Slide 1: Full Year Results 2002 Roadshow, March 2003, New York
Full Year Results 2002 Roadshow, March 2003 New York Full Year Results 2002 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: 2002: A record performance by Nestlé
2002: A record performance by Nestlé % +27.1 +19 +19 +19 +13 +60 Cash conversion +13 bp cycle (days) +9.5 Net debt +50 bp +5.3 Margin Free Sales EBITA Net profit/EPS Operating EBITA cash flow cash flow -10 Reported Constant currency -23 Full Year Results 2002 Name of chairman
Slide 4: Key figures in US Dollars
Key figures* in US Dollars % % mio CHF change USD change Sales 89'160 + 5.3 57'560 + 14 EBITA 10'940 + 9.5 7'063 + 19 Net profit 7'564 + 13.2 4'883 + 23 EPS 19.51 + 13.1 12.60 + 23 Market cap. 113'368 - 17.4 81'560 +/- 0 *Illustrative only. P&L at average rates; balance sheet at year end rates. Full
Slide 5: Operating efficiencies drive EBITA improvement
Operating efficiencies drive EBITA improvement FROM COGS TO EBITA IMPACT AT EBITA LEVEL target 2004+ mktg +130 -40 petcare Schöller admin and NICC distrib +50 -20 FX -10 target 2004+ pensions -40 EBITA retained -10 IS/IT R&D improvement at EBITA -10 EBITA -10 improvement +10 +50 +50 +50 data in basi
Slide 6: 2002: An excellent year in Food and Beverage
2002: An excellent year in Food and Beverage Waters: Europe: AMS: AOA: Resilient Profitable Efficiencies Integration high margins growth 20 + 80 bp 17.2 17.2 + 100 bp 15 13.5 14.3 + 60 bp 12.0 11.0 10 8.4 9.0 5 0 01 02 01 02 01 02 01 02 EBITA '02 0.7 3.4 4.2 2.6 CHF bn Full Year Results 2002 Name of
Slide 7: Europe and AMS main contributors to Group EBITA improvement
Europe and AMS main contributors to Group EBITA improvement EBITA Contribution to in basis points change Group EBITA Z-EUR + 100 + 24 Z-AMS + 80 + 28 Z-AOA 0 -4 Nestlé Waters + 60 +3 Other Activities - 40 -1 Total Group + 50 Full Year Results 2002 Name of chairman
Slide 8: Profitability improvements by product group
Profitability improvements by product group 2001 2002 margin CHF bio Margin* EBITA Margin* improv bps Beverages 17.7% 4.07 17.5% (20) Milk products, nutrition & ice cream 11.2% 2.76 11.8% 60 Prepared dishes & cooking aids 10.4% 1.71 10.8% 40 Chocolate, confectionery & biscuits 11.0% 1.18 11.0% - Pet
Slide 9: Other income (expenses): The numbers
Other income (expenses): The numbers Total expenses: CHF 3.3 billion • Impairment of property, p&e: CHF 1.3 billion • Restructuring costs: CHF 1.1 billion Total goodwill impairments: CHF 0.8 billion Future restructuring costs to be around 0.5% of sales per year Full Year Results 2002 Name of chairma
Slide 10: Impairments: Fixed assets
Impairments: Fixed assets • Economies of scale and asset utilisation are critical to improving the Group ROIC • As an investment, these impairments will be closely monitored to ensure that the returns meet our expectations, within the timeframe established This reflects our commitment to optimise re
Slide 11: Food and beverage efficiency initiatives
Food and beverage efficiency initiatives Incremental (CHF mio) Functional Owner 2002 2003 2004 2005 2006 ROLLING TOTAL 1. Target 2004+ Technical 2,000+ Technical / 2. GLOBE /Op. efficiencies distribution 2,000 Supply 3. Other GLOBE benefits chain / IT 1,000 Finance 1,000 4. Project FitNes and contro
Slide 12: Return on invested capital improves in 2002
Return on invested capital* improves in 2002 % 20 18.9 15 17.3 17.5 15.6 14.0 10 5 0 1998 1999 2000 2001 2002 ROIC including goodwill** dipped in 2002 to 11% from 13.8%, due mainly to acquisition of Ralston Purina *EBITA on segment assets (** plus gross goodwill on balance sheet) - taxes at 30% Full
Slide 13: Nestlé Waters
Nestlé Waters Nestlé Waters USA Nestlé Waters • Excellent efficiency gains + 16% • Good year in Europe: East/West/HOD • Asia/Middle East 23% RIG • Pure Life volume doubled + 70bp + 4%pts • 2003: continued improved performance; integration of HOD Margin RIG Market share Full Year Results 2002 Name of
Slide 14: Ice cream: Continued improvement
Ice cream: Continued improvement % Share EUR AMS AOA 15% 16% 10% Spain Canada Australia Switzerland USA Philippines Profitable Russia Chile Malaysia market leader Peru South Africa Argentina Egypt Hong Kong Tunisia Strong no. 2 (growing & France East.Europe Brazil Thailand improving EBITA) Improveme
