Half Year Results 2005 - Roadshow · 2019-07-14 · 2 Half Year Results 2005 - roadshow - August...

Half Year Results 2005 - roadshow - August 2005 Name of chairman1

Half Year Results 2005 - Roadshow


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 risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

Disclaimer


Roadshow agenda

• Summary financials

• Observations/outlook

• GLOBE update

• The Nestlé Model

• Zone Americas


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


EBITA: Sustainable improvement in margin

H1 2004 H1 2005 Diff. basis pointsAs % of sales Restated (rounded)

Cost of goods sold (41.2) (41.5) (30)Distribution (8.7) (8.2) 50Marketing & Admin (36.6) (36.7) (10)R & D (1.6) (1.6) 0

EBITA 11.9 12.0 10EBITA improvement at constant currency 30*EBITDA 15.1 15.1 -

Sales (CHF million) 42,454 43,474100 100



EBITA margin improvement H1 2004 - H1 2005

* H1 2004 costs of share-based payments adjusted to make them comparable with H1 2005

11.9%

H1 2004Restated

-10 bp*Share-based

paymentscomparability

+ 40 bpProduct &

marketMix

+ 20 bp

+ 10 bpDivestitures

+ 30 bp

- 10 bpFX Rates 12.0%

H1 2005Reported

11.8%

Savings

LESS

Growth

Reinvestment

Input cost

Margin improvement:constant currency*

H1 2004 EBITA withcomparable share-

based payments


EBITA to net profit: underlying EPS up 11.2%

EBITA 11.9 12.0 10Net other income/expenses (0.2) (0.7) (50)Amortisation of goodwill (1.9) (0.0) 190Net financing cost (0.8) (0.5) 30Taxes (2.8) (2.6) 20Share of results of associates 0.9 0.9 0

Profit for the period - of whichattributable to minority interest 0.5 0.6 10attributable to the Group (Net profit) 6.6 8.5 190

Underlying net profit 8.2* 8.9 70

Underlying net profit per share (in CHF) 8.95* 9.95 + 11.2%Basic earnings per share (in CHF) 7.16 9.48 + 32.4%

H1 2004 H1 2005 Diff. As % of sales Jan-June % Jan-June % basis points

Restated (rounded)



Raw material, packaging and energy price index

Nestle Weighted Average RMPE Indices in USD and CHFJan 1998=100

50.0

70.0

90.0

110.0

130.0

150.0

170.0

Jan-89

Jan-90

Jan-91

Jan-92

Jan-93

Jan-94

Jan-95

Jan-96

Jan-97

Jan-98

Jan-99

Jan-00

Jan-01

Jan-02

Jan-03

Jan-04

Jan-05

Pric

e In

dice

s

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

1.8

1.9

CH

F/U

SD R

ate

RMPE in USD terms RMPE in CHF terms CHF/USD EX Rate


Raw material, packaging & energy price index: 2004 v 2005 (CHF)

Inde

x C

HF

(Jan

199

8=10

0)

150

90

100

110

120

130

140

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2004 CHF Index 2005 CHF Index


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


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


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 improve in 2005

• Nestlé's ability to deliver savings will endure beyond cyclical cost issues



2005 Major GLOBE "Go-Lives"

• South Africa (completed)

• Austria (completed)

• Pakistan (completed)

• The Center (completed)

• Russia (completed)

• Germany (completed)

• India (completed)

• Nestlé Waters HOD UK (completed)

• Mexico (completed)

• UK/Ireland (completed)

• Oceania


"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


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


Zone Americas


Zone Americas: A strong first half performance

Zone Americas + 4.9 + 7.2North America 65 + 5.6 + 6.9

United States + 3.5 + 5.0NPPNA (PetCare) + 7.3 + 8.6Dreyer's + 9.2 + 8.7Canada + 5.0 + 8.0

Latin America and Caribbean 35 + 3.7 + 7.6Brazil + 4.3 + 2.4Mexico + 5.8 + 11.2

H1 2005 Sales split RIG OG% % %

EBITA 12.8% 13.6% + 80 bps

H1 2004 H1 2005restated


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 time zones


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 over CHF 1 Billion : Nestlé, Nido,

Nescafé, Nestlé Chocolate, Stouffer's, Lean Cuisine, Hot Pockets, Purina

Nestlé #1 Brands have on average a Market Share 4X bigger than the nearest competitor

Overview of Zone AmericasStrong position and proud tradition in the Americas


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– Latin America & Caribbean: Median age of 24 years

Source: Worldbank-2005 World Development Indicators


Zone Americas

"Becoming a respected, trustworthy Food, Nutrition,

Health & Wellness Company."

