMS EMENA AOA Sales 19.3 bn 12.4 bn 11.3 bn (in CHF) RIG 0.7% 0.9% 3.1% OG 1.8% 1.4% 4.4% Each geography includes zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health 8 | July 27, 2017 | Nestlé half
Slide 9: Growth in developed and emerging markets
Growth in developed and emerging markets Developed Emerging Sales (in CHF) 24.3 bn 18.7 bn % of group sales 56% 44% RIG 1.1% 1.9% OG 0.8% 4.4% 9 | July 27, 2017 | Nestlé half-year results 2017
Slide 10: Zone AMS
Zone AMS Sales CHF 13.3 bn Organic growth 1.3% Real internal growth -0.1% Underlying TOP margin 18.1% (vs LY) (+30 bps) • Organic growth improved, with stronger RIG and sustained positive pricing in both North America and Latin America • North America continued to face soft consumer demand and a cha
Slide 11: Zone EMENA
Zone EMENA Sales CHF 7.8 bn Organic growth 1.0% Real internal growth 0.6% Underlying TOP margin 18.1% (vs LY) (+50 bps) • Pricing continued to improve, however RIG turned negative in the quarter • Western Europe: RIG affected by pricing and weather • Central and Eastern Europe: RIG and pricing remai
Slide 12: Zone AOA
Zone AOA Sales CHF 7.9 bn Update pic Organic growth 4.8% Real internal growth 3.0% (new Milo) Underlying TOP margin 20.3% (vs LY) (-20 bps) • Organic growth accelerated for a fifth consecutive quarter • China turned positive in the second quarter • South East Asia and sub-Saharan Africa drove organi
Slide 13: Nestlé Waters
Nestlé Waters Sales CHF 4.0 bn Organic growth 4.0% Real internal growth 3.5% Underlying TOP margin 12.4% (vs LY) (flat) • Broad-based organic growth, led by an acceleration in Western Europe and North America • Perrier and S. Pellegrino maintained good momentum • In emerging markets, China and Latin
Slide 14: Nestlé Nutrition
Nestlé Nutrition Sales CHF 5.2 bn Organic growth 0.9% Real internal growth -0.2% Underlying TOP margin 24.8% (vs LY) (+130 bps) • Soft growth in China, with Illuma and NAN remaining resilent • US was slightly positive, helped by stabilization of Gerber • RIG in Brazil and Mexico impacted by pricing
Slide 15: Other Businesses
Other Businesses Sales CHF 4.8 bn Organic growth 3.7% Real internal growth 4.5% Underlying TOP margin 13.6% (vs LY) (-270 bps) • Nespresso: mid single-digit organic growth led by the Americas • Nestlé Health Science: Consumer Care subdued in the US, but Medical Nutrition sustained good growth • Nest
Slide 16: Growth by products
Growth by products 4.2 Organic Growth 3.2 3.2 2.7 2.3 2.2 1.4 -1.6 Pricing RIG Total Group Powdered and Water Milk products Nutrition and Prepared dishes Confectionery PetCare Liquid Beverages and Ice cream Health Science and cooking aids 16 | July 27, 2017 | Nestlé half-year results 2017
Slide 17: Underlying TOP margin by products
Underlying TOP margin by products 22.9% In % of sales 20.6% 19.0% 17.9% 16.2% 15.8% 12.7% 10.2% Reported bps flat -60 +10 +20 flat +90 -30 -20 evolution Total Group Powdered and Water Milk products Nutrition and Prepared dishes Confectionery PetCare Liquid Beverages and Ice cream Health Science and
Slide 18: Gross margin impacted by higher input costs
Gross margin* impacted by higher input costs 52.0% 50.0% 50.8% 50.2% 49.5% 48.0% 47.9% 48.1% 47.0% 46.0% 44.0% HY 2012 HY 2013 HY 2014 HY 2015 HY 2016 HY 2017 *Gross margin = (Sales - Cost of good sold) / Sales 42.0% 18 | July 27, 2017 | Nestlé half-year results 2017
Slide 19: Underlying TOP margin in line with our expectations
Underlying TOP margin in line with our expectations +20 bps -80 bps +70 bps Commodity costs Efficiencies and 15.8% portfolio management 15.9% -30 Underlying TOP COGS & Marketing & Currency impact & Underlying TOP HY 2016 Distribution Administration Other HY 2017 in constant currency 19 | July 27, 20
Slide 20: Underlying EPS increase
Underlying EPS increase +3.4% in constant currency 20 | July 27, 2017 | Nestlé half-year results 2017
Slide 21: Continued focus on working capital
Continued focus on working capital Working capital as a % of sales, calculated on a 5-quarter average 8.0% 6.3% 5.8% 4.3% 3.0% HY 2013 HY 2014 HY 2015 HY 2016 HY 2017 21 | July 27, 2017 | Nestlé half-year results 2017
