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2007 9 months sales conference call – October 2007 Name of chairman2
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. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.
2 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Key Figures
• Sales of CHF 78.7bn, up CHF 6.5bn (+9%)
• Above-target Organic Growth of 7.2%
• Real Internal Growth of 4.5%
• Food and Beverages: 6.8% Organic Growth
3 Name of chairmanAUTUMN PRESS CONFERENCE 2007
SustenancePleasure andPleasure anddiversitydiversity
ConvenienceConvenience
5,000 13,000 22,000
Per-capita income (PPP)
Consumption of food manufacturing value-added
actual US$, per capita
28,000
Nestlé per capita sales
Sources: UNIDO (value-added), WIDER and World Bank; Nestlé F&C; analysis EIR
Growth scenario (2005-15)
+ US$ 170bn5.9% p.a.
Growth scenario (2005-15)
+ US$ 70bn6.9% p.a.
Demographics Focusing on the Low and High Ends
US$ 1,500
PPP
$240 billion opportunity
5 Name of chairmanAUTUMN PRESS CONFERENCE 2007
+ 0.9%+ 0.9%
+ 2.7%
+ 4.5%
CHF 78.7 bio
Acq. / Divest.Exchange
Rates
Pricing & others
RIG + 7.2%organicgrowth
+ 9.0%total
evolution
Total Group
+ 1.0%
+ 1.1%
+ 2.6%
+ 4.2%
CHF 73.2 bio
Acq. / Divest.
Pricing & others
RIG + 6.8%organicgrowth
+ 8.9%total
evolution
Food & Beverage
Exchange Rates
9 months sales 2007: Organic growth of 7.2%9 months sales 2007: Organic growth of 7.2%
6 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Strong organic growth - highlights
• Organic growth of 7.2%
• Food and Beverage delivers 6.8% organic growth – strong performances in most areas
• Total sales increase 9% to CHF 78.7 billion
• Raw material costs up sharply, particularly agricultural
• Full Year targets reconfirmed:approaching 7% organic growthimprovement in constant currency EBIT margin
• Creation of Nestlé Professional – a global foodservices business
7 Name of chairmanAUTUMN PRESS CONFERENCE 2007
-5
0
5
10
15
20
25
30
35
40
OG % Jan-Sep 2007
BAB's:
Food & Beverage Billionaire Brands Organic Growth
Average market growth
8 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupPharmaceutical products
PharmaSales : 5.5 CHF bio
RIG : +9.2%OG : +10.3%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
9 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupNestlé Nutrition
Nestlé NutritionSales : 5.7 CHF bio
RIG : +6.6%OG : +9.7%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
10 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupNestlé Waters
Nestlé WatersSales : 8.2 CHF bio
RIG : +5.4%OG : +6.9%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
Nestlé Waters
11 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupConfectionery
ConfectionerySales : 8.4 CHF bio
RIG : +2.6%OG : +5.4%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
Nestlé Waters
Confectionery
12 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupPetCare
PetCareSales : 9.0 CHF bio
RIG : +4.1%OG : +7.1%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
Nestlé Waters
Confectionery
PetCare
13 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupPowdered & Liquid Beverages
Powdered & Liquid BeveragesSales : 12.8 CHF bio
RIG : +7.5%OG : +10.0%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
Nestlé Waters
Confectionery
PetCare
Powdered & Liquid Beverages
15 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupPrepared Dishes and Cooking Aids
Prepared Dishes andCooking AidsSales : 13.3 CHF bio
RIG : +3.4%OG : +3.8%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
Nestlé Waters
Confectionery
PetCare
Powdered &
Liquid Beverages
Prep. Dishes and Cooking Aids
16 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Organic Growth by product groupDairy (incl. Ice Cream)
Dairy (incl. IC)Sales : 15.7 CHF bio
RIG : +1.8%OG : +6.5%
Pharma
1.0
4.0
7.0
10.0
13.0
4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sales in bio CHF
Org
anic
Gro
wth
in %
Nestlé Nutrition
Nestlé Waters
Confectionery
PetCare
Powdered &
Liquid Beverages
Prep. Dishes and
Cooking Aids
Dairy
17 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Food & BeverageOrganic Growth by Zone / Geography
* each region includes sales of Food & Beverages, Water and Nutrition businesses, Nespresso and F&B JVs.
F&B OG
+ 6.8%
Europe*
Asia, Oceania, Africa*
Zone Europe
Zone AOA
Americas*Zone Americas
0.0
2.0
4.0
6.0
8.0
10.0
12.0
14.0
10.0 13.0 16.0 19.0 22.0 25.0 28.0 31.0 34.0
Sales in bio CHF
Org
anic
Gro
wth
18 Name of chairmanAUTUMN PRESS CONFERENCE 2007
2005 2006 2007 2008
Nestlé on its way towards Nutrition, Health and Wellness
CHF 5 bio CHF 10 bio
Jenny Craig (Aug) NMN (July)Gerber (Sept)
Proteika (April)Musashi (Nov)
Leverage recent acquisitions and Extend our leadership by becoming the most innovative personalised Nutrition Company
19 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Agricultural commodities prices continue to trend higher
20 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Conclusion The Nestlé Model reconfirmed
• Outlook unchanged from Half Year
• The Nestlé Model reconfirmed for 2007
• Raw material environment tough – as expected
• Organic growth to approach 7%
• Improvement in constant currency EBIT margin
21 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Nutrition, Health & Wellness the driver ofNutrition, Health & Wellness the driver ofgrowth and profitabilitygrowth and profitability
The Nestlé Model
5-6% organic growth Sustainable improvement in EBIT
Improving trend in Return on Invested Capital
23 Name of chairmanAUTUMN PRESS CONFERENCE 2007
SustenancePleasure andPleasure anddiversitydiversity
ConvenienceConvenience
5,000 13,000 22,000
Per-capita income (PPP)
Consumption of food manufacturing value-added
actual US$, per capita
28,000
Nestlé per capita sales
Sources: UNIDO (value-added), WIDER and World Bank; Nestlé F&C; analysis EIR
Growth scenario (2005-15)
+ US$ 170bn5.9% p.a.
