Slide 1: 2010 Full Year Results European Roadshow
2010 Full Year Results European Roadshow Paul Bulcke Chief Executive Officer James Singh Chief Financial Officer
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: The Reference for Financial Performance
The Reference for Financial Performance James Singh Chief Financial Officer
Slide 4: Agenda
Agenda 2010: improvements in organic growth, EBIT, EPS Reporting transparency & comparability High quality results: continuing peer outperformance Being the reference for financial performance 3 22 February 2011 2010 Full Year Roadshow
Slide 5: 2010 highlights: Strong Full Year 2010 Performance
2010 highlights: Strong Full Year 2010 Performance Improvements in organic growth, EBIT, EPS Actuals CHF/% Sales (Group) 109.7 bn +6.2% organic growth, net divestments -0.6%, FX -3.6% Net Profit 34.2 bn Includes 2010 profit on sale of Alcon +7.4% improved operating performance Underlying EPS 3.32 +1
Slide 6: Nestlé's Total Performance Framework
Nestlé’s Total Performance Framework Achieving Investment Scale Driving Simplicity for Growth Benefits Performance THE NESTLÉ MODEL Securing progress today and ensuring success in the future 5 | 22 February 2011 | 2010 Full Year Roadshow
Slide 7: Outperformance is the keystone of our ambition
Outperformance is the keystone of our ambition Competitive Advantages Operational Growth Pillars Drivers 6 22 February 2011 2010 Full Year Roadshow
Slide 8: Outperformance is the keystone of our ambition
Outperformance is the keystone of our ambition 7 22 February 2011 2010 Full Year Roadshow
Slide 9: Being the reference for financial performance requires…
Being the reference for financial performance requires… Consistent delivery: top & bottom line High quality results: consistent peer outperformance Financial performance aligned to strategy: credibility & trust Balance sheet management for long-term shareholder benefit Competitive sharehol
Slide 10: Reporting transparency & comparability
Reporting transparency & comparability Effective 1st January 2011 Change to Net-Net sales recognition From EBIT to Trading Operating Profit Segment reporting changes in 2011 9 22 February 2011 2010 Full Year Roadshow
Slide 11: Change to Net-Net sales recognition
Change to Net-Net sales recognition Current revenue recognition policy is IAS compliant IAS18 allows a range of treatments New Net-Net model is also IAS compliant and makes Nestlé more comparable Current and new income statement models both IFRS compliant 10 22 February 2011 2010 Full Year R
Slide 12: From EBIT to Trading Operating Profit
From EBIT to Trading Operating Profit EBIT no longer reported; change to Trading Operating Profit Trading Operating Profit Is struck after COGs, Distribution, Marketing/Admin, R&D BUT ALSO AFTER Other trading income/expenses (restructuring charges, impairment of assets, result on disposal of ass
Slide 13: Consolidated income statement 2010
Consolidated income statement Discontinued operations (a) Continuing for the year ended 31 December 2010 operations T otal In millio ns o f CHF Sales 87'906 5'109 93'015 Other revenue 109 - 109 Cost of goods sold (44'775) (1'074) (45'849) Distribution expenses (7'953) (125) (8'078) Marketing and adm
Slide 14: Full Year 2010 Trading Operating Profit
Full Year 2010 Trading Operating Profit Consolidated income statement Discontinued operations (a) Continuing for the year ended 31 December 2010 operations T otal In millio ns o f CHF Sales 87'906 5'109 93'015 Other revenue 109 - 109 Cost of goods sold (44'775) (1'074) (45'849) Distribution expenses
Slide 15: Agenda
Agenda 2010: improvements in organic growth, EBIT, EPS Reporting transparency & comparability Segment reporting changes in 2011 Relative weighting of businesses High quality results: continuing peer outperformance Being the reference for financial performance 14 22 February 2011 2010 Ful
Slide 16: Segment reporting changes from 1/01/11
Segment reporting changes from 1/01/11 Operating segments No change to Zones, Nestlé Waters "Other Food & Beverage" becomes "Other" Healthcare Nutrition (CHF 1.7bn/1.6bn net-net sales) joins Nestlé Health Science Nestlé Health Science reported in "Other", not Nestlé Nutrition Galderma & Laboratoir
Slide 17: Full Year 2010, Operating Segments
Full Year 2010, Operating Segments 3. Analyses by segment 3.1 Operating segments discontinued oper ations c ontinuing Unallocated Nutrition (a) eliminations Zone Asia, operations and Africa Americas Other (b) items (c) segment Oceania Pharma Europe Waters Nestlé Nestlé T otal T otal Inter- Zone Zone
Slide 18: Full Year 2010, Products
