Slide 1: 2003 Full Year Results Roadshow
2003 Full Year Results Roadshow 1 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 2: Forward looking statements
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. Potential
Slide 3: 2003: in the industry context, an excellent year
2003: in the industry context, an excellent year • Organic growth within our target • Strong margin improvement: 80 basis points, at constant currency excluding pension impact • All Zones, Nestlé Waters and Other activities improved - demonstrating sustained operating improvement 3 2003 Full Year Ro
Slide 4: A good operating performance in 2003
A good operating performance in 2003 + 11% + 60 bp + 6.3% + 6.8% + 20 bp - 4 days + 0.6% + 1.3% - 1.3% Sales EBITA EBITA Underlying Free Cash Margin Net profit cash conversion flow cycle (days) Reported Total constant currency 4 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 5: Excellent 2003 performance in US Dollars
Excellent 2003 performance in US Dollars* CHF USD 25 20 23.1 % Change 15 15.9 10 13.7 5 6.8 0.6 x 0 1.3 Sales EBITA Underlying Net Profit *P&L at average rates. Illustrative only 5 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 6: Positive EBITA margin development 2002-2003
Positive EBITA margin development 2002-2003 EBITA improvement at constant FX Net operations FX rates Improvement EBITA improvement + Savings from efficiency -40bp initiatives +90bp + Growth Market mix +60bp -10bp Pension cost + Synergies -20bp - Raw & packaging materials - Reinvestment +20bp Based o
Slide 7: EBITA margin improves in all areas
EBITA margin improves in all areas + 20 bp + 10 bp 20 + 70 bp 17.2 17.4 16.5 16.6 + 20 bp 15.0 15 14.3 + 70 bp 12.3 12.5 % margin 10 9.7 9.0 5 0 02 03 02 03 02 03 02 03 02 03 Waters Europe* Americas AOA Other* EBITA CHF bn 0.8 3.6 4.1 2.5 1.5 *Europe 2002 restated excluding Eismann. Other includes E
Slide 8: Contribution to Group EBITA in 2003
Contribution to Group EBITA in 2003 in basis points % EBITA EBITA margin Contribution to margin change Group EBITA Z-EUR 12.5 + 20 + 18 Z-AMS 15.0 + 70 + 1 Z-AOA 17.4 + 20 - 3 Nestlé Waters 9.7 + 70 + 10 Other Act. 16.6 + 10 + 4 Unallocated items - 10 Total Group 12.5 + 20 + 20 Constant currency + 6
Slide 9: Zone Europe On track to "Destination Growth"
Zone Europe • First Half 2003 EBITA margin up 80bps - Marketing spend up versus H1 2002 - "Don't extrapolate" - Lars Olofsson on roadshow • Full year 2003 EBITA margin up 20bps despite: - Significant increase in H2 marketing spend - Pension cost up 40 bps over 2002 - Heat wave impact on sales • 14 f
Slide 10: Product groups: EBITA margins
Product groups*: EBITA margins - 30 bp 20 17.5 17.2 + 150 bp + 20 bp 15 - 80 bp + 90 bp 14.7 13.2 % margin 11.7 11.8 12.0 11.0 10.8 10.2 10 5 0 02 03 02 03 02 03 02 03 02 03 Choc, confect Prepared Milk, nutrition Petcare Beverages and biscuits dishes and ice cream EBITA cooking aids CHF bn 1.0 1.9 2
Slide 11: Return on invested capital improves in 2003
Return on invested capital* improves in 2003 % 20 19.9 18.9 17.3 17.5 15 15.6 14.0 10 5 0 1998 1999 2000 2001 2002 2003 ROIC including goodwill remained stable at 11.0% *EBITA on segment assets - taxes at 30% 11 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 12: Capital expenditure declined in 2003
Capital expenditure declined in 2003 CHF 4 4.5 % of bn. 3.61 3.58 Sales 3.5 3.30 3.34 3 2.81 4.3% 2.5 4.1% 4.0 2 4.0% 1.5 3.8% 3.8% 1 0.5 3.5 0 1999 2000 2001 2002 2003 12 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 13: Evolution of Net Debt 2003
Evolution of Net Debt 2003 25 3.4 21.1 20 1.8 (CHF bio) 1.3 2.0 15 15.0 2.7 14.4 7.0 1.7 3.1 10 5 0 02 H 1 en d H1 e tc.) er's .2003 w H2 ex H2 tc.) .2 d x X y e 1 .12 h- flow Div i Ca pe c k,F Dr e 0 .06 h- f lo C a p , F X .2003 ebt 3 g cas v enpi e bt 3 cas en ts 3 1 .12 D g m Ne t e r atin , Mö
