Slide 1: 2006 half year results roadshow
2006 half year results roadshow 2006 half year results roadshow - August 2006 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 2006 First Half Highlights Strategic transformation Ø Brands and innovation: Product Group review Ø Transformation to Nutrition, Health and Wellness Organisational transformation Ø Scale and structure Conclusion 3 2006 half year results roadshow - August 2006 Name of chairman
Slide 4: 2006 H1 Highlights: A strong performance across the Group with an improvement in key financials
2006 H1 Highlights: A strong performance across the Group with an improvement in key financials Ø Total sales growth 11% to CHF 47.1 billion Ø Strong organic growth at 6.4% Ø Food and Beverage delivers 6% organic growth Ø EBIT increases 14.5% to CHF 6.1 billion; + CHF 768 million Ø EBIT margin up 40
Slide 5: Our increased transparency
Our increased transparency Greater transparency on Food and Beverage reporting Ø Full reporting on Nestlé Nutrition & smaller globally managed businesses, as well as Nestlé Waters Ø Food and Beverage margin disclosed Ø Greater transparency on brand performance Ø Disclosure of total F&B regional sale
Slide 6: Agenda
Agenda 2006 First Half Highlights Strategic transformation Ø Brands and innovation: Product Group review Ø Transformation to Nutrition, Health and Wellness Organisational transformation Ø Scale and structure Conclusion 6 2006 half year results roadshow - August 2006 Name of chairman
Slide 7: Creating shareholder value through profitable growth
Creating shareholder value through profitable growth Strategic transformation Nutrition, Health & Wellness, Innovation and renovation Ø Generating sales growth Ø Growing market shares Ø Enhancing mix Ø Improving F&B margin Organisational transformation Mix and efficiency ØDriving focus & discipline
Slide 8: Creating shareholder value through profitable growth
Creating shareholder value through profitable growth Our strategic transformation is driving growth and mix in our product groups Ø 60/40+ and the Nestlé Compass Ø Acquisitions - Uncle Toby's/ Jenny Craig Ø Divestitures - Japanese vending/Perrier bottle making Our Organisational transformation is dr
Slide 9: Beverages, including Water (26% of Group sales)
Beverages, including Water (26% of Group sales) H1 performance - 8.1% organic growth; EBIT +10bps Ø Nespresso, Waters, Milo - excellent growth Ø Dynamic growth in emerging markets across all categories Ø Japan, UK competitive but positive RIG in coffee Ø Raw material pressure in green coffee, Waters
Slide 10: Beverages, including Water
Beverages, including Water Nutrition Health & Wellness/Innovation & renovation Ø Milo with enhanced nutritional profile Ø Water: Aqapod launch - encouraging children to drink water Ø Nescafé "Body partner" launch in AOA Enhancing the mix/efficiencies Ø Move to added value products Ø Japanese vending
Slide 11: 2006 half year results roadshow
11 2006 half year results roadshow - August 2006 Name of chairman
Slide 12: Aquapod - The First FUN Bottled Water
Aquapod - The First FUN Bottled Water Ø Revolutionary patented PET technology: unique shape 96% of kids said that Ø Aquapod meets all bases success Aquapod was benchmarks for Bottled Waters in the US: fun to drink! 80% of products that meet these benchmarks succeed Ø 65% of kids 6-12 would ask their
Slide 13: Soluble coffee
Soluble coffee Ø With enhanced health characteristics... Ø ginseng, soya, calcium and vitamins Ø three times the antioxidants of green tea 13 2006 half year results roadshow - August 2006 Name of chairman
Slide 14: Dairy products (20% of Group sales)
Dairy products (20% of Group sales) H1 performance - 5% organic growth; EBIT +60bps Ø Strong performance from Milk in emerging markets Ø CoffeeMate grows double digit in the US Ø Dreyer's focus on profitability delivers improvement Brand Mkt share Nestlé N/M Dreyer's Nido/Ninho CoffeeMate 14 2006 ha
Slide 15: Dairy products
Dairy products Nutrition Health & Wellness/Innovation & renovation Ø Nido nutrition system enhanced with Lactobacillus Ø "Slow Churn" technology roll-out in Europe Ø No Lactose, no taste compromise Ice Cream (Finland) Enhancing the mix/efficiencies Ø SKU rationalisation in Milk to exit commodity pro
Slide 16: Nutrition (6% of Group sales)
Nutrition (6% of Group sales) H1 performance - organic growth 5%; EBIT +60bps Ø China shows signs of recovery Ø Good growth elsewhere (8% OG), led by NAN HA Ø Mid term targets of 20% EBIT, 10% Organic growth Enhancing the mix/efficiencies Ø NAN HA - superpremium Ø Factory disposal/ improved sourcing
Slide 17: Prepared dishes & cooking aids (18% of Group sales)
Prepared dishes & cooking aids (18% of Group sales) H1 performance - 5.4% organic growth; EBIT - 20bps Ø Maggi performing well in AOA and accelerating in Europe Ø Strong performance from Stouffer's and Lean Cuisine in US Ø Wagner strong in Germany, their innovation driving Europe Ø Chilled continues
Slide 18: Prepared dishes and cooking aids
Prepared dishes and cooking aids Nutrition Health & Wellness Ø Reduced salt in Maggi cubes Ø Reduced TFA across range Ø Increased fibre and vegetables in soups Ø "Indulgent" meals in Lean Cuisine - Panini Ø Launch of 97% fat free Lean Cuisine pizza Enhancing the mix/efficiencies Ø Factory closures;
Slide 19: Maggi Minute Noodles
Maggi 2 Minute Noodles Renovating an Australian Icon - 25 years old Ø 38% reduced sodium, 25% less than competitor Ø Over 70% reduction in saturated fat , 50% less than competitor Ø Contributes 25% of RDI of Iron, B1, B2 and Niacin Value share grows to 65% of the noodles market “Simple Goodness that
