Slide 1: Full Year Results 2001
FULL YEAR RESULTS 2001 Roadshow, March 2002
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: Agenda
Agenda Review of the financials Wolfgang Reichenberger Ralston Purina integration John Harris Nestlé Purina North America Pat McGinnis Realising opportunities Peter Brabeck-Letmathe 3 05.03.2002/res.2001
Slide 4: Agenda
Agenda Review of the financials Wolfgang Reichenberger Ralston Purina integration John Harris Nestlé Purina North America Pat McGinnis Realising opportunities Peter Brabeck-Letmathe 4 05.03.2002/res.2001
Slide 5: Key achievements 2001
Key achievements 2001 Strong sales growth + 4.4% RIG + 6.4 % organic + 9.7% comparable structure & constant FX Profit performance Stable EBIT margin of 11.3% on comparable basis; 10.9% after TTS review and GLOBE Excellent net profit growth of 15.9% EPS rises 15.7% 5 05.03.2002/res.2001
Slide 6: Key figures 2000 and 2001
Key figures 2000 and 2001 Change CHF mio. 2000 % 2001 % % Sales 81'422 100 84'698 100 4.0 EBITDA 12'516 15.4 12'444 14.7 (0.6) ex TTS - - - 15.2 EBITA 9'600 11.8 9'713 11.5 1.2 ex TTS - - - 11.9 Trading profit (EBIT) 9'186 11.3 9'218 10.9 0.4 ex TTS - - - 11.3 Net profit 5'763 7.1 6'681 7.9 15.9 ex
Slide 7: Drivers of sales growth
Drivers of sales growth January - December 2001 : CHF 84.7 billion + 4.0% 4.4% REAL INTERNAL GROWTH (RIG) 5.3% Selling price increases and others TTS 0 - 1.0% Acquisitions minus divestitures - 4.7% Variation of exchange rates Sales growth at comparable structure and constant exchange rates: + 9.7% 7
Slide 8: Sales and profitability by management responsibilities and geographic area
Sales and profitability by management responsibilities and geographic area 2000 2001 CHF bio. Sales Profit Margin* Sales Profit Margin* # RIG % % Food Europe 26.3 2.75 10.5 26.7 2.78 10.4 2.1 Americas 25.5 3.50 13.7 26.6 3.53 13.3 3.9 AOA 15.7 2.67 17.0 15.5 2.60 16.8 5.6 Other 13.9 2.02 14.5 15.9 2
Slide 9: Sales and profitability by product group
Sales and profitability by product group 2000 2001 CHFbio. Sales Profit Margin* Sales Profit Margin* # RIG % % Beverages 23.0 4.32 18.7 24.0 4.26 17.75.8 Milk products, 22.0 2.62 11.9 23.0 2.57 11.2 3.5 nutrition, ice cream Prep. dishes... 20.6 1.95 9.4 21.3 2.03 9.5 2.9 & petcare Chocolate, 11.0 1.
