Welcome to the
Full-Year Results
Conference
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.
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Full-Year Results
Conference
Paul Bulcke
Nestlé CEO
Nestlé Group Highlights
Sales CHF 91.6 bn
Organic Growth 4.5 %
Real Internal Growth 2.3 %
Trading Operating Profit Margin + 30 bps in constant currencies
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Full-Year Results
Conference
Wan Ling Martello
Chief Financial Officer
Resilient Performance Fuelled by Top Line Growth
Trading Free Underlying
Organic
Operating Profit Cash Flow Earnings Per Share
Growth
(in CCY) (in CCY) (in CCY)
+ CHF
+ 4.5% + 30 bps 14.7 bn + 4.4 %
(FX - 5.5%) (+10 bps reported) (- 1.7% reported)
(+ CHF 14.1 bn
reported)
CCY = Constant Currencies
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Broad Based Regional Growth
Asia,
Americas Europe Oceania &
Africa
Sales 39.4 bn 25.9 bn 26.3 bn
(in CHF)
RIG +2.3% +2.4% +2.4%
OG +5.4% +1.9% +5.7%
Each region includes Zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso, NHSc, and NSH OG = Organic Growth, RIG = Real Internal Growth
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Developed and Emerging Markets Growth
Developed Emerging
Sales 51.4 bn 40.2 bn
(in CHF)
% of Group sales 56% 44%
OG +1.1% +8.9%
OG = Organic Growth
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Zone Europe
Sales 15.2 RIG % 2.2 OG % 1.5 TOP % 15.3
in CHF bn
Good growth driven by innovation and premiumisation despite
deflationary environment
Continued strong contributions from petcare, Nescafé Dolce Gusto,
frozen pizza and premium soluble coffee
Western Europe
– Growth supported by France, Switzerland, Austria, Netherlands,
Spain and Portugal
– UK, Germany, Italy and Greece remained challenging
Eastern Europe
– Russia remained growth driver; Ukraine contributed positively
TOP margin +30 bps: leveraging real internal growth plus
efficiencies
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Zone Americas
Sales 27.3 RIG % 1.1 OG % 5.0 TOP % 18.8
in CHF bn
North America remained subdued, good organic growth in Latin America
helped by pricing, reflecting inflationary pressures
North America
– Good growth in petcare, coffee creamers, super-premium ice cream
– Frozen foods challenged, but efforts maintained to turnaround
category with innovations
Latin America
– Good overall performance despite slowing economic environment
– Brazil saw good growth in most categories
– Mexico remained challenging
– Petcare sustained strong momentum
TOP margin +60 bps: lower structural costs and net other trading
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expenses
Zone Asia, Oceania & Africa
Sales 18.3 RIG % -0.3 OG % 2.6 TOP % 18.7
in CHF bn
Growth impacted by ongoing challenges in China and Oceania
Emerging markets
– Good performance in Philippines, South Asia, Indochina
– Growth driven by innovations and NHW focus, e.g. fortified Bear
Brand Milk Powder, Milo Activ-Go, Maggi Oat Noodles
Developed markets
– Innovations in Japan drove performance
TOP margin -20 bps: slow growth and net other trading expenses
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Nestlé Waters
Sales 7.4 RIG % 6.3 OG % 5.4 TOP % 9.7
in CHF bn
Broad-based growth across all geographies and brands
– Pure Life continued to be a growth engine
– International sparkling brands created value in premium
segment
– Good performance of local brands
Developed markets: solid growth in both North America and
Europe
Emerging markets: double digit growth
TOP margin +50 bps: leverage of good growth with contained
structural costs
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Nestlé Nutrition
Sales 9.6 RIG % 3.6 OG % 7.7 TOP % 20.8
in CHF bn
Growth driven by infant formula, cereals, and emerging markets
Emerging markets: strong growth driven by AOA
Developed markets: impacted by soft category growth, and
continued focus on value generation in the US
Infant formula brand highlights include NAN, S26 and
superpremium Illuma
Meals & Drinks soft but improving with innovations
TOP margin +80 bps: active portfolio management, strong
Wyeth Nutrition performance, and efficiencies
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Other Businesses
Sales 13.9 RIG % 5.6 OG % 7.1 TOP % 19.1
in CHF bn
Nestlé Professional
Growth driven by emerging markets