Slide 20: Chocolate, confectionery & biscuits (10% of Group sales)
Chocolate, confectionery & biscuits (10% of Group sales) H1 performance - 3.5% organic growth; EBIT - 50bp Ø Expected acceleration in Q2 materialised (Easter) Ø Strong growth in Russia, Brazil, AOA, Southern Europe Ø Core brands deliver good growth Ø UK on plan with structural reorganisation/ brand
Slide 21: Chocolate, confectionery and biscuits
Chocolate, confectionery and biscuits Nutrition Health & Wellness Ø World leader in dark chocolate Ø A strong "lighter" portfolio Ø Initiatives in pipeline Enhancing the mix/efficiencies Ø "Magnificent seven" in the UK Ø Increased focus on core brands - globally Ø Factory closure/disposal, rationsal
Slide 22: PetCare (12% of Group sales)
PetCare (12% of Group sales) H1 performance - 6.6% organic growth; EBIT + 40 bps Ø Strong growth and share gains continue in Europe, with beneficial effect on mix Ø AOA and Latin America lead margin gains Ø Beneful Prepared meals launch highly successful in US Ø Margin pressure from energy and relat
Slide 23: Key brands deliver above market growth
Key brands deliver above market growth Organic Growth H1 2006 40 35 BAB's: 30 25 20 15 10 5 0 -5 23 2006 half year results roadshow - August 2006 Name of chairman
Slide 24: Transformation to Nutrition, Health & Wellness
Transformation to Nutrition, Health & Wellness In summary, Innovation and Renovation is at the heart of our business, delivering Ø Differentiation from competitors and share gains in key categories Ø Exceptionally High RIG, above target organic growth Ø Improved Food and Beverage EBIT margin 24 2006
Slide 25: The Corporate Wellness Unit is driving activities internally
The Corporate Wellness Unit is driving activities internally 25 2006 half year results roadshow - August 2006 Name of chairman
Slide 26: Transformation to Nutrition, Health & Wellness
Transformation to Nutrition, Health & Wellness Acquisition of Uncle Toby's Acquisition of Jenny Craig 26 2006 half year results roadshow - August 2006 Name of chairman
Slide 27: Transformation to Nutrition, Health & Wellness
Transformation to Nutrition, Health & Wellness Disposal of Japanese vending Disposal of Perrier bottle making Disposal of Vlachas in Greece (Dairy) 27 2006 half year results roadshow - August 2006 Name of chairman
Slide 28: Agenda
Agenda 2006 First Half Highlights Strategic transformation Ø Brands and innovation: Product Group review Ø Transformation to Nutrition, Health and Wellness Organisational transformation Ø Scale and structure Conclusion 28 2006 half year results roadshow - August 2006 Name of chairman
Slide 29: Creating shareholder value through profitable growth
Creating shareholder value through profitable growth Strategic transformation - Nutrition, Health & Wellness Ø Generating sales growth Ø Growing market shares Ø Enhancing mix Ø Improving F&B margin Organisational transformation Ø Driving focus & discipline Ø Tackling underperformers Ø Improving F&B
Slide 30: GLOBE Implementation Plan
GLOBE Implementation Plan 2002 2003 2004 2005 2006 2007 Business Excellence/ Best Practice Implementation Data Standards/Data Management Implementation GLOBE System Implementation l Switzerland l Poland l Nestlé Purina UK l South Africa l Hungary l Nordic l Chile/Peru/Bolivia l Thailand l Philippine
Slide 31: Nestlé's Future with GLOBE
Nestlé's Future with GLOBE Ø Speed to share and implement new best practices Ø Provide better information for better decisions Ø Facilitate organizational change Ø Allows markets to focus on generating demand activities GLOBE enables the Nestlé Model 31 2006 half year results roadshow - August 2006
Slide 32: Global Business Services: objectives
Global Business Services: objectives Ø To free up market resources to focus on demand generation – profitable growth Ø To deliver back office support at competitive service levels and best-in-class cost Ø To exploit the potential of GLOBE Ø To scale up shared service initiatives to further leverage
Slide 33: Initial scope relates to four service bundles
Initial scope relates to four service bundles Employee Services IS/IT Services To increase workplace To enable business productivity excellence through the use of information technology Businesses focus on profitable growth Facility Services Financial Services To improve physical asset To provide ti
Slide 34: Improving performance of Nestlé F&B Finance Focus areas
Improving performance of Nestlé F&B Finance Focus areas 1. Drive simplicity across the businesses E.g. SKUs, structures, reporting 2. Leverage scale for competitive advantage E.g. GLOBE, Shared services, procurement 3. Tackle underperformers Investment phase, core, non-core, 4. Increase discipline/
Slide 35: Summary
Summary Ø Transformation to Nutrition, Health and Wellness is accelerating Ø Organisational transformation is freeing up the markets to focus on profitable growth Ø Nestlé is opportunity rich - innovation for growth and mix; scale for growth and efficiencies 35 2006 half year results roadshow - Augu
Slide 36: Conclusion - H1 2006
Conclusion - H1 2006 The Nestlé Model reconfirmed Ø H1 organic growth ahead of market, driven by key brands Ø F&B the main contributor to First Half margin improvement Ø Progress on working capital Ø The Nestlé Model reconfirmed for 2006: upper end of 5-6% organic growth target and improvement in co
Slide 37: 2006 half year results roadshow
2006 half year results roadshow 2006 half year results roadshow - August 2006 Name of chairman