Slide 14: Efficiency initiatives savings schedule
Efficiency initiatives savings schedule Actual 2002 2003 2004 2005 2006 '04-'06** 1. Target 2004+ 900 2. Operation "Excellence" 2,300 3. FitNes* 800 Remaining savings 2004- '06** 1,100 1,300 1,600 4,000** Savings achieved 1,200 1,150 2,350 Cumulative savings 2002- '06 6 billion + Enabled by GLOBE 3,
Slide 15: Reshaping our business
Reshaping our business GLOBE: Best practices, Data standards, IT FitNes Target 2004+ Operation "Excellence" Reshape organisation Shared services Manage product portfolio Improve performance 15 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 16: GLOBE Status: general
GLOBE Status: general • No change to objectives • On time and on budget; will enable benefits of CHF 3 billion by 2006 through savings initiatives • Business Excellence and Data Management in progress in all markets: the key benefit enablers • Lessons from pilot markets implemented in "next wave" ma
Slide 17: GLOBE status: market implementations
GLOBE status: market implementations Switzerland, Chile, Peru, Bolivia, Malaysia, Singapore, Thailand, Poland & Indonesia have implemented all three objectives (Best practices, Data management, IS/IT) • Relatively complex businesses • About CHF 5 billion in sales • Over 20,000 employees (13,000 user
Slide 18: GLOBE: best practice examples and benefits from markets without new systems
GLOBE: best practice examples and benefits from markets without new systems • Accelerated Close (S.E. Africa): from 14 days to 5 at year end, reduced cost (CHF 1 mio), better management information • Intermarket Supply (Waters in N, America & Europe): reduced stocks & write-offs (EUR 1.3 mio in 2002
Slide 19: Life Ventures: access to emerging technologies
Life Ventures: access to emerging technologies • The fund was set up in mid-2002 • Objective to provide access to emerging technologies and active compounds which are – relevant to innovation strategies – support the move to nutrition & wellness – provide a long term-capital growth opportunity • Pro
Slide 20: Life Ventures - investments
Life Ventures - investments Fund size Amount invested Typical investment size € 140 million € 26 million € 2 – 6 million Investments by Area Consumer Investments by Country communication GER 12,5% 25% Packaging 12.5% US Nutraceuticals/ 50% medical food Functional 50.0% NL products 12.5% Oral immune
Slide 21: Evolution of Need States in Food
Evolution of Need States in Food Good Food Nutrition & Health Wellbeing Taste/Pleasure Perceived Feeling Good Variety/Balance Safety/Quality For all + Nutritional value + Taking Control Equilibrium Body & Mind Sustenance Enjoyment Health/ Nutrition Psychological Contentment GOOD FOOD GOOD FOOD, GOOD
Slide 22: Food, health and nutrition
Food, health and nutrition • Over 700 products have undergone recent Innovation/ renovation to enhance nutritional profile • 60:40+ drives the development of nutrition and health value-added • Clear nutrition communication on packaging • Nutrition education programmes for consumers • Wellness days h
Slide 23: 2003 Full Year Roadshow - March 2004 Name of chairman
23 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 24: Alcon
Alcon • Sales up 13.2% to $3.4 billion • Net earnings up 27.5% to $595.4 million • EPS up 25.5% to $1.92 • Dec '03 market cap of $18.7 billion, up 83% since partial IPO 24 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 25: Topical subjects
Topical subjects • Nestlé Waters USA: the right strategy in 2003; further growth in 2004 • Nestlé Purina: successful integration; growth drivers in 2004 • Ice cream: improving performance; US integration; positioned for leadership • L'Oréal: a transparent solution, benefitting all 25 2003 Full Year