VisionAccretive to the Group's vision:


Nestlé's Four Strategic Pillars

• Growth• EBITA• Market Share

Speed...


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


Cost efficient and service-driven backline operations enable our frontline businesses to

remain focused on driving the business.



North America is leading the way with front-line focused Operating Companies and back-office shared support structures.

CENTERS OF EXCELLENCE

ON SHORE

OFF SHORE

OUT SOURCE

NESTLÉ BUSINESS CENTER


Dreyer's

Office of the

Chairman

NestléCanada

NestléWaters

Service Contract

Service Contract

NestléBusinessServices

NestléPrepared

FoodsNestléPurina

PetCare

NestléNutrition Alcon

NestléBrands

NestléMexico


Focused NestléOperating

CompaniesLeveraged Nestlé Business Services (NBS)

Onshore / Offshore

In-source/Out-source

Centers of Skill/Centers of Scale

Delivery Options:

Brands

Prepared Foods

Purina PetCare

Nutrition

Canada

Waters

Purchasing – S&IM Purchasing – Direct Retail Sales Execution

HR/Payroll Disbursements General Accounting Operations Accounting

Customer Service Transportation Decision Support Communications Legal Other - All support functions which could be shared

Dreyer's Mexico Alcon•• Other

IT – Application Dev./Maintenance

IT – Data Center Tax Treasury

Operational EfficiencyOpportunities identified to leverage the scale of Nestlé in the North

Scope of First Phase


Innovation and RenovationSpeed up consumer relevant Innovation/Renovation


Innovation and RenovationRich pipeline of innovation and renovation


Innovation and Renovation

Nourishment Moms

NIDO

Benefit: Milk-based Nutrition

Product: Full Cream Milk Powder

NIDO

Enhancement Moms

NIDO 1+, 3+, 6+

NIDO 1+ NIDO 3 NIDO 6+

Benefit: Protection Stimulation Growth

Product: Specialized Milk Powder

Adding nutritional value: NIDO


Product AvailabilitySatisfy consumers with our brands/products wherever, whenever, however


Product AvailabilityBuilding and controlling proprietary, Routes to Market, with optimal product portfolio


Product Availability


Product AvailabilityBringing products to consumers in Brazil


Consumer Communications

Insights: Living our consumers' lives

NUTRIMOVIL Nestlé

Plan Conos: Sampling & Merchandising

Insights into Action in Peru


Consumer CommunicationMotivating Communications-Nestlé Brazil "Faz Bem"

Corporate Communications & Sponsorships

Strategic Brand Campaigns

Consumer Promotions


Consumer CommunicationDirect contact with consumers

Brazil Mexico

Chile

Nestlé Purina Petcare Latin America

USA Colombia


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.


Cost of goods sold (41.2) (41.5) (30)Distribution (8.7) (8.2) 50Marketing & Admin (36.6) (36.7) (10)R & D (1.6) (1.6) 0EBITA 11.9 12.0 10EBITA improvement at constant currency 30*



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 of results of associates 0.9 0.9 0

Profit for the period - of which

attributable to minority interest 0.5 0.6 10

attributable to the Group (Net profit) 6.6 8.5 190


Underlying net profit per share (in CHF) 8.95* 9.95 + 11.2%

Basic earnings per share (in CHF) 7.16 9.48 + 32.4%

Net Income Statement

Half Year Results 2005 - roadshow - August 2005 Name of chairman40* 2004 restated for comparable share-based payment cost

Net Income Statement

NEW IFRS ?

Cost of goods sold (41.2) (41.5) (30)Distribution (8.7) (8.2) 50Marketing & Admin (36.6) (36.7) (10)R & D (1.6) (1.6) 0EBITA 11.9 12.0 10EBITA improvement at constant currency 30*


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 of results of associates 0.9 0.9 0

Profit for the period - of which

attributable to minority interest 0.5 0.6 10

attributable to the Group (Net profit) 6.6 8.5 190


Underlying net profit per share (in CHF) 8.95* 9.95 + 11.2%

Basic earnings per share (in CHF) 7.16 9.48 + 32.4%


IFRS

International Accounting Standards Board30 Cannon Street

UK - London, EC4M 6XH

email: [email protected]

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