Slide 10: EBIT margin maintained despite investing in the future
EBIT margin maintained despite investing in the future Diff. basis Diff. basis (% of sales) 2000 2001 points 2001 (ex TTS) points Sales (CHF million) 81'422 84'698 - 100 100 100 Cost of goods sold (46.8) (44.5) +230 (46.1) +70 Distribution (7.2) (7.6) -40 (7.8) -60 Marketing and (32.5) (34.7) -220 (
Slide 11: Marketing investment continues - administrative costs fall
Marketing investment continues - administrative costs fall Actual CHF bio. % change %of sales 2000 2001 2000 2001 Marketing expenses 19.5 22.7 16.4 23.9 26.8 excl. TTS review 19.5 19.9 2.0 23.9 24.2 Administration 7.0 6.7 (4.1) 8.6 7.9 TTS review figures are illustrative. Calculations based on non-r
Slide 12: Distribution costs: Customer proximity
Distribution costs: Customer proximity Growth in Perrier Vittel Group sales – Home & office is distribution intensive Whenever, wherever, however Ice cream and Confectionery High Q1 oil costs 12 05.03.2002/res.2001
Slide 13: Net profit - major improvement
Net profit - major improvement Diff. basis points Diff.basis points (%of sales) 2000 2001 2001 (ex TTS) Trading profit (EBIT) 11.3 10.9 -40 11.3 0 Net financing cost (0.9) (0.5) +40 (0.5) +40 Net non-trading expenses (0.1) (0.1) (0.1) Taxes (3.4) (2.8) +60 (3.0) +40 Outside interests (0.3) (0.2) +10
Slide 14: Non recurring events anticipated for 2002
Non recurring events anticipated for 2002 Capital gain on partial IPO of Alcon (no material impact on taxes expected) Realignment of the Group's Petcare assets to realise announced synergies, including US Distribution Network Rationalisation of asset base triggered by increased globalisation a
Slide 15: Working capital - returning to appropriate level
Working capital - returning to appropriate level Improved from half-year increase of CHF 2'562 mio. to increase of CHF 870 mio. Key reasons for movement in 2001 - Excellent sales development - Emphasis on higher value-added products - Move to regional manufacturing - Strong last quarter Monito
Slide 16: Healthy cash flow
Healthy cash flow CHF mio. 10000 8851 8614 8187 8000 7401 6372 5633 6000 3839 4000 5501 5599 4938 2000 4390 2691 3706 917 0 1995 1996 1997 1998 1999 2000 2001 Free cash flow Operating Cash Flow (OCF) 16 05.03.2002/res.2001
Slide 17: Net indebtedness up, AAA maintained
Net indebtedness* up "AAA" maintained CHF billion 24 20 19.4 16 12 9.1 9.5 8 6.6 6.2 6.0 5.2 3.0 4 0 H1 H2 H1 H2 H1 H2 H1 H2 1998 1999 2000 2001 * Total financial liabilities minus liquid assets. Liquid assets do not include the carrying value of treasury shares (CHF 2.8 bio. at year-end 2001) 17 05
Slide 18: The Ralston Purina transaction
The Ralston Purina transaction Has added net debt of USD 10.3 bio. (CHF 17.3 bio. at 1.68 CHF vs. USD) Favourable impact on WACC 18 05.03.2002/res.2001
Slide 19: Agenda
Agenda Review of the financials Wolfgang Reichenberger Ralston Purina integration John Harris Nestlé Purina North America Pat McGinnis Realising opportunities Peter Brabeck-Letmathe 19 05.03.2002/res.2001
Slide 20: Global leader in petcare
[Friskies ame _™,.,Ralston Purina Company 3 Nestle PURINA GLOBAL LEADER IN PETCARE
Slide 21: Nestlé Purina PetCare
Nestlé Purina PetCare World class petcare brand portfolio - with brands that can be made truly global Strong positions in key segments and regions Low cost global supply base Strong management with proven records Significant financial upside 21 05.03.2002/res.2001
Slide 22: Strong brand equity in dog food...
Strong brand equity in dog food... 22 05.03.2002/res.2001
Slide 23: ...and in cat food...