Full Year 2010, Products 3. Analyses by segment 3.2 Products and intra-group HealthCare (a) Confectionery Milk products discontinued cooking aids oper ations c ontinuing Unallocated eliminations dishes and Beverages operations Nutrition & Ice cream Powdered and Liquid Prepared items (b) PetCare Phar
Slide 19: Agenda
Agenda 2010: improvements in organic growth, EBIT, EPS Reporting transparency & comparability Segment reporting changes in 2011 Relative weighting of businesses High quality results: continuing peer outperformance Being the reference for financial performance 18 22 February 2011 2010 Ful
Slide 20: Relative weighting of businesses
Relative weighting of businesses 19 22 February 2011 2010 Full Year Roadshow
Slide 21: Agenda
Agenda 2010: improvements in organic growth, EBIT, EPS Reporting transparency & comparability High quality results: continuing peer outperformance The Nestlé Model Being the reference for financial performance 20 22 February 2011 2010 Full Year Roadshow
Slide 22: Enhancing The Nestlé Model
Enhancing The Nestlé Model Current New 5-6% Organic Growth 5-6% Organic Growth Annual improvement Annual improvement EBIT margin Trading Operating Profit margin (constant currencies) Improving Capital Efficiency Annual improvement underlying EPS (constant currencies) Improving Capital Efficiency 21
Slide 23: Agenda
Agenda 2010: improvements in organic growth, EBIT, EPS Reporting transparency & comparability High quality results: continuing peer outperformance Being the reference for financial performance 22 22 February 2011 2010 Full Year Roadshow
Slide 24: Driving our ambition to be the reference for financial performance
Driving our ambition… The Nestlé Model now a tougher benchmark Internal targets set at Trading Operating Profit level - Accountability for other operational costs - For 2011, current EBIT improvement also a KPI Underlying EPS focus enhances drive for shareholder value creation Move to Net-Ne
Slide 25: Being the reference for financial performance requires…
Being the reference for financial performance requires… Consistent delivery: top & bottom line High quality results: continuing peer outperformance Financial performance aligned to strategy: credibility & trust Balance sheet management for long-term shareholder benefit Competitive sharehol
Slide 26: Appendix
Appendix 25 22 February 2011 2010 Full Year Roadshow
Slide 27: Consolidated income statement H1 2010
Consolidated income statement Discontinued operations (a) Continuing for the period ended 30 June 2010 operations T otal In millio ns o f CHF Sales 43'174 3'915 47'089 Other revenue 58 - 58 Cost of goods sold (21'725) (816) (22'541) Distribution expenses (3'962) (93) (4'055) Marketing and administra
Slide 28: Half Year 2010, Operating Segments
Half Year 2010, Operating Segments 3. Analyses by segment Operating segments discontinued oper ations c ontinuing Unallocated Nutrition (a) Zone Asia, operations and Africa Americas Other (b) items (c) Oceania Pharma Europe Waters Nestlé Nestlé T otal T otal Zone Zone In millio ns o f CHF January-Ju
Slide 29: Half Year 2010, Products
Half Year 2010, Products 3. Analyses by segment Products and intra-group HealthCare (a) Confectionery Milk products discontinued cooking aids oper ations c ontinuing Unallocated eliminations dishes and Beverages operations Nutrition & Ice cream Powdered and Liquid Prepared items (b) PetCare Pharma W
Slide 30: 1st Quarter 2010
1st Quarter 2010 29 22 February 2011 2010 Full Year Roadshow
Slide 31: 9 months 2010
9 months 2010 30 22 February 2011 2010 Full Year Roadshow
Slide 32: 2011: A Year with Challenges
2011: A Year with Challenges Challenges: Opportunities for Nestlé to benefit from its competitive advantages Paul Bulcke Chief Executive Officer
Slide 33: Agenda
Agenda Overview of 2010, and into 2011… Perceived issue: consumer demand Response: Building our own growth in developed markets Beating the growth benchmark in emerging markets Perceived issue: raw material pressure Response: Outperformance in procurement, operations, products Conclusion 32
Slide 34: Overview: Nestlé in 2010…
Overview: Nestlé in 2010… We built on our accelerating 2009 momentum We delivered a strong operating performance We invested for growth: in brands, capabilities, capital, M&A We laid foundations for future growth platforms Including Nestlé Health Science & Nestlé Institute of Health Science
Slide 35: …and into 2011
…and into 2011 We outperformed our competition in 2010 We carry strong momentum into 2011 Top-line growth Efficiencies and operating performance We are well positioned to manage the challenges 2011: another year of delivering the Nestlé Model 34 22 February 2011 2010 Full Year Roadshow
Slide 36: Agenda
