Slide 1: Nestlé S.A. 2009 First Half Results
Nestlé S.A. 2009 First Half Results Jim Singh, CFO 1 2009 first half roadshow – 13 August 2009 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: 2009 First Half Highlights
2009 First Half Highlights • Successful delivery of profitable growth Organic Growth of 3.5% EBIT margin +30bp reported & constant currencies • Resilient performance by Food & Beverages OG 3.4%; EBIT margin +20bp CC; +10bp reported; 5 out of 6 operating segments achieve positive organic growth, and
Slide 4: Total Performance Framework
Total Performance Framework DRIVING PERFORMANCE ACHIEVING SIMPLICITY ► Profitable growth ► Divestment of businesses ► Operational Efficiency ► SKU rationalisation ► Factories ► High quality Working Capital ► Legal Entities ► Sales to Top 10 Total Performance SCALE BENEFITS Framework INVESTMENT FOR G
Slide 5: The Essence of Nestlé's performance: Drivers of profitable growth
The Essence of Nestlé's performance Drivers of profitable growth • Billionaire brands 6% OG • Emerging markets 7% OG • PPP 11% OG • Top 10 customers 6% OG • Premium – Nespresso 28% OG • R&D spend +20bps, new R&D centres • F&B Consumer marketing spend +10bp 5 2009 first half roadshow – 13 August 2009
Slide 6: The Essence of Nestlé's performance: Drivers of EBIT margin
The Essence of Nestlé's performance Drivers of EBIT margin... • Profitable growth • SKU rationalisation: 9% reduction • Operating efficiencies • Divestitures & exits ...and of financial discipline • CHF1.8bn improvement in operating working capital • Re-gating of major Capex: down 12% in H1'09 6 200
Slide 7: Zone Europe
Zone Europe • Positive RIG in three of the top four EBIT 11.8% markets/businesses • GB Region particularly strong 0.2 -1.5 % Organic Growth % RIG • Strong performance in Eastern Europe • Soluble coffee & PetCare the stronger categories 7 2009 first half roadshow – 13 August 2009 Name of chairman
Slide 8: Zone Europe
Zone Europe • Unchanged EBIT margin despite currency and pension cost impacts • Marketing spend maintained despite av.15% decline in rates • Increased competitive pressure but about 60% of categories gain share • RIG expected to accelerate in H2, but pricing to trend down 8 2009 first half roadshow
Slide 9: Zone Americas
Zone Americas • Strong performances in North America, EBIT 15.2% Brazil and Mexico + 20 bp • Weaker performances in smaller Latin 6.6 American markets and Caribbean % OG • NA: Frozen Food, PetCare, Ambient Dairy % RIG & Chocolate have a good H1 1.9 • The Zone: 2/3rds of key brands increase market sh
Slide 10: Zone Americas
Zone Americas • LA: Key category, Ambient dairy's OG is low due mainly to pricing • Chocolate's growth recovered in Q2 • Soluble, Culinary, PetCare double digit OG • Smaller LA countries impacted by economic turmoil (oil, tourism, remittance, etc) • New factories' fixed costs impact margins (Anderso
Slide 11: Zone AOA
Zone AOA EBIT 16.7% • Emerging markets recovering; + 60 bp developed/export-driven markets slower 5.9 % OG • RIG accelerating during the period % RIG • Some markets have negative price: 2.2 corrections after '08, not deflation • India and China double-digit RIG • Africa & Middle East strong • Japan
Slide 12: Zone AOA
Zone AOA • Ambient dairy gaining RIG momentum • PPP a key driver of profitable growth & a key focus or innovation • Continuing to extend distribution networks • Accelerating RIG by investing COGS savings in brands & price reductions • FY'09 OG weighted to RIG 12 2009 first half roadshow – 13 August
Slide 13: Nestlé Waters
Nestlé Waters • Water market stabilising EBIT 8.3% • Europe below Waters' growth rate, +110bp US above • Share gains in USA: good performance % OG in supermarkets and mass (including in % RIG -2.9 Walmart despite "Great Value" initiative) -3.7 • European market is weak generally, but Nestlé Waters'
Slide 14: Nestlé Waters
Nestlé Waters • Emerging markets & Nestlé Pure Life achieve double digit organic growth • EBIT margin impacted by negative sales development... • ... but benefits from raw materials, NCE efficiency programmes & disposals • Efficiencies in distribution, particularly in US, & from improved HOD routing
Slide 15: Nestlé Nutrition
Nestlé Nutrition • All four divisions accelerate during EBIT 17.4% the second quarter -110bp • All three Zones gain share in Infant 1.5 % OG Nutrition % RIG • EBIT margin impacted by timing of costs, particularly increased marketing spend -2.4 • H2 acceleration expected in RIG & improvement in EBIT
Slide 16: Nestlé Nutrition
Nestlé Nutrition • Infant formula gaining share in Europe; good growth in US, but WIC impact • Baby food very strong in the US; also gaining in Europe • Healthcare & Performance accelerated growth & EBIT margins in H1 • Jenny Craig growth improving. EBIT margin protected by good cost management & be