Challenging out-of-home environment in North America and Europe
Nespresso
Broad-based strong growth in all regions, supported by innovation
VertuoLine launch in North America on plan
Nestlé Health Science
Strong performance in Europe and emerging markets
Innovations with new products and rollouts in new markets
Nestlé Skin Health (as from July 2014)
Double digit growth in all businesses and geographies
Other TOP Margin
+140 bps: good performance on all Other business, including
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exceptional contribution from Nestlé Skin Health
Products
% Real Internal Growth
% Organic Growth
8.7
6.2
4.2
5.4 5.3 5.3
4.2 5.0 5.6
3.4
-1.0 -0.1 -0.1
-1.2
Powdered Water Milk products Nutrition Prepared dishes Confectionery PetCare
and Liquid and and and
Beverages Ice cream Health Science cooking aids
Sales 20.3 6.9 16.7 13.0 13.5 9.8 11.3
(in CHF bn)
TOP % 23.1 10.3 16.1 20.9 13.4 13.8 19.8
in bps +40 bps +30 bps +90 bps +210 bps +20 bps -210 bps +60 bps
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Trading Operating Profit Margin
-10 bps
+30 bps -10 bps Trading Operating
+20 bps Profit margin
+30 bps in
-20 bps constant currencies
+10 bps +10 bps 15.5
Consumer facing
+10 bps 15.3 marketing spend
15.2 +5.8% in constant
+30 bps currencies
TOP Other revenue COGS Distribution Marketing & R&D Net Other TOP CCY impact TOP
2013 Administration Trading Income 2014 2014
/ Expenses at CCY
TOP = Trading Operating Profit, CCY = Constant Currencies
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Income Statement
Total Group 2013 2014 Difference
% of sales % of sales bps
Trading operating profit 15.2 15.3 10
Net other operating income/expenses (1.0) (3.4) -240
Operating Profit 14.2 11.9 -230
Net financial income/expenses (0.7) (0.7) 0
Profit before taxes, associates and JVs 13.5 11.2 -230
Taxes (3.5) (3.7) -20
Income From Associates and JVs 1.3 8.8 750
Profit for the year 11.3 16.3 500
of which attributable to non-controlling interests 0.4 0.5 10
Attributable to shareholders of the parent 10.9 15.8 490
Basic EPS (CHF) 3.14 4.54 44.6%
Underlying EPS (CHF) 3.50 3.44 -1.7%
Underlying EPS (CHF) constant currencies +4.4%
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Free Cash Flow
in CHF bn
-0.2 -1.5 +4.3
+1.0
14.1 14.7
10.5
3.6
FCF Operational Working CAPEX Other * FCF FCF
(1 Jan 2014) Improvement Capital (31 Dec 2014) (31 Dec 2014)
at CCY
* Mainly impacted by the cash in from the partial disposal of L’Oréal shares
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Continued Focus on Working Capital
Working capital variation, calculated on a quarterly average as a percentage of sales
2012 2013 2014
-80 bps
-120 bps
-200 bps
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Evolution of CAPEX 8.0
7.0 6.0%
6.0
CAPEX as % of sales 5.9%
5.0
5.3%
4.3%
CAPEX in CHF bn 4.0
5.3 4.9
3.0
3.9
2.0 1.0%
2012* 2013 2014
*Restated following implementation of IFRS 11 and IAS 19
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Group Net Debt Decreased by CHF 2.4 bn
Estimated figures in CHF bn
+14.1
- 1.5 Proceeds from sale
of L'Oréal shares
- 1.7 Exchange +4.1
Acquisition rates &
other
- 6.9 net of
disposals
- 0.1 (incl. Minority)
+10.0
- 1.5 Treasury Dividends
Share
buy-back shares
program (net)
Free Cash
Flow
- 14.7 2.4 bn decrease
- 12.3
Net debt Net debt
(1 Jan 2014) (31 Dec 2014)
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Managing the Currency Challenge
FY 2014 Currency Impact
Sales Operating Underlying Free Cash Balance
Performance EPS Flow Sheet
- 5.5% - 20 bps - 6.1% - 0.6 bn + 3.0 bn
SNB announcement to remove floor of the EUR vs CHF
Natural hedge of the underlying business
Sustainable dividend policy in CHF
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Sustainable Dividend per Share in CHF
2.50
2.20*
2.15
2.05
2.00 1.95
Dividend
in CHF
1.50
1.00
0.50
0.00
* Proposed
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Summary
Delivery of Top Line and Bottom Line
Growth in Emerging and Developed Markets
Improved Operational and Capital Efficiency
Making Choices to Divest, Fix and Accelerate
Delivering in Short Term and Investing in Long Term
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Outlook 2015
We aim to achieve organic growth of around 5% with
improvements in margins, underlying earnings per
share in constant currencies and capital efficiency.