...and in cat food... 23 05.03.2002/res.2001
Slide 24: ...as well as being the leader in US litter products
...as well as being the leader in US litter products 24 05.03.2002/res.2001
Slide 25: Well positioned to succeed
Well positioned to succeed Highly complementary, benefiting from: – marketing and R&D – industrial efficiency – global market growth opportunities – a broad product range for customers – distribution strength in different channels 25 05.03.2002/res.2001
Slide 26: Superior R&D expertise
Superior R&D expertise Friskies Purina Shared expertise Wet food Dry food and Pet nutrition Human food treats Palatability / technology and Heska alliance flavours nutrition for functional expertise foods Assures long term, proprietary product innovation 26 05.03.2002/res.2001
Slide 27: Fast track integration
Fast track integration Worldwide integration officer reporting to Group CEO St. Louis is HQ for N. America (US + Canada) Combined North America management team committed to business objectives International operations being integrated into new regional focused petcare structure - L.A., Europ
Slide 28: $260 million synergy potential
$260 million synergy potential Minimum $260 million annual savings as of 2004 “Soft” synergies include brand extensions, transfer of know-how, patents and R&D expertise Revenue synergies from sales expansion outside North America 28 05.03.2002/res.2001
Slide 29: Identified savings opportunities
Identified savings opportunities Apply Purina's supply matrix to Friskies (10%) – Procurement – Distribution Consolidate factories (15%) Overheads (75%) – Warehousing – Sales and marketing – R&D – Administration Costs estimated at $250 million over 2 years 29 05.03.2002/res.2001
Slide 30: Integration timetable
Integration timetable $300 $250 $200 $150 $100 $50 $0 2002 2003 2004 2005 2006 Savings $59 $125 $263 $270 $277 Cost to Attain $120 $130 30 05.03.2002/res.2001
Slide 31: Progress to date
Progress to date Management teams named throughout the world Integration teams in place Synergy accountability established Synergy attainment program fully underway - Supply chain synergy plans confirmed - Overhead synergies confirmed; staff reductions occurring Service sharing with Nestlé
Slide 32: Agenda
Agenda Review of the financials Wolfgang Reichenberger Ralston Purina integration John Harris Nestlé Purina North America Pat McGinnis Realising opportunities Peter Brabeck-Letmathe 32 05.03.2002/res.2001
Slide 33: Pet Care – Total market view
Pet Care – Total market view Sales ($B) Chg. v. YA Pet Food $ 11.6 +8% Supplies 5.6 +5% Litter 1.2 +8% Total $ 18.4 +7% Source: NPPC estimate of 12 Mos. ending 9/30/01 based on IRI (through 1/27/02), Audits & Surveys (through 9/30/01), Market Master, ACNielsen, and NPPC shipment history. Nestlé Puri
Slide 34: Pet Care – Segment view
Pet Care – Segment view Overall growth driven by Dry Pet food, but all segments showing growth vs. YAG. Category $B/Yr Growth Dry Dog $5.1 5% Dry Cat $2.3 7% Wet Dog $1.4 2% Wet Cat $1.7 1% Dog Snacks $1.0 7% Cat Snacks $0.1 11% Litter $1.2 8% Source: NPPC estimate of 12 Mos. ending 9/30/01 based on
Slide 35: Nestlé Purina North America is a unique operating company in a high growth market
Nestlé Purina North America is a unique operating company in a high growth market Sharply focused on PetCare Significant scale and the resulting efficiencies Nestlé Purina PetCare 35 05.03.2002/res.2001
Slide 36: NPPC share leadership – Total Pet Food
NPPC share leadership – Ttl. Pet Food Total Pet food & Sales by vendor Food, Drug, Mass, Pet speciality All other Nutro NPPC has top 4% 9% Hills NPPC share position 13% 32% in Total U.S. Pet Pr. Label food 12% Heinz P&G Mars 8% 12% 10% Source: IRI and Audits & Surveys, data through Sept. ‘01 Nestlé
Slide 37: NPPC share leadership – by category
NPPC share leadership – by category In Food/Drug/Mass, NPPC holds the top share position in 6 of 7 categories: Category Share Position Dry Dog #1 Dry Cat #1 Wet Dog #2 Wet Cat #1 Soft Dog Snacks #1 Cat Snacks #1 Litter #1 Source: 52 Weeks Ending Nestlé Purina PetCare 1/27/02; IRI; Food, Drug & Mass
