Nestle India Limited · fast food OOH at least once/month Search for Convenience Consumer Changing...
Transcript of Nestle India Limited · fast food OOH at least once/month Search for Convenience Consumer Changing...
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Nestle India Limited
Financial Analysts’ Meet - December 7, 2005
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Agenda
Introduction & Overview Martial Rolland
Financials Shobinder Duggal
Food Business Shivani Hegde
Social Responsibility Dr. Raj Singh
Questions & answers ALL
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This presentation may contain statements reflecting Management’s current views and estimates, that may be construed as forward looking statements. Actual results might differ materially from those either expressed or implied in the statements, depending on the circumstances.
Responses can only be given to questions, which are not price sensitive.
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INTRODUCTION &OVERVIEW
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Economy
EconomySteady growth – exceeding 7%Monday 28 November 2005 Sensex @ 9000High consumer confidence
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Growing Urbanization-Urban up from 17% in1950 to 28% now
Rising Aspirations- Durable ownership doubled in last decade - 8 Mio Cars, 45 Mio Two wheelers(+20% vs LY)-45 Mio Mobile phones(+25% vs LY)
Greater use of Credit-Easy availability of low interest credit-Housing Loans at US $ 10 Bio (+30% vs LY)-25 Mio credit & debit cards issued (+20% vs LY)-85% cars purchased on credit
ConsumerChanging Lifestyles & Rising Aspirations
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-Out of home consumption (+10% vs LY)– 70% of Urban Metro Indians eatfast food OOH at least once/month
Search for Convenience
ConsumerChanging Lifestyles & Rising Aspirations
Rising Education and Working Women
-Literacy has gone up from52% to 66%(1991-04) -1 Mio graduates pa-Urban working women up from 14% to 20% (1991-04)
Growing Exposure-Media,TravelEating out on the rise
-Pressure Cooker urban penetration 65%-Ready to eat category small but fast growing
-108 Mio TV households (+10% vs LY)-Cable TV in 53% urban homes(x 2 in 5 yrs)-8 Mio traveled abroad in 2004 (x2 vs 2001)
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BUSINESS
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Strategic Focus
Efficiency: Low–Cost Operator
People
Availability
Innovation and Renovation
Consumer Communications
GLOBEStructure
Nu
trit
ion
,Hea
lth
,Wel
lnes
sfo
r al
l age
s
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Innovation & Renovation
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Availability
CustomerBusiness
Teams
CustomerNeeds
ChannelStrategy
Consumer Marketing
Team
CategoryOpportunities
Brand Plan
CCSD• Shopper Expertise
Market intelligenceChannel strategy & planningPOP drivers strategy & planningPre/post evaluation analysis
Customer & Channel Sales Development (CCSD)
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Front ViewSeparate entry for Material & People
Pant Nagar Factory
• Total CAPEX INR 100 crores
Finished goods –loading bay view
Efficiency: Low-Cost Operator
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Consumer Communication
Support overall strategyConsumers Insight drivenCreate clear product differentiationHighly impactful
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Nutrition,Health,Wellness
Evolution of Need States in Food
Sustenance Enjoyment
Good Food
Taste/PleasureVariety/BalanceSafety/Quality
For all + +
Health/ Nutrition
Health & Wellness
PerceivedNutritional
value
Psychological Contentment
Wellbeing
Feeling Good Taking Control
EquilibriumBody & Mind
GOOD FOOD, GOOD LIFEGOOD FOOD
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Structure
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Globe
• Considered best implementation yet within the Nestle Group
• On time • Smooth transition
FUTURE
• Leverage• Yield synergies
ObjectivesHarmonization of Nestle Business Excellence Best PracticesStandardization of Internal and External Master Data allowing Data to be managed as a corporate assetStandardization of Information Systems and technology
PRESENT
PAST
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Benchmarked Performance
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Growth in Consumer Off-take
95.0%
100.0%
105.0%
110.0%
115.0%
120.0%
125.0%
130.0%
2003 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005
Cu
mm
ula
tive G
row
th
FMCG Industry NestléSource: A C Nielsen
Top line against Industry
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Source: Annual Reports & www.sebiedifar.nic.in
Bottom line against Competitors
EBITDA MARGIN (Competition Comparable)
16%
20% 20% 19%
21%
17% 17%
14% 14%15%
10%
12%
14%
16%
18%
20%
22%
2001 2002 2003 2004 JAN-SEP 05
Nestle Industry
Industry includes Nestle, HLL, P&G, GSK & Britannia
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Share Price against Indices
50
100
150
200
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Rela
tive S
cale
Nestle BSE FMCG Index BSE SENSEX
.
Dec-05
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Over to SHD
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FINANCIALS
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Business Framework
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Result of focus on Value Drivers
50
100
150
200
Jan-01
Jul-01
Jan-02
Jul-02
Jan-03
Jul-03
Jan-04
Jul-04
Jan-05
Jul-05
Rela
tive S
cale
Nestle BSE FMCG Index BSE SENSEX
.