Slide 22: Free cash flow evolution
Free cash flow evolution In CHF billion 3.3 - 0.1 1.3 - 1.3 + 0.0 - 0.6 Free cash flow Margin Working CAPEX Other* Free cash flow (HY 2016) improvement capital (HY 2017) *rounded 22 | July 27, 2017 | Nestlé half-year results 2017
Slide 23: Outlook 2017 confirmed
Outlook 2017 confirmed • Organic growth between 2-4%, likely to be in the lower half of the range • Increased restructuring costs to drive future profitability • As a result, stable trading operating profit margin* in 2017 • Underlying EPS* growth and improved capital efficiency *in constant currenc
Slide 24: Half-year results 2017 – Discussion
Half-year results 2017 Discussion 24 | July 27, 2017 | Nestlé half-year results 2017
Slide 25: Half-year results 2017 – Supporting Slides
Half-year results 2017 Supporting Slides 25 | July 27, 2017 | Nestlé half-year results 2017
Slide 26: HY-2017 Operating segments – quarterly summary
HY-2017 Operating segments – quarterly summary Q2-2017 sales Sales RIG Pricing OG (CHF mio) % % % Zone AMS 6’916 1.1 1.0 2.1 Zone EMENA 3’812 -0.4 0.7 0.3 Zone AOA 3’947 3.0 2.1 5.1 Nestlé Waters 2’223 4.2 0.4 4.6 Nestlé Nutrition 2’593 -0.1 0.8 0.7 Other Businesses 2’510 2.8 -1.0 1.8 Total Group 22
Slide 27: HY-2017 Operating segments – topline summary
HY-2017 Operating segments – topline summary HY-2017 sales Reported Sales RIG Pricing OG Net M&A F/X sales growth (CHF mio) % % % % % % Zone AMS 13’314 -0.1 1.4 1.3 -0.9 2.5 2.9 Zone EMENA 7’800 0.6 0.4 1.0 -9.3 -2.0 -10.3 Zone AOA 7’902 3.0 1.8 4.8 -0.5 -2.9 1.4 Nestlé Waters 4’025 3.5 0.5 4.0 -0.3
Slide 28: HY-2017 Products – topline summary
HY-2017 Products – topline summary HY-2017 sales Sales RIG Pricing OG (CHF mio) % % % Powdered and Liquid Beverages 9’814 1.7 1.5 3.2 Water 3’772 3.7 0.5 4.2 Milk Products and Ice cream 6’499 0.1 2.1 2.2 Nutrition and Health Science 7’476 1.2 0.2 1.4 Prepared Dishes and cooking aids 5’732 1.2 1.5 2.
Slide 29: HY-2017 Operating segments – revenue and results
HY-2017 Operating segments – revenue and results In CHF mio 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 amortisation Zone AMS 13’314 2’405 2’2
Slide 30: HY-2017 Products – revenue and results
HY-2017 Products – revenue and results In CHF mio Of which Underlying Net other impairment Trading Trading trading of property, Of which Operating Operating income/ plant and restructuring Sales Profit Profit (expense) equipment costs Powdered and Liquid Beverages 9’814 2’244 2’192 (52) (14) (16) Wa
Slide 31: HY-2017 EPS reconciliation (1 of 2)
HY-2017 EPS reconciliation (1 of 2) From net profit to underlying profit In CHF mio HY-2016 HY-2017 Net Profit 4’100 4’889 Restructuring costs 94 166 Impairments of property, plant & equipment, goodwill and int. assets 109 96 Net result on disposal of businesses 40 -25 Other adjustment in Net other
Slide 32: HY-2017 EPS reconciliation (2 of 2)
HY-2017 EPS reconciliation (2 of 2) From operating profit to underlying net profit In CHF mio HY-2016 HY-2017 Operating profit adjusted 6’809 6’798 Net financial income / (expense) -328 -301 Adjusted taxes -1’753 -1’757 Adjusted income from associates and joint ventures 551 650 Adjusted non-controll
Slide 33: HY-2017 historical six quarters
HY-2017 historical six quarters Period RIG Pricing OG % % % Q1-2016 3.0 0.9 3.9 Q2-2016 2.7 0.4 3.1 Q3-2016 1.9 1.3 3.2 Q4-2016 2.0 0.9 2.9 Q1-2017 1.3 1.0 2.3 Q2-2017 1.5 0.9 2.4 33 | July 27, 2017 | Nestlé half-year results 2017
Slide 34: HY-2017 currency overview
HY-2017 currency overview Weighted average rate HY-2016 HY-2017 Variation in % US Dollar 1 USD 0.982 0.994 +1.3 Euro 1 EUR 1.096 1.077 -1.7 Chinese Yuan Renminbi 100 CNY 15.042 14.470 -3.8 Brazilian Reias 100 BRL 26.682 31.247 +17.1 UK Pound Sterling 1 GBP 1.407 1.251 -11.1 Mexican Pesos 100 MXN 5.4
Slide 35: 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 TOP Trading operating profit Underlying TOP Trading operating profit before net ot