Slide 38: Enhancing performance by leveraging our brand portfolio
We will enhance our performance and our market positions by leveraging our brand portfolio with our organizational strengths Research and development Consumer knowledge Product supply Customer alliances Nestlé Purina PetCare 38 05.03.2002/res.2001
Slide 39: Agenda
Agenda Review of the financials Wolfgang Reichenberger Ralston Purina integration John Harris Nestlé Purina North America Pat McGinnis Realising opportunities Peter Brabeck-Letmathe 39 05.03.2002/res.2001
Slide 40: Realising opportunities
Realising opportunities Generating efficiencies Perrier Vittel - the growth leader Nutrition - meeting objectives Ice cream - improving performance CPW - building market share Key objectives 2002 40 05.03.2002/res.2001
Slide 41: Evolution of Group's factories 1997 to 2001
Evolution of Group's factories 1997 to 2001 1.1.97 1997-2001 2001 Number of factories 489 479 Acquired /set up +119 +18 Sold / closed /other -140 -29 Factories as of 31.12.2001 468 2001 excludes Ralston Purina 29 41 05.03.2002/res.2001
Slide 42: COGS in % of Sales
MH 97 target savings exceeded Without Improvements 53% 52.0% 51.9% 52% 51.8% 51.2% 51.0% 51% 50.7% CHF COGS in % of Sales 50.1% CHF 50% 0.6 bio. 2.2 bio. CHF CHF 49.3% 49% 1.3 bio. 3.1 bio. 48% 48.1% CHF 4.0 bio. 47% 46.8% 46% With Improvements 45% 44.5% 44% 1996 1997 1998 1999 2000 2001 Target 2004
Slide 43: Future efficiencies to be achieved
Future efficiencies to be achieved Target 2004: at least CHF 1.5 billion by 2004 Project Fitness: savings of 1% of sales by 2004 GLOBE: benefits of CHF 3 billion by 2006 IC3: improving customer and channel contributions 43 05.03.2002/res.2001
Slide 44: Perrier Vittel
Perrier Vittel RIG of 9.1% delivering organic growth of 11.7% No. 1 in US; 16.3% RIG and profit improvement No. 1 in European Home & office (Aqua Cool) Nestlé Pure Life sold 220m litres in 11 countries Germany achieved 16.2% volume growth Nestlé Aquarel triples volume & is No.1 in German
Slide 45: Nutrition
Nutrition RIG of 6.1% – Infant 5.5% – Clinical 14.2% – Performance 9.4% Infant nutrition continued to grow market share Clinical nutrition now in 26 markets Branded active ingredients now in 35 markets 45 05.03.2002/res.2001
Slide 46: PowerBar
PowerBar Outstanding sales growth in the US and Europe Good improvement in profitability Accelerated geographical expansion R&D effort re-energised Delivering on expectations pre-acquisition 46 05.03.2002/res.2001
Slide 47: Be great advertising campaign
Be great advertising campaign 47 05.03.2002/res.2001
Slide 48: Pria advertising campaign
Pria advertising campaign 48 05.03.2002/res.2001
Slide 49: Ice cream
Ice cream Improvement continues - profitability doubled Key market positions strengthened (US & Ger) UK solution demonstrates pragmatism European industrial structure under review Pan-European management structure in place Future emphasis: innovation and availability Focus for 2002: pr
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Slide 51: Cereal Partners Worldwide
Cereal Partners Worldwide RIG of 9.3% drives sales and market share growth CHFbio. in % 1.8 22 25 1.6 21 20 1.4 18 19 1.6 20 17 1.5 1.2 16 14 1.3 13 1.2 15 1.0 12 1.1 0.8 0.9 10 0.6 0.7 0.6 0.6 0.4 5 0.4 0.2 0.0 0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 51 05.03.2002/res.2001
Slide 52: CPW: Top markets
CPW : Top 10 markets Market Share as at ... % 1. UK 24.5 2. France 25.3 3. Poland 80.2 4. Mexico 18.5 5. Portugal 47.2 6. Italy 17.7 7. Germany 4.9 8. Spain 15.0 9. Brazil 21.0 10. Chile 59.4 Source: Nielsen 52 05.03.2002/res.2001
Slide 53: CPW - summary
CPW - summary A successful joint venture Global category with positive growth outlook CPW will achieve strong volume, share and profit growth 53 05.03.2002/res.2001
Slide 54: Nestlé: Key objectives 2002
Nestlé : Key objectives 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 54 05.03
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