Slide 1: Half Year Results 2005 - Roadshow
Half Year Results 2005 - Roadshow 1 Half Year Results 2005 - roadshow - August 2005 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: Roadshow agenda
Roadshow agenda • Summary financials • Observations/outlook • GLOBE update • The Nestlé Model • Zone Americas 3 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 4: A strong start to 2005
A strong start to 2005 • Organic growth accelerates to 5.2% • Reported EBITA margin up 10 basis points • Constant currency EBITA margin up 30 bps* • Underlying EPS up 11.2% * 2004 restated for comparable share-based payment cost 4 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 5: EBITA: Sustainable improvement in margin
EBITA: Sustainable improvement in margin H1 2004 H1 2005 Diff. basis points As % of sales Restated (rounded) Sales (CHF million) 42,454 43,474 100 100 Cost of goods sold (41.2) (41.5) (30) Distribution (8.7) (8.2) 50 Marketing & Admin (36.6) (36.7) (10) R&D (1.6) (1.6) 0 EBITA 11.9 12.0 10 EBITA imp
Slide 6: EBITA margin improvement H1 2004 - H1 2005
EBITA margin improvement H1 2004 - H1 2005 + 30 bp H1 2005 + 10 bp - 10 bp Reported Divestitures FX Rates + 20 bp 12.0% H1 2004 Restated Margin improvement: 11.9% -10 bp* constant currency* Share-based + 40 bp payments Product & comparability 11.8% market Savings Mix Growth H1 2004 EBITA with LESS c
Slide 7: EBITA to net profit: underlying EPS up 11.2%
EBITA to net profit: underlying EPS up 11.2% H1 2004 H1 2005 Diff. As % of sales Jan-June % Jan-June % basis points Restated (rounded) EBITA 11.9 12.0 10 Net other income/expenses (0.2) (0.7) (50) Amortisation of goodwill (1.9) (0.0) 190 Net financing cost (0.8) (0.5) 30 Taxes (2.8) (2.6) 20 Share o
Slide 8: Raw material, packaging and energy price index and CHF/USD rate
Raw material, packaging and energy price index 170.0 1.9 1.8 150.0 1.7 CHF/USD Rate 130.0 1.6 Price Indices 1.5 110.0 1.4 90.0 1.3 1.2 70.0 1.1 50.0 1 Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- Jan- 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 RMPE in USD t
Slide 9: Raw material, packaging & energy price index: 2004 v 2005 (CHF)
Raw material, packaging & energy price index: 2004 v 2005 (CHF) 150 140 130 Index CHF (Jan 1998=100) 120 110 100 90 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2004 CHF Index 2005 CHF Index 9 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 10: 2005 outlook: Europe, The Americas
2005 outlook: Europe, The Americas • Zone Europe - Prioritised growth over margin in H1 - Potential to improve margin in H2, but - Chilled Dairy to be a drag on profitability • Zone Americas - Excellent performance: sales & margin - USA's annual margin performance less H2 weighted than historically
Slide 11: 2005 outlook: Zone AOA, Nestlé Waters
2005 outlook: Zone AOA, Nestlé Waters • Zone AOA - Specific problems held back H1 margin - H2 likely to improve • Nestlé Waters - North America driving growth - H1 impacted dramatically by PET & distribution costs - Cost pressure to remain in H2 11 Half Year Results 2005 - roadshow - August 2005 Nam
Slide 12: Observations & outlook
Observations & outlook • Constant currency EBITA margin up 30 bps* • Nestlé Food & Beverage contributed to the constant currency earnings improvement • Input costs a challenge for 2005, but efficiency programmes on target • Organic growth to be within 5 - 6% range and constant currency margin to imp
Slide 13: 2005 Major GLOBE "Go-Lives"
2005 Major GLOBE "Go-Lives" • South Africa (completed) • India (completed) • Austria (completed) • Nestlé Waters HOD UK • Pakistan (completed) (completed) • The Center (completed) • Mexico (completed) • Russia (completed) • UK/Ireland (completed) • Germany (completed) • Oceania 13 Half Year Results
Slide 14: "Live" Markets - August 2005
"Live" Markets - August 2005 20 countries • Approx. CHF 22.6 billion in sales • Approx. 61,000 users • 222 factories (113 Nestlé, 109 Co-Packers) • 270 distribution centers • 202 sales offices 14 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 15: The Nestlé model
The Nestlé model On-going organic growth target of 5 - 6 % Continued year after year improvement of EBITA margin Improving capital efficiency / ROIC Resulting in an industry outperforming, long term total shareholder return 15 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 16: Zone Americas
Zone Americas 16 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 17: Zone Americas: A strong first half performance
Zone Americas: A strong first half performance H1 2004 H1 2005 restated EBITA 12.8% 13.6% + 80 bps H1 2005 Sales split RIG OG % % % Zone Americas + 4.9 + 7.2 North America 65 + 5.6 + 6.9 United States + 3.5 + 5.0 NPPNA (PetCare) + 7.3 + 8.6 Dreyer's + 9.2 + 8.7 Canada + 5.0 + 8.0 Latin America and C
Slide 18: Overview of Zone Americas
Overview of Zone Americas 45 Countries (incl. Caribbean Islands) 4 Markets (USA, Mexico, Brazil & Canada) 4 Regions (Austral-America, Bolivarian, Caribbean and Central American) 860 million people 70,000 employees (approx.) 4 major languages (English, Spanish, Portuguese and French) 7
Slide 19: Overview of Zone Americas
Overview of Zone Americas Strong position and proud tradition in the Americas Nestlé in the Americas Over 100 years manufacturing in USA Over 80 years manufacturing in Latin America (Brazil) Strong management and in-depth knowledge of each country Nestlé has Leadership & Scale 8 Brands o