Slide 15: Frozen Food in the US: A great success story
Frozen Food in the US: A great success story Stouffer's Chef America USA Frozen Food prepared dishes handheld snacks 1999 2002 2002 • market size ($ billion ) 5.6 6.8 1.1 • market growth (%) - + 6.2* + 11.8** • market share Nestlé (%) 27.0 30.6 52.3 • market share nr 2 (%) 25.5 21.6 4.9 • * 3yr aver
Slide 16: Nestlé acquisition criteria (1)
Nestlé acquisition criteria (1) Strategic criteria • To create category No.1 or strong No.2 • Focused approach on value-added growth categories • Strong brands in leadership positions Integration • High degree of certainty of successful integration - Business fit / management commitment / existing k
Slide 17: Nestlé acquisition criteria (2)
Nestlé acquisition criteria (2) Financial criteria • RIG, cash flow and earnings enhancing - Either pre-acquisition or due to potential for improvement • Generate value - IRR (conservative scenario) > WACC - Normally ROIC greater than WACC in planning horizon - Quantifiable and measurable synergies
Slide 18: Powwow meets acquisition criteria
Powwow meets acquisition criteria On strategy • Fast growing market • Delivers pan-European leadership • Opportunity for strong branded presence Integration • Management retained • Good cultural fit • Benefit from Nestlé Waters USA expertise Financial • RIG of 15-20% • Synergies to exceed 10% of sal
Slide 19: 2003 outlook
2003 outlook Positives • Efficiency gains: Target 2004+, GLOBE, FitNes • Soluble coffee and Nutrition • Purina, Schöller and Chef America synergies • China, Russia, India, Mexico... Possible issues • Easter is late: Q1 • Petcare USA RIG impact (Hi-lo/EDLP) • Dreyer's merger process • Japan Full Year
Slide 20: Agenda
Agenda Peter Brabeck: • 2002 objectives and achievements • Accelerating, reshaping and delivering • 2003 objectives Full Year Results 2002 Name of chairman
Slide 21: Nestlé: Key objectives in 2002
Nestlé: Key objectives in 2002 Drive profitability through efficiency programmes Continue to deliver 4 % RIG Continued improvement in Ice cream Improve performance of Chilled dairy and Petcare Integration of Ralston Purina, Ice cream Partners, Schöller Conclude partial IPO of Alcon Full Year Results
Slide 22: Nestlé: Key achievements in 2002
Nestlé: Key achievements in 2002 Drive profitability through efficiency programmes Good performance by Target 2004+, GLOBE on track, FitNes established Continue to deliver 4 % RIG Below trend target but quality of sales improved Continued improvement in Ice cream Positive RIG and 110 basis point imp
Slide 23: Three businesses reach sales of CHF 1 billion
Three businesses reach sales of CHF 1 billion • People's Republic of China (Greater China exceeds CHF1.4 billion) • Russia • Products used as carriers for branded active ingredients • Also, our food joint ventures, CPW and BPW, now contribute combined sales in excess of CHF 1 billion Full Year Resul
Slide 24: Accelerating
Accelerating '92-'96 '97-'02 Average RIG +2.68% +3.72% EBITA margin +30bps +200bps EPS improvement +37% +114% Operating cash flow CHF 24bio CHF 50bio Average RIG 2000 to 2002 is above 4% Full Year Results 2002 Name of chairman
Slide 25: Reshaping
Reshaping • The products - From basic foodstuffs to R&D based products - From sustaining life to enhancing well-being • The organisation - From multi-national to multi-focal - From complexity = cost to efficiency in complexity • The business model - An open, asset efficient network organisation - Fr
Slide 26: Delivering
Delivering • Real, measurable organic growth • Ongoing efficiencies across admin & factories • Increasing EBITA margins • Improving returns on invested capital Sustainable, capital efficient and profitable long term growth Full Year Results 2002 Name of chairman
Slide 27: Nestlé: Key objectives 2003
Nestlé: Key objectives 2003 • Maintenance of 4% RIG trend target as foundation for organic growth • Continued margin improvement • Continued improvement in ROIC • Continued improvement in Ice cream and Chilled dairy • Continued successful integration of acquisitions and GLOBE • First gains from the
Slide 28: Full Year Results 2002
Full Year Results 2002 Full Year Results 2002 Name of chairman