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Full-Year Results
Conference
Paul Bulcke
Nestlé CEO
Delivering today…
… and building for the future
• Our intrinsic strengths
• Challenges we face
• Positioning Nestlé for the future
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Delivering today…
… and building for the future
• Our intrinsic strengths
• Challenges we face
• Positioning Nestlé for the future
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Our intrinsic strengths
• Our people : commitment and alignment
• Foresight and courage : ideas and markets
• Our organisation : local and global
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Delivering today…
… and building for the future
• Our intrinsic strengths
• Challenges we face
• Positioning Nestlé for the future
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The Swiss franc
• Natural hedge between revenue and cost ( ≈ 90 % locally produced and sold)
• < 2 % of turnover in Switzerland
But impact on Actions for
competitiveness
• Export from Switzerland
(2/3 of production) • Supply & logistics
reorientation
• Structural cost in CHF
(R&D, HQ) • Productivity gains
• Translation risk – consolidation • Structural cost reduction
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China
• Changing consumer landscape
• Changing trade landscape
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China – adjusting to a changing landscape
Consumers
• Traditional and new
• NHW awareness
• Premiumisation
Trade
• Rebalancing push & pull
• e commerce
• Out-of-home
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US Frozen food
High penetration Household 96 %
Nestlé household 66 %
Sizeable and growing Category sales 23 bn USD
2014 – 2019 + 3.2 %
Leading positions Single & multi-serve meals 29.0 %
Single serve diet meals 38.0 %
Sandwiches & handheld snacks 18.0 %
Pizza 43.0 %
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Enhancing the brands’ relevance to consumers
• Innovate in fast-growing • New health dimensions • Winning at retail • Premiumise and offer
segments and expand and culinary trends and in digital on-trend products
the brand franchise
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Delivering today…
… and building for the future
• Our intrinsic strengths
• Challenges we face
• Positioning Nestlé for the future
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Expanding the boundaries of nutrition, health and wellness
Nutritional therapies that change the way Science-based solutions
we approach the management of people’s health for the health of skin
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Consumer Care Medical Nutrition Novel Therapeutic Nutrition
Healthy Ageing • Inborn errors of metabolism • Brain health
• Physical and cognitive autonomy : • Paediatric care & allergy • Gastrointestinal health
mobility, energy, body & mind, • Acute care • Diagnostics
cognitive capacity • Metabolic & obesity care • Nutrient-based technology platforms
• US medical nutrition specialties
• Devices
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Prescription Self-medication Aesthetic & Corrective Well-being
Genetics skin Nutrition
Pharmaceutical Disease and non-disease Medical solutions and
products prescribed by specific therapeutic skin services for minimally Environment
healthcare professionals care solutions invasive aesthetic
and corrective treatments
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Nestlé Business Excellence
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Nestlé Business Excellence… fuel for growth
Highly efficient support structures
Speed and quality of execution
Increased business focus
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resilient, innovative, consistent
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Appendix
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Operating Segments
% Real Internal Growth
% Organic Growth
7.7 7.1
6.3 5.6
5.0 5.4
1.5 3.6
2.2 2.6
1.1 -0.3
Zone Zone Zone Nestlé Waters Nestlé Nutrition Other
Europe Americas Asia, Oceania, Businesses
Africa
Sales 15.2 27.3 18.3 7.4 9.6 13.9
(in CHF bn)
TOP % 15.3 18.8 18.7 9.7 20.8 19.1
in bps +30 bps +60 bps -20 bps 50 bps 80 bps 140 bps
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Currency Overview
Weighted average rate
FY 2013 FY 2014 % Var.
1 US Dollar USD 0.93 0.92 -1.1
1 Euro EUR 1.23 1.21 -1.3
100 Chinese Yuan Renminbi CNY 15.06 14.88 -1.3
100 Brazilian Reais BRL 42.99 38.90 -9.5
1 Pound Sterling GBP 1.45 1.51 4.0
100 Mexican Pesos MXN 7.26 6.88 -5.2
100 Philippine Pesos PHP 2.18 2.06 -5.6
1 Canadian Dollar CAD 0.90 0.83 -7.7
1 Russian Ruble RUB 0.03 0.02 -17.5
1 Australian Dollar AUD 0.90 0.83 -7.9
100 Japanese Yen JPY 0.94 0.86 -8.7
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FX Impact
FX impact
FY 2014
Zone Americas -8.2%
Zone Europe -3.6%
Zone AOA -5.3%
Nestlé Waters -3.1%
Nestlé Nutrition -6.4%
Other Businesses -3.3%
Total -5.5%
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