Nestle S.a. · SIX:NESN
Nestle — CAGNY 2017
33 slides from Nestle's conference presentation, Feb 23, 2017
Slide 1: CAGNY 2017
CAGNY 2017 February 23, 2017 François-Xavier Roger EVP, 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: Agenda
Agenda Overview Of Nestlé Long-Term Value Creation Structural Cost Saving Initiatives Summary 3 February 23, 2017 CAGNY 2017
Slide 4: Agenda: Overview of Nestlé
Agenda Overview Of Nestlé Long-Term Value Creation Structural Cost Saving Initiatives Summary 4 February 23, 2017 CAGNY 2017
Slide 5: The Nestlé story
The Nestlé story 150 years of portfolio evolution Henri Nestlé 1867 1905 1938 1960s 1980s 2000s 2011 2014 1929 1947 1970s 1990s 2010 2012 George H. Page Anglo-Swiss Condensed Milk Company 1866 5 February 23, 2017 CAGNY 2017
Slide 6: A strong global footprint
A strong global footprint Unmatched geographic presence R&D sites Factories Illustrative 6 February 23, 2017 CAGNY 2017
Slide 7: Very diversified and balanced portfolio
Very diversified and balanced portfolio Diversified by geography & category Sales Contribution 2016 Water 8% Beverages Confectionary 22% 10% Beverages AOA AOA 25% AMS AMS 45% Petcare 14% Nutrition & Nutrition and Health Science Health Science EMENA 17% Prepared 30% Culinary dishes EMENA and cooking
Slide 8: Strong global and local brands
Strong global and local brands 34 billionaire brands; local jewels 8 February 23, 2017 CAGNY 2017
Slide 9: Agenda: Long-Term Value Creation
Agenda Overview Of Nestlé Long-Term Value Creation Structural Cost Saving Initiatives Summary 9 February 23, 2017 CAGNY 2017
Slide 10: Commitment to long-term value creation
Commitment to long-term value creation Balanced top and bottom line growth Nutrition Health and Wellness Strategy Balanced top and bottom-line growth key to long-term value creation: Invest selectively in fast-growing categories and regions Address underperforming businesses Portfolio mana
Slide 11: Quality Organic Growth driven by Real Internal Growth
Quality Organic Growth driven by Real Internal Growth Industry- leading volumes (RIG) % Pricing % Real Internal Growth 5% 4% 3% 2% 1% 0% Q1-14 Q2-14 Q3-14 Q4-14 Q1-15 Q2-15 Q3-15 Q4-15 Q1-16 Q2-16 Q3-16 Q4-16 11 February 23, 2017 CAGNY 2017
Slide 12: Cost efficiencies and portfolio management driving gross margin evolution
Cost efficiencies and portfolio management driving Gross Margin gross margin evolution +350bps in 4 years 52.0% Gross margin as a % of sales 50.0% 50.6% 49.6% 48.0% 48.1% 47.1% 47.8% 46.0% 44.0% 42.0% 2012* 2013 2014 2015 2016 *Re-stated 12 February 23, 2017 CAGNY 2017
Slide 13: Continuous margin-improvement over time
Continuous margin-improvement over time Consistent TOP margin development Trading Operating Profit (TOP) margin improvement 1 1 in bps 2012-16 (constant currency) 1 +28 bps / year 1 1 1 0 0 0 0 0 2012 2013 2014 2015 2016 13 February 23, 2017 CAGNY 2017
Slide 14: Consistent industry-leading cash flow generation
Consistent industry-leading cash flow generation Industry- leading FCF generation 13.0% 12.5% Free cash flow as a % of sales 12.0% 11.5% 11.0% 11.2% 11.3% 10.5% 11.0% 10.9% 10.0% 10.2% 9.5% 9.0% 2012* 2013** 2014*** 2015 2016 *Re-stated ** Adjusted for exceptional income due to Givaudan disposal (CH
Slide 15: Sustainable dividend per share in CHF
Sustainable dividend per share in CHF Long-term dividend growth 22nd consecutive year of increase 2.50 2.252.30* 2.15 2.20 2.05 2.00 1.95 Dividend in CHF 1.50 1.00 0.50 0.00 *Proposed dividend 2016 15 February 23, 2017 CAGNY 2017
Slide 16: Balanced Emerging and Developed Markets
Balanced Emerging and Developed Markets Balanced EM vs DM exposure Sales contribution 2007 Sales contribution 2016 Emerging Markets Emerging 32% Markets 42% Developed Developed Markets Markets 58% 68% 16 February 23, 2017 CAGNY 2017
Slide 17: Driving our profitable growth in emerging markets
Driving our profitable growth in emerging markets Balanced EM vs DM exposure Developed Emerging Sales 58% 42% Annual Growth 12-16 +1.6% +8.3% Growth in Marketing 100 115 Spend index Profit < 17 February 23, 2017 CAGNY 2017
Slide 18: Quality growth: leading in eCommerce
Industry- Quality growth: leading in eCommerce leading e-commerce development eCommerce as % of Group Sales 4.9% eCommerce Sales (FY15 vs FY16): • Group: +18% • Ex-Nespresso: +34% 2.9% 0.0% 2012 2016 18 February 23, 2017 CAGNY 2017
Slide 19: Playing in the right categories