Growth scenario (2005-15)
+ US$ 70bn6.9% p.a.
Demographics Focusing on the Low and High Ends
US$ 1,500
PPP
$240 billion opportunity
24 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Global Presence in HealthCare Nutrition
HealthCare Nutrition – Facts & FiguresSales in billion CHF: 1.7Markets: 30Employees: ~ 2'500
25 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Conditions for Success
• Strong R&D
• Specialized marketing capabilities
• Capacity to distribute through all channels
26 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Delivering Excellence to Babies
• Gerber founded in 1928 with mission to help parents raise happy, healthy babies
• Heritage of product innovation
• Recognized leader in developing cutting-edge science on infant and toddler feeding
Dorothy S. Gerber
27 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Our Consumers
Performance Nutrition
Energy bars, specialty liquids,
proteins and training nutrition
Weight ManagementPersonalized
weight management
programs
HealthCare NutritionEnteral and oral nutrition
for Critical Care, diabesity, cancer,
pediatric and elderly patients
Infant NutritionInfant formulas,
pediatric specialties, infant cereals,
meals and drinks,Baby Care
28 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Our Business
Nestlé NutritionBusiness Units: 4
Employees: 20'000
Office locations: 12
Factories: 30
Technical centres: 5
29 Name of chairmanAUTUMN PRESS CONFERENCE 2007
SustenancePleasure andPleasure anddiversitydiversity
ConvenienceConvenience
5,000 13,000 22,000
Per-capita income (PPP)
Consumption of food manufacturing value-added
actual US$, per capita
28,000
Nestlé per capita sales
Sources: UNIDO (value-added), WIDER and World Bank; Nestlé F&C; analysis EIR
Growth scenario (2005-15)
+ US$ 170bn5.9% p.a.
Growth scenario (2005-15)
+ US$ 70bn6.9% p.a.
Demographics Focusing on the Low and High Ends
US$ 1,500
PPP
$240 billion opportunity
31 Name of chairmanAUTUMN PRESS CONFERENCE 2007
SustenancePleasure andPleasure anddiversitydiversity
ConvenienceConvenience
5,000 13,000 22,000
Per-capita income (PPP)
Consumption of food manufacturing value-added
actual US$, per capita
28,000
Nestlé per capita sales
Sources: UNIDO (value-added), WIDER and World Bank; Nestlé F&C; analysis EIR
Growth scenario (2005-15)
+ US$ 170bn5.9% p.a.
Growth scenario (2005-15)
+ US$ 70bn6.9% p.a.
Demographics Focusing on the Low and High Ends
US$ 1,500
PPP
$240 billion opportunity
32 Name of chairmanAUTUMN PRESS CONFERENCE 2007
What is Foodservice?
• We talk of foodservice every time that food or beverage is purchased and consumed away from home
• The consumption is in most cases immediate and on the spot
• Operators: restaurants, cafés, convenience stores, pubs, canteens, hospitals, schools, vending
33 Name of chairmanAUTUMN PRESS CONFERENCE 2007
• Due to shifts in demographics, socio-economic factors and consumer behaviour, foodservice represents an increasingly important consumer option
• Consumption varies from market to market, but consumer demand for convenience, taste and nutrition is driving foodservice growth in all markets
• The OOH spending today accounts for 30-50% of total consumer food and beverage purchases in mature economies
• The trend is a further and long term growth in OOH consumption
A Growing Trend
34 Name of chairmanAUTUMN PRESS CONFERENCE 2007
The Global Manufacturers
Source: Annual Reports, Broker reports, Web Page, Bain analysis
= 3% of the total market
35 Name of chairmanAUTUMN PRESS CONFERENCE 2007
Two Key Priorities
"The Global leader in branded hot and cold non-carbonated
Beverage solutions"
"Be the Local and Regionalleader in strategic Food
product solutions"
39 Name of chairmanAUTUMN PRESS CONFERENCE 2007
0 1 2 3 4 5 6 7 8 9 10
Quick to prepare
Easy to use
Easy to clean
Made by well-known brand
Suitable for everyday use
Attractive design
Great taste/superior quality
Cream/foam
Each person his choice
Wide range
9.6
9.6
9.5
9.4
9.3
9.2
9.1
9.1
8.3
7.3
Consumer Feedback
40 Name of chairmanAUTUMN PRESS CONFERENCE 2007
• France
• Spain
• Italy
• Portugal
• Austria
• Czech-Slovak
• Japan (test 800 -7/11 stores)
Launch Wave 2
41 Name of chairmanAUTUMN PRESS CONFERENCE 2007
2 Welcome Pack Executions
Germany/France/CH/Austria/UK/Czech/Slovakia
Spain/Portugal/Italy
Nescafé Dolce Gusto
42 Name of chairmanAUTUMN PRESS CONFERENCE 2007
1 European Packaging Solution
• 16 capsules per box• 8 languages
Nescafé Dolce Gusto
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