Slide 17: Other F&B
Other F&B EBIT 16.1% • Mainly Nestlé Professional, + 20 bp Nespresso 6.1 • Nestlé Professional has flat % OG organic growth – challenged by % RIG OOH consumption trends 2.4 • Nespresso continues to achieve above 25% organic growth • CPW achieves mid-single digit OG 17 2009 first half roadshow – 13 A
Slide 18: Powdered & Liquid Beverages
Product Segments Powdered & Liquid Beverages EBIT 21.8% • Soluble achieves strong RIG in all - 110 bp zones, as well as pricing 9.7 • Powdered volumes strong in AOA & % OG accelerating in Latin America, pricing % RIG softer 4.7 • RTD growing double digit, with particular momentum in the Americas • E
Slide 19: Powdered & Liquid Beverages
Powdered & Liquid Beverages • New Dolce Gusto machine & flavours • Roll-out of Nescafé Green in Europe • Relaunch of the premium Nescafé range in Australia (11% RIG) • PPPs & local flavour launches in Africa, Peru, Philippines.... • Milo nutritional framework relaunched in Australia (+300bps to 63%
Slide 20: Renovation / SKU Rationalisation
Renovation / SKU Rationalisation Previous Continental Europe UK NEW Total Europe Improved flavour, new packaging, fewer skus, 20 2009 first half roadshow – 13 August 2009 Name of chairman
Slide 21: Milk Products & Ice Cream: Ambient Dairy
Milk Products & Ice Cream Ambient Dairy EBIT 11.0% • A strong acceleration in RIG over the period... -20bp • ...whilst pricing eases at almost the same rate Dairy products including ice cream • Major Latin American markets are strong, but 0.0 smaller ones see sharp declines – consumer demand, econom
Slide 22: Roll-out of affordable milks
Roll-out of affordable milks: 9% RIG Algeria China Caribbean Reg Q2-09 Q4-08 NME Bangladesh NEAR Q1-08 Q1-09 Q3-08 Morocco Q3-09 Mexico Central Am Cambodia Q3-07 Q2-08 Colombia Q3 09 Philippines Q1-09 Pakistan Myanmar New Recipe: Vietnam & Q2-09 Q3 09 Q2-08 Thailand Srilanka Pacific Islands CWAR Q4-
Slide 23: Milk Products & Ice Cream: Ice Cream
Milk Products & Ice cream Ice Cream • European growth challenged by OOH consumption, private labels & exit from value-destroying markets • North America sees share gains versus branded competitors: small portion premium, "better for you" & impulse going well • PPPs rolled-out in AOA and Latin Americ
Slide 24: Prepared Dishes and Cooking Aids
Prepared Dishes and Cooking Aids • Emerging markets continue to achieve double digit growth EBIT 12.2% • The European business is weak: +90bp % OG economic environment particularly 1.0 % RIG in Italy & Spain; competitor "volume 0.0 chasing" in Germany • North America performs well • EBIT margin ahea
Slide 25: Prepared Dishes and Cooking Aids
Prepared Dishes and Cooking Aids • Maggi is growing double digit in emerging markets, but overall growth held back by Europe • Buitoni struggles in Europe, but goes well in the US • Herta continues to achieve good volume growth • Stouffer's takes share in multi-serve segment • Hot Pockets continues
Slide 26: Confectionery
Confectionery • Good performance continues, with EBIT 11.3% KitKat at forefront +60bp • The UK continues to perform at a 4.3 high level % OG • North America has a strong start % RIG • Latin America accelerates during the half, due to Brazil -1.3 • Emerging markets generally weaker than in '08 • EBIT
Slide 27: PetCare
PetCare • All three zones achieved positive OG and EBIT 15.7% market share gains +120bp • North America driven by Premium Dry Dog 9.1 and Cat (Beneful, Dog Chow, Cat Chow, Friskies...) % OG • Europe driven by Dry cat & Single serve % RIG wet cat (ONE; Friskies, Gourmet, Felix...) 2.7 • EBIT performa
Slide 28: Outlook
Outlook • More stability in general economic environment • Growing impact of state incentives • Global trade & credit markets improving • Comparatives easier in H2, specially Q4 Nestlé in H2 2009 • Accelerated efficiencies reinvested for profitable growth and roll-out of innovations (NaturNes, Dolce
Slide 29: The Roadmap to Value Creation
The Roadmap to Value Creation 29 October 23, 2008 Press conference, CEO Presentation 29 2009 first half roadshow – 13 August 2009 Name of chairman
Slide 30: Summary
Summary First Half 2009: • A strong financial performance, combining: - Organic growth robust in current environment - EBIT margin improvement, with increased brand investment - Underlying EPS up 8.5% constant currency - Good cash flow and working capital performances Full year 2009: • EBIT margin i
Slide 31: 2009 first half roadshow – 13 August 2009 Name of chairman
31 2009 first half roadshow – 13 August 2009 Name of chairman