Playing in the right categories Leading positions in growing Nestlé presence F&B fastest growing categories (CAGR 2013-16, %) categories + Portioned Coffee 13,2 - Bottled Water 9,0 Milk Formula 8,3 Yogurt 7,4 Baby Food 7,1 Other Plant-based Hot Drinks 7,0 Fruit Snacks & Nuts 6,9 Oils & Fat 6,7 Sport
Slide 20: … and leading these categories
… and leading these categories Leading positions in growing Nestlé presence F&B fastest growing categories (CAGR 2013-16, %) categories + Portioned Coffee 13,2 #1 - Bottled Water 9,0 #2 Milk Formula 8,3 #1 Yogurt 7,4 <#2 Baby Food 7,1 #1 Other Plant-based Hot Drinks 7,0 #2 Fruit Snacks & Nuts 6,9 Oi
Slide 21: Growth driven by innovation
Growth driven by innovation Innovation And 30% of sales come from products innovated or renovated in the last 3 years renovation Premiumisation Nutrition and Added-value Science Les Recettes de l’Atelier Nescafé Gold Barista Nido FortiGrow ProNourish Nespresso Vertuoline Coffee-mate Natural Bliss Mi
Slide 22: Focusing on our billionnaire brands
Focusing on our billionnaire brands* Focus on 34 Billionaire brands Billionaire Rest of brands the Group Net Sales 77% 23% Growth +5.2% +1.9% Marketing spend 80% 20% Profit 83% 17% *Figures represent averages 2012 - 2016 22 February 23, 2017 CAGNY 2017
Slide 23: Addressing the polarization of consumer trends
Addressing the polarization of consumer trends Premium & Affordable grow > mainstream Premium 16% 19% Mainstream 71% 67% Affordability 13% 14% (PPP*) 2014 2016 Average OG over the period 2014-2016 * PPP: Popularly Positioned Products 23 February 23, 2017 CAGNY 2017
Slide 24: Driving our NHW profitable growth journey
Driving our NHW profitable growth journey Nutrition Health and Wellness (NHW) Performance of businesses vs. NHW dimension* NHW below NHW above average average Sales % 50 50 Growth index 100 180 Marketing spend index 100 100 Profit index 100 150 * NHW dimension measured by % of Net Sales with 60/40 w
Slide 25: Agenda: Structural Cost Saving Initiatives
Agenda Overview Of Nestlé Long-Term Value Creation Structural Cost Saving Initiatives Summary 25 February 23, 2017 CAGNY 2017
Slide 26: Identified eight structural savings beyond NCE
Identified eight structural savings beyond NCE 3 Pillars to our structural savings projects Estimated structural savings by 2020 1 Operations Raise our asset intensity by 10 percentage points Leverage on scale through global 2 Procurement sourcing (from 40% today to 60%) >200bps Consolidate Nestlé i
Slide 27: 2016 Achievements: Operations
2016 Achievements: Operations Sweating our assets Objective Achievements 2016 “Sweat” assets: • Accelerated # of lines under TPM* from 12% to 22% • Reducing conversion and distribution costs • Increased asset intensity by 400bps • Optimize our industrial footprint • Increase capacity utilization • F
Slide 28: 2016 Achievements: Procurement
2016 Achievements: Procurement Leveraging our scale Objective Achievements 2016 • Implementing ONE • 3 global hubs of purchasing procurement model across organization set up: 60% of Nestlé positions staffed • From 40 to 60% of Global • 6 markets go-live Buying • 3 categories go-live: Dairy, • Optimi
Slide 29: 2016 Achievements: NBE
2016 Achievements: NBE Simplifying and leveraging scale Objective Achievements 2016 • Four out of six new business process designs completed • Increase in Shared Service Center coverage +60% (cost coverage from 6% to 10%) • Set-up two new Shared Service Centres in China and Portugal, taking total to
Slide 30: 2016 Achievements: Site Optimization
2016 Achievements: Site Optimization Site optimization commenced in USA Objective Achievements 2016 • Consolidate Nestlé in the • Announced consolidation of markets Nestlé USA HQ and support functions in East Coast and • Improve facility management Ohio • De-layer functions • Commenced restructuring
Slide 31: Agenda: Summary
Agenda Overview Of Nestlé Long-Term Value Creation Structural Cost Saving Initiatives Summary 31 February 23, 2017 CAGNY 2017
Slide 32: Summary
Summary Long-Term value creation through balance of top and bottom line growth Increased cost discipline and progress structural saving initiatives Continuous FCF improvement to support sustainable, growth-oriented dividend Prudent approach to capital allocation, including M&A Manage chang
Slide 33: Thank you !
Thank you ! 33 February 23, 2017 CAGNY 2017