Dec-05
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Evolution of Dividend
1.4 1.9 1.9 2.21.7
180200 200
140
230
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2001 2002 2003 2004 20050
50
100
150
200
250
Per
cen
tag
e (%
) .
Dividend in INR bio. % of Equity Capital
INR Bio Returned Share capital almost 10 Returned Share capital almost 10 times in the last 5 yearstimes in the last 5 years
2004 - Excludes special dividend of Rs 4.5/Share. 2005 – Represents two interim dividends.
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2.6 3.4 3.6 3.63.7 2.3
13.8
16.415.7
18.0
15.4
13.213.8
16.3
14.715.1
12.9
15.7
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2001 2002 2003 2004 09/2005 09/200410
12
14
16
18
20
Per
cen
tage
(%
) .
AmountOp Cash Flow as % of NPSAdjusted op. cash flow as % of NPS
Evolution of Operating Cash Flow
INR Bio.
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SALES GROWTH
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Gross Sales Evolution
16.318.3
20.5 21.7
16.4
2.2
2.32.1
1.4
1.2
18.4
2.9
3.9
12.211.3
10.2
4.4
8.5
0
4
8
12
16
20
24
2001 2002 2003 2004 09/2005 09/2004
Sale
s (I
NR
Bio)
.
0
3
6
9
12
15
RIG
(%
) .
Third Party Sales Affiliated Exports RIG
19.819.2
20.5
22.823.7
17.6
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Decomposition
Jan-Sep 2005 Sales
(Basis international accounting standards)
Sales growth: 12.2%
RIG: 8.7%
Price increases: 3.5%
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Volume (000’Tons) Value@ (INR Bio)
2005 2004 Var% 2005 2004 Var%
Domestic 149.1 140.3 6.3 17.8 15.8 12.3
Exports 13.8 13.7 0.6 2.0 1.8 11.2
Total 162.9 154.0 5.8 19.8 17.6 12.2
Channel-wise Sales (Jan-Sep)
@ Gross Sales including excise dutyAforesaid percentages have been calculated on base values
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Brand Volume (000’ Tons) Value@ (INR Bio.)
2005 2004 Var % 2005 2004 Var %Milk Products & Nutrition
76.1 73.0 4.2 9.0 8.1 10.4
Beverages 18.7 18.8 -0.2 4.2 3.8 10.0
Prepared Dishes & Cooking Aids
48.3 45.0 7.5 3.7 3.1 17.5
Chocolate & Confectionary
19.8 17.2 14.8 2.9 2.5 14.8
Total 162.9 154.0 5.8 19.8 17.6 12.2
Sales by Product Categories(Jan-Sep)
@ Gross Sales including excise dutyAforesaid percentages have been calculated on base values
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Balancing Export Portfolio
2.42.62.43.1
INRBio.
74 72 67
48 46 51
26 28 33
52 54 49
0
10
20
30
40
50
60
70
80
90
100
2001 2002 2003 2004 09/2005 09/2004
Perc
enta
ge (%
) .
Exports to Russia Others
2.0 1.8
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EBITDA MARGIN
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3.1
4.0
4.44.0
4.5
3.2
16.4
19.5 19.5
20.5
19.0
18.0
14.1
17.1 17.516.9
15.9
18.3
2.4
2.8
3.2
3.6
4.0
4.4
4.8
2001 2002 2003 2004 09/2005 09/200410
12
14
16
18
20
22
Perc
enta
ge (
%)
.
EBITDA EBITDA as % of Gross Sales EBITA as % of Gross Sales
INR Bio.
Evolution of EBITDA
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2005 2004Difference
(Basis points)
EBITDA(% of Gross Sales)
20.5 18.0 250
EBITDA Margins (Jan-Sep)
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INR Mio.
Description 2005 % of Net
Sales
2004 % of Net
Sales
Var. %
Total Expenses -of which
14,496 78.2 13,379 80.8 8.3
Materials 8,435 45.5 7,840 47.4 7.6
Staff Cost 1,392 7.5 1,215 7.3 14.6
Advt + sales Promotion
911 4.9 988 6.0 -7.8
Distribution 863 4.7 800 4.8 7.9
Power & Fuel 750 4.0 613 3.7 22.4
Aforesaid percentages have been calculated on base values
Total Expenditure (Jan-Sep)
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6.5
1.70.2
RMPMBought Out
Total = INR 8.4 Bio.78%
20%2%
Break up of Materials Consumed(Jan-Sep 2005)
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3.3
1.0
0.40.9
0.4
0.5
MilkCoffeeSugarFatsW.FlourOthers
INR Mio.
Total = INR 6.5 Bio.
15%
51%
14%
8%
6%
6%
Basis International Accounting Standards
Key Raw Materials
(Jan-Sep)
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100
113
120
107
124120
115
109
106
113
117
100
105
110
115
120
125
Q 1 Q2 Q3 Q4
Period
Rs.