Slide 20: Diversity and Potential
Diversity and Potential • GDP per capita (year 2004) – USA US$ 39'752 vs. Haiti US$ 411 • Large population and growing – North America: 320 million people, 0.9% growth rate – Latin America & Caribbean: 540 million people, 1.4% growth rate • Young population – North America: Median age of 36 years –
Slide 21: Zone Americas Vision
Zone Americas Vision Accretive to the Group's vision: "Becoming a respected, trustworthy Food, Nutrition, Health & Wellness Company." 21 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 22: Nestlé's Four Strategic Pillars
Nestlé's Four Strategic Pillars • Growth • EBITA • Market Share Speed... 22 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 23: Operational Efficiency
Operational Efficiency Striving to continue to be the low cost operator • Operation EXCELLENCE 2007 and FitNes • Optimized production infrastructure • Shared Service Centers (North America, LATAM) • Common purchasing with networked organizations • Aggressive GLOBE implementation 23 Half Year Results
Slide 24: Operational Efficiency
Operational Efficiency Cost efficient and service-driven backline operations enable our frontline businesses to remain focused on driving the business. 24 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 25: Operational Efficiency
Operational Efficiency North America is leading the way with front-line focused Operating Companies and back-office shared support structures. Office of the Chairman NESTLÉ BUSINESS CENTER Nestlé Nestlé Nestlé Prepared Purina Dreyer's Brands Foods PetCare ct nt ra Co i ce CENTERS OF rv Se EXCELLENCE
Slide 26: Operational Efficiency
Operational Efficiency Opportunities identified to leverage the scale of Nestlé in the North Focused Nestlé Operating Leveraged Nestlé Business Services (NBS) Companies Scope of First Phase Brands Prepared Foods Purchasing – S&IM HR/Payroll Centers of Skill/ Purina PetCare Purchasing – D
Slide 27: Innovation and Renovation
Innovation and Renovation Speed up consumer relevant Innovation/Renovation 27 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 28: Innovation and Renovation
Innovation and Renovation Rich pipeline of innovation and renovation 28 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 29: Innovation and Renovation: Adding nutritional value: NIDO
Innovation and Renovation Adding nutritional value: NIDO NIDO NIDO 1+, 3+, 6+ Nourishment Moms Enhancement Moms NIDO NIDO 1+ NIDO 3 NIDO 6+ Benefit: Milk-based Nutrition Benefit: Protection Stimulation Growth Product: Full Cream Milk Powder Product: Specialized Milk Powder 29 Half Year Results 2005
Slide 30: Product Availability
Product Availability Satisfy consumers with our brands/products wherever, whenever, however 30 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 31: Product Availability
Product Availability Building and controlling proprietary, Routes to Market, with optimal product portfolio 31 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 32: Product Availability
Product Availability 32 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 33: Product Availability
Product Availability Bringing products to consumers in Brazil 33 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 34: Consumer Communications
Consumer Communications Insights into Action in Peru NUTRIMOVIL Nestlé Plan Conos: Sampling & Merchandising Insights: Living our consumers' lives 34 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 35: Consumer Communication
Consumer Communication Motivating Communications-Nestlé Brazil "Faz Bem" Strategic Brand Campaigns Corporate Communications & Sponsorships Consumer Promotions 35 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 36: Consumer Communication
Consumer Communication Direct contact with consumers Chile Brazil Mexico USA Colombia Nestlé Purina Petcare Latin America 36 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 37: Zone Americas: In summary
Zone Americas • In summary... • Performance is on track • Potential for continued growth is promising • Aligned organization with a vision and a plan • Strong management with local expertise People. Products. Brands. 37 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 38: Half Year Results 2005 - Roadshow
Half Year Results 2005 - Roadshow 38 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 39: Net Income Statement
Net Income Statement Sales (CHF million) 42,454 43,474 100 100 Cost of goods sold (41.2) (41.5) (30) Distribution (8.7) (8.2) 50 Marketing & Admin (36.6) (36.7) (10) R&D (1.6) (1.6) 0 EBITA 11.9 12.0 10 EBITA improvement at constant currency 30* Net other income/expenses 0.2) (0.7) (50) Amortisation
Slide 40: Net Income Statement
Net Income Statement Sales (CHF million) 42,454 43,474 100 100 Cost of goods sold (41.2) (41.5) (30) Distribution (8.7) (8.2) 50 Marketing & Admin (36.6) (36.7) (10) R&D (1.6) (1.6) 0 EBITA 11.9 12.0 10 EBITA improvement N at constant currency Net other income/expenses EW 0.2) (0.7) 30* (50) Amortis
Slide 41: IFRS International Accounting Standards Board
IFRS International Accounting Standards Board 30 Cannon Street UK - London, EC4M 6XH email: iasb@iasb.org 41 Half Year Results 2005 - roadshow - August 2005 Name of chairman
Slide 42: Half Year Results 2005 - Roadshow
Half Year Results 2005 - Roadshow 42 Half Year Results 2005 - roadshow - August 2005 Name of chairman