Slide 26: Topical subjects
Topical subjects • Prioritising profit over sales growth in '03 - Chilled dairy disposals - European petcare portfolio focused - German chocolate portfolio reduced - Latin American pricing - Japan liquid drink vending downsized - 26 factories closed or divested - Trinks disposal to benefit '04 Opera
Slide 27: 2003 objectives - update
2003 objectives - update • Creation of 5-6% organic growth trend target 5.1% achieved • Continued margin improvement 20 basis points, 60 basis points constant currency • Continued improvement in ROIC 100 basis points improvement • Improvement in Ice cream and Chilled dairy Both deliver good increase
Slide 28: 2004 outlook: overall positive
2004 outlook: overall positive Perceived issues • Competitive situation in Waters • Chocolate & confectionery • Retail environment in Europe • Japan, Brazil, Milk price in AOA Potential positives • The business environment / FX compared to '03 • EBITA margin - Efficiency gains: Target 2004+, FitNes
Slide 29: Summary: excellent results, excellent prospects
Summary: excellent results, excellent prospects 2003 • Organic growth within target range • Increased Group, Zones & Waters margins • Underlying net profit & EPS increased 2004 • Market conditions to improve over 2003 • Efficiencies to deliver gross CHF 1.1 billion • Further improvement in operating
Slide 30: 2003 full year results
2003 full year results 30 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 31: 2003 Full Year Roadshow - March 2004 Name of chairman
31 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 32: Sveltesse Chilled Dairy
SVELTESSE CHILLED DAIRY Innovation through geographic expansion and guiltless indulgence Italy Portugal Sept 2003 UK March 2003 Sept 2003 New Creamy texture New Coffee Liegeois New Dessert Yogurt recipes France, Spain, Portugl, Italy, Belgium France; Spain, Belgium France, Spain, Portugal, Ialy, Bel
Slide 33: Sveltesse - Other categories
SVELTESSE - Other categories Innovation 2003 SVELTESSE Cereal Bar Czech Republic, France SVELTESSE Chilled Soups France SVELTESSE Ready Meals France 33 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 34: Nestle NEW Low Carbohydrate Products
Nestle NEW Low Carbohydrate Products Lean Cuisine low carb meals Lean Cuisine low carb meals USA (11 skus) CANADA (2 skus) 34 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 35: Lean Cuisine US Introduces Reduced Carbohydrate Entrées
Lean Cuisine US Introduces . . . Healthy, Reduced Carbohydrate Entrées • Now, consumers can decrease their carbs and increase their vegetables for healthy eating – 25g or less of carbs – 2 full servings of fresh vegetables – Low in fat and calories • Creative recipes bursting with flavour • Availabl
Slide 36: Lean Cuisine products are not part of the Atkins regime
NONE of the Lean Cuisine products are part of the Atkins regime – they’re more mainstream Recipes = 25g of carbs or less (vs. 50g on average for regular Lean Cuisine) Lean Cuisine is carb concerned 2 FULL servings of vegetables These new skus are part of the full line up of Lean Cuisine meal
Slide 37: Beneful Healthy Weight Formula
Beneful Healthy Weight Formula • Brand launched in June 2001 in the US • HWF launched in 2003 as first line extension • Features soy as a protein source for sustaining lean body mass • Total brand over 7% share 37 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 38: 2003 Full Year Roadshow - March 2004 Name of chairman
38 2003 Full Year Roadshow - March 2004 Name of chairman
Slide 39: 2003 Full Year Roadshow - March 2004 Name of chairman
39 2003 Full Year Roadshow - March 2004 Name of chairman