Per
KG
(Ind
exed
) 2003
115 Current
2004
2005
Evolution – Milk Solid Prices(INR 3,301 mio, 51% of raw materials)
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100
120
106107
124
113113115
117120
110
90
100
110
120
130
2003 2004 2005
Ind
exed
Pri
ce p
er
kg
.
Q1 Q2 Q3 Q4
Milk Fat Prices(INR 3,301 mio, 51% of raw materials)
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120113
151
10099 100 100100 100 100 100
80
100
120
140
160
180
Q 1 Q2 Q3 Q4Period
Rs
per
KG
(In
dex
ed)
174 Current
(INR 961 mio, 15% of raw materials)
2003
2004
2005
Evolution – Green Coffee Prices
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112
9696
100
100
108110
116
98
102
96
90
95
100
105
110
115
120
Q 1 Q2 Q3 Q4Period
Rs
per K
G (I
ndex
ed)
97Current
2005
2003
2004
Evolution – Vegetable Oil Prices(INR 396 mio, 6% of raw materials)
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144148
100 99 110106
112
124127 129
145
80
90
100
110
120
130
140
150
160
Q 1 Q2 Q3 Q4Period
Rs
per K
G (I
ndex
ed)
2003
152
Current
2004
2005
Evolution - Sugar Prices(INR 504 mio, 8% of raw materials)
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108 109
100 100
108
101
112
107
116
108111
95
100
105
110
115
120
125
Q 1 Q2 Q3 Q4Period
Rs
per K
G (I
ndex
ed)
2003
121Current
2004
2005
Evolution – Wheat Flour Prices(INR 395 mio, 6% of raw materials)
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NET PROFIT MARGIN
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1.72.0
2.6
1.8
2.52.4
10.0
10.6
11.911.4
9.7
8.9
1.0
1.3
1.6
1.9
2.2
2.5
2.8
2001 2002 2003 2004 09/2005 09/20046
7
8
9
10
11
12
Perc
enta
ge (
%)
.
Amount % of Gross Sales
INR Bio.
Evolution of Net Profit Margins
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Net Profit Margins (Jan-Sep)
% of Gross Sales 2005 2004Difference
(Basis points)
EBITDA 20.5 18.0 250
NET PROFIT 11.9 10.0 190
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WORKING CAPITAL INTENSITY
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Operating Working Capital
INR Mio
30-Sep2005
30-Sep2004
Trade receivables 419 414
Inventories 2,142 2,188
Less: Trade Payables # 1,715 1,513
Net capital tied up 846 1,089
As % of Gross Sales 4.2% 4.6%
Basis International Accounting Standards & Average of two period ends
# Excludes any exceptional payable, if any
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21.8
25.227.7
31.4
21.718.5
8
16
24
32
40
2001 2002 2003 2004 09/2005 09/2004Basis International Accounting Standards & Average of two period ends
* In relation to total sales
Times
Rotation of Operating Working Capital*
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3632
2725
18
28
0
5
10
15
20
25
30
35
40
45
2001 2002 2003 2004 09/2005 09/2004
Days
(Avg trade receivables/sales*365)+(Avg inventory/COGS*365)-(AVG trade payables/COGS*365)
Cash Conversion Cycle
Basis International Accounting Standards
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FIXED CAPITAL INTENSITY
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INR mio. % of Net sales
458742596589 681 477
3.33.03.1
2.9
2.3
2.8
0
100
200
300
400
500
600
700
800
2001 2002 2003 2004 09/2005 09/20040.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Dep. 435 494 463 491 385 365
Investment in Tangible Fixed Assets
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5.4
6.2 6.3
6.8
6.3
4.9
4
4.4
4.8
5.2
5.6
6
6.4
6.8
2001 2002 2003 2004 09/2005 09/2004
Times
Rotation of Tangible Fixed Assets
Basis International Accounting Standards & average of two period ends
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INCOME TAX RATE
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35.7 35.936.6
32.9
34.7 34.435.0 34.9
36.3
36.8
34.7
36.2
30
32
34
36
38
40
2001 2002 2003 2004 '09/2005 '09/2004
Marginal Rate Effective Rate
Evolution of Tax(as % of pre-tax profit)
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COST OF CAPITAL
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10.59.4 9.7 9.3
9.0
7.2
5.36.6
5.3
14.2
16.0
11.0
0.0
3.0
6.0
9.0
12.0
15.0
18.0
2001 2002 2003 2004 09/2005 09/2004
WACC Risk Free Bond Rate
Evolution of WACC - %
Basis International Accounting Standards
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VALUE GROWTH DURATION
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Value Growth Duration
Effective & Efficient Operations
People
Availability
Innovation and Renovation
Consumer Communications
GLOBEStructure
Nu
trit
ion
,Hea
lth
,Wel
lnes
sfo
r al
l age
s
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Food Business
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Social Responsibility
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QUESTIONS
Thank You
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ROBUSTA COFFEE
2000 2001 2002 2003 2004 2005
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ARABICA COFFEE
2000 2001 2002 2003 2004 2005
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PALM OIL
2000 2001 2002 2003 2004 2005