Nestle S.a. · SIX:NESN
Nestle — Investor Day (November 2024)
22 slides from Nestle's investor day presentation, Nov 19, 2024
Slide 1: Anna Manz, Chief Financial Officer
Anna Manz Chief Financial Officer
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: Contents
Contents Growth Margin Cash flow and balance sheet Guidance 3 November 19, 2024
Slide 4: Model supports 4%+ p.a. organic growth in the medium term
Model supports 4%+ p.a. organic growth in the medium term • 2-3% food & beverage trend growth p.a. 4%+ 3-4% • 3-4% Nestlé’s category trend growth p.a. 2-3% • 4%+ Nestlé medium term growth objective • All in normal market conditions Food & Nestlé Nestlé Accelerate Improve Nestlé beverage category cat
Slide 5: Market share loss and below-trend category growth impacting 2024
Market share loss and below-trend category growth impacting 2024 • Nestle category growth currently towards the lower end of the 3-4% 3-4% Market underperformance/share loss is 2-3% • c.2% further >100 bps drag on growth • Clear diagnosis of underperformance, concentrated in 15-20 cells Food & Nestl
Slide 6: Confident in our portfolio growth potential
Confident in our portfolio growth potential • Portfolio exposure tilted towards higher growth areas • Opportunities to expand into areas of strength and accelerate category growth • Granular understanding informs investment decisions and performance management Cluster >2% of Group sales 1% Expected
Slide 7: Action plan supports our growth objective
Action plan supports our growth objective Medium-term guidance • Unlock full portfolio potential – Expand winners 4%+ – Build new growth engines 3-4% – Address underperformers • Drive operational excellence – Sharpen value propositions – Step up investment – Focus our innovation Nestlé Accelerate Im
Slide 8: Contents
Contents Growth Margin Cash flow and balance sheet Guidance 8 November 19, 2024
Slide 9: Margin outlook underpinned by structurally strong profitability
Margin outlook underpinned by structurally strong profitability • Categories with attractive profitability • Strong competitive advantages • Innovation to deliver against consumer needs at the right margin structure 9 November 19, 2024
Slide 10: Resilient recent margin performance helped by reduced investment
Resilient recent margin performance helped by reduced investment Managing input cost pressure • Gross margin pressure over last 5 years, but limited reduction in UTOP margin 17.5% 17.7% 17.4% 17.1% 17.3% 17.4% • Lower investment, especially in marketing 9.0% 8.9% 8.6% 49.1% 8.1% 48.9% • Going forwar
Slide 11: Medium-term UTOP margin target of 17%+
Medium-term UTOP margin target of 17%+ • Input cost increases are a headwind in the short term • Investment level stepping up through 2025 17%+ c.17% • Efficiencies will fund incremental investments, but with a lag 2024 Input cost Increased Net Efficiency Growth Medium increases investment pricing p
Slide 12: Managing short-term pressures on input costs
Managing short-term pressures on input costs Green coffee prices evolution • Short-term pressures on input costs, especially in coffee and cocoa • We manage according to the situation – Take price to cover cost ~ 5220 300 – Drive efficiencies in procurement 3826 ~ 270 – Innovate to protect gross mar
Slide 13: Incremental cost efficiencies to fund the increased investment
Incremental cost efficiencies to fund the increased investment • Targeting incremental cost savings of CHF 2.5 billion by the end of 2027, in addition to existing efficiency initiatives • Key initiatives already underway: – procurement – commercial investment – operational efficiencies • Rigorous mo
Slide 14: Increasing investment to drive growth and support our brands
Increasing investment to drive growth and support our brands Marketing investment • Consumer-facing investment reduced by cumulative CHF 5bn over the last 3 years 9% • Intention to step up investment; advertising CHF 5bn lower and marketing increasing to ~9% of sales investment 2022-24 • Investment
Slide 15: Contents
Contents Growth Margin Cash flow and balance sheet Guidance 15 November 19, 2024
Slide 16: Cash flow generation is a priority going forward
Cash flow generation is a priority going forward Cash flow • Free cash flow generation reduced over 15.8 15.9 recent years 14.4 13.9 • Key drivers have been temporary increase 13.0 in capital expenditure and working capital 12.9 12.0 12.3 12.7 11.9 11.9 • Driving cash flow generation is a focus 10.2
Slide 17: Working capital and capex expected to reduce
Working capital and capex expected to reduce Capex as % sales • Capex increased mainly due to capacity 6.1% 5.8% 5.8% additions in PetCare and Coffee 4.8% • Expected to reduce going forward as 4.0% new capacity additions slow 2019 2020 2021 2022 2023 2024 2025 Working capital as % sales Calculated o
Slide 18: ROIC remains an area of focus
ROIC remains an area of focus 14.7% • Margin reduction in 2024-25 impacts ROIC 13.9% • Medium-term opportunity to improve through: 12.1% – Sales growth 11.2% 12.2% – Margin improvement 10.8% – Disciplined capital investment 9.1% 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 1
Slide 19: Capital allocation priorities are organic growth and dividend
Capital allocation priorities are organic growth and dividend Deploying capital for profitable growth Returning capital to shareholders Organic growth M&A Dividend Share buybacks Targeted growth Potential bolt-ons Practice of Use of investments with rigor in areas with proven year-on-year dividend e
Slide 20: Contents
Contents Growth Margin Cash flow and balance sheet Guidance 20 November 19, 2024
Slide 21: Guidance and outlook
Guidance and outlook 2024 2025 Medium-term guidance outlook guidance Organic Improving 4%+ Around 2% sales growth vs 2024 in normal market conditions Underlying Investing trading operating Around 17.0% 17.0%+ for growth profit margin 21 November 19, 2024
Slide 22: Key takeaways
Key takeaways • Driving category growth and improving market share are key priorities • Targeting incremental cost savings of CHF 2.5 billion by the end of 2027, in addition to existing efficiency initiatives, to fund increased investment • Investment will be more polarized with rigorous performance