Agenda Overview of 2010, and into 2011… Perceived issue: consumer demand Response: Building our own growth in developed markets Beating the growth benchmark in emerging markets Perceived issue: raw material pressure Response: Outperformance in procurement, operations, products Conclusion 35
Slide 37: Nestlé's categories offer potential for growth
Nestlé’s categories offer potential for growth Category Growth Rate Beverages 6.6% Dairy 5.8% Food 5.0% PetCare 6.3% Confectionery 5.2% Waters 8.2% Ice cream 5.4% Infant Formula 9.1% Baby Food 5.6% Weight Management 5.6% Beverage systems, ++ HCN… Source: Euromonitor global category annual growth 200
Slide 38: Outperformance is the keystone of our ambition
Outperformance is the keystone of our ambition Competitive Advantages Operational Growth Pillars Drivers 37 22 February 2011 2010 Full Year Roadshow
Slide 39: Nestlé has outperformed its competition
Nestlé has outperformed its competition 70% of business cells held or built share in 2010 70% juin/06 août/06 oct./06 déc./06 févr./07 avr./07 juin/07 août/07 oct./07 déc./07 févr./08 avr./08 juin/08 août/08 oct./08 déc./08 févr./09 avr./09 juin/09 août/09 oct./09 déc./09 févr./10 avr./10 juin/10 ao
Slide 40: Nestlé in developed markets
Nestlé in developed markets CHF 70 billion sales 3.3% organic growth 134,700 employees 233 factories 23 R&D centres CHF 3 billion Capex in 2011 39 22 February 2011 2010 Full Year Roadshow
Slide 41: Europe: the market realities
Europe: the market realities Population shrinking Private Label in our categories 66% 60% 29% 28% 26% 25% 24% 24% 23% 22% 22% 22% 4% Chilled Frozen RTD Ambient Ice Petcare R&G Ambient Sugar Chocolate Soluble Powd. Closed Culinary Culinary Coffee Culinary Cream Dairy Coffee Bev.. Coffee Systems No na
Slide 42: F&B spend: av. 13.1% EU household income
F&B spend: av. 13.1% EU household income 14.8 15.2 15 14.6 15.1 14.8 14.4 15 14.6 14.2 14.4 14.9 14 14.2 14 14.8 13.8 14.7 14 13.6 14.7 13.6 13.8 13.4 14.6 13.6 13.2 14.5 13.4 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2000 2001 2002 2003 2004
Slide 43: Europe: outperformance is key to growth
Europe: outperformance is key to growth and Delivering Source of Profitable Efficiencies Growth and and Drive Focused Market Investments Share Gains on Key Brands and I&R and 42 22 February 2011 2010 Full Year Roadshow
Slide 44: Europe: outperformance is key to growth
Europe: outperformance is key to growth Innovation & Renovation is a key growth driver NESCAFÉ Dolce Gusto Juicy Roasting NESCAFÉ Green Blend NDG launched in 2010 By end 2010 Launched 2009 Prior to 2010 In 2011 In 2010 43 22 February 2011 2010 Full Year Roadshow
Slide 45: Innovation in Europe
Innovation in Europe 44 22 February 2011 2010 Full Year Roadshow
Slide 46: Nestlé is consistently growing faster than its categories
Europe: outperformance is key to growth Nestlé is consistently growing faster than its categories 6.7% Category growth Nestlé growth 6.0% 6.1% 5.5% 5.1% 5.1% 4.6% 3.6% 2.6% 2.4% 2.1% 1.5% Jan-Sep 2009 FY 2009 Jan-Mar 2010 Jan-Jun 2010 Jan-Sep 2010 FY 2010 Growth of category & Nestlé In Nestlé’s top
Slide 47: To outperform, we need to create value
Europe: outperformance is key to growth To outperform, we need To serve different consumer groups (not all are shrinking) To deliver best-in-class service from a best-in-class cost base To offer distinctive brand-differentiation To drive consumers to higher-value products To gain market sh
Slide 48: Nestlé in emerging markets
Nestlé in emerging markets CHF 39 billion of sales 11.5% organic growth 13 countries with sales CHF 1bn+ 146,300 employees 210 factories 6 R&D centres CHF 2.5bn Capex in 2011 47 22 February 2011 2010 Full Year Roadshow
Slide 49: AOA: the market realities
AOA: the market realities AOA: Asia: 76% of world’s population 34% of global GDP 55% of global wealth by 2030 83% of world’s babies China: 16 of the world’s 26 megacities 2nd largest economy 1 bn new $3-15k consumers India: 2005-2015 Most populated nation by 2030 Africa: 1 bn population: 60% below 2
Slide 50: AOA: expanding presence is key to winning
AOA: expanding presence is key to winning and Operational Invest efficiency in brands and and Secure/ensure Build efficient supply PPP and and Deeper/wider distribution 49 22 February 2011 2010 Full Year Roadshow
Slide 51: AOA: expanding presence is key to winning
AOA: expanding presence is key to winning Strong brands with local heritage Differentiated multi-tier strategy & price-point management PPP & Premium are at extremes: mindsets & business-models We have proven expertise in both Distribute deeper/wider 1 million more outlets by 2012 Local in
Slide 52: AOA: expanding presence is key to winning (Capex)
AOA: expanding presence is key to winning Capex 1400 CHF Mn 840 760 660 2008 2009 2010 2011 We are investing ahead of demand in a fast growth environment 51 22 February 2011 2010 Full Year Roadshow
Slide 53: To win we need…
AOA: expanding presence is key to winning To win we need… To build capacity Not just traditional, but also local finishing plants for PPP To further expand our distribution Direct & indirect; urban & rural To have highly-efficient operations & procurement To continue to develop our capabilit
Slide 54: Agenda
Agenda Overview of 2010, and into 2011… Perceived issue: consumer demand Response: Building our own growth in developed markets Beating the growth benchmark in emerging markets Perceived issue: raw material pressure Response: Outperformance in procurement, operations, products Conclusion 53
Slide 55: Costs: volatility is an issue; trends are the key
Costs: volatility is an issue; trends are the key 54 22 February 2011 2010 Full Year Roadshow
Slide 56: Managing raw material costs: an opportunity for competitive advantage
Managing raw material costs: an opportunity for competitive advantage in the market place Use local expertise & hedges Waste out ̶ efficiencies and effectiveness Create value ̶ innovation and renovation Drive operating performance Pricing If we excel along the value chain, we need less pri
Slide 57: Procurement: helping our markets win
Procurement: helping our markets win Leveraging our scale and best practices Aligned strategies with one Nestlé voice to suppliers/the market Providing forward looking information by business & commodity We began managing 2011 in 2010 Enabling accelerated decision-making by our markets Innovat
Slide 58: Procurement: helping Nestlé win
Procurement: helping Nestlé win Farm-to-Fork approach creates value (& not just for Nestlé) Multi-sourcing Reduces exposure to volatility Streamlines supply chain & helps assures supply Improves raw materials quality, reduces waste Increases farmers’ skills, yields & incomes Enhances Nestlé’s re
Slide 59: Procurement: helping Nestlé win
Procurement: helping Nestlé win Procurement has consistently created value Its performance was improving due to GLOBE before NCE GLOBE + NCE = a new level of value-creation Today, Procurement is: a dynamic enterprise closely aligned with business needs equipped with new capabilities to accel
Slide 60: Outperformance: it goes beyond operations
Outperformance: it goes beyond operations From 2000 to 2010 From 2010 GLOBE & Nestlé Continuous Excellence 59 22 February 2011 2010 Full Year Roadshow
Slide 61: NCE touches all Nestlé
NCE touches all Nestlé A consumer-driven war on waste 60 22 February 2011 2010 Full Year Roadshow
Slide 62: A lean enterprise – the Nestlé way
A lean enterprise – the Nestlé way First, we understand what customers & consumers ‘value’ And we evaluate which activities add that ‘value’. Then we eliminate other activities, and thereby Free up resources for value-adding activities. Finally, we relentlessly optimise value-adding activi
Slide 63: Driving efficiencies and effectiveness
Driving efficiencies and effectiveness Cost & productivity Supply chain Output per factory +5% Case fill rate +30 bps Distribution costs -20 bps Freshness at shipment +70 bps Customer survey +3 places Safety Average working cap -110 bps Bad goods -21% Lost time injuries -10% Stock cover (Raw) -14% R
Slide 64: Our Journey to a Lean Enterprise
Reduction of waste a key factor but... 10% 10% 60% 20% Daily Fire Continuous Strategy MAKING A DIFFERENCE INImprovement OUR Tasks Fighting (Entrepreneurship & Creativity) DAY TO DAY ACTIVITIES Our Journey to a Lean Enterprise 10% 40% 50% Entrepren- eurship Daily Tasks Fire Fighting and Creativity ..
Slide 65: Agenda
Agenda Overview of 2010, and into 2011… Perceived issue: consumer demand Response: Building our own growth in developed markets Beating the growth benchmark in emerging markets Perceived issue: raw material pressure Response: Outperformance in procurement, operations, products Conclusion 64
Slide 66: Conclusion
Conclusion Strong alignment behind the Nestlé Roadmap Anticipating downsides & risks; optimising upsides Nestlé is building competitive advantage all along the value chain We have strong growth momentum with positive mix Our market share performance is strong Our innovation pipeline is r
Slide 67: 2011: A Year with Challenges
2011: A Year with Challenges Challenges: Opportunities for Nestlé to benefit from its competitive advantages 66 22 February 2011 2010 Full Year Roadshow
Slide 68: Discussion
Discussion 67 22 February 2011 2010 Full Year Roadshow