Feb 20 2012 - Nestlé 2011 Full-year roadshow presentation

February 21st, 2012 2011 Full Year Roadshow

2011 Full Year Roadshow

Paul Bulcke

Chief Executive Officer

Jim Singh

Chief Financial Officer

Wan Ling Martello


Designate


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.

1



Jim Singh


February 21st, 2012 2011 Full Year Results Roadshow 3

Delivering progress sustainably in a New Reality

February 21st, 2012 2011 Full Year Results Roadshow

2011: Strong Full Year Performance

As reported At constant

exchange rates

Sales 83.6 bn

Organic Growth +7.5%

Real Internal Growth +3.9%

Trading Operating Profit 12.5 bn

Trading Operating Profit Margin (vs. 2010 continuing operations)

15.0% +60 bps +90 bps

Net Profit (vs. 2010 continuing operations)

9.5 bn +8.1%

Net Profit Margin (vs. 2010 continuing operations)

11.3% +130 bps

Underlying EPS (vs. 2010 Group)

3.08 +7.8%

Dividend (proposed)

1.95 +5.4%

4

All figures in CHF


Delivering the Nestlé Model in 2011

Former Nestlé Model FY 2011

Organic growth 5-6% +7.5%

Increased EBIT margin

in constant currencies

+10 bps

Improvement in capital efficiency

Enhanced Nestlé Model FY 2011

Organic growth 5-6% +7.5%

Increased trading operating

margin in constant currencies

+90 bps

Increased underlying EPS

in constant FX

+7.8%


5


11.8% 12.3% 12.5% 12.6%

12.9% 13.5%

14.0% 14.3% 14.6%

10 years of the Nestlé Model Driving Organic Growth & EBIT Margin Improvement

Data corresponds to published figures – not restated for accounting changes

7.4%

2009 2001 2002 2003 2004 2005 2006 2007

9.7%

5.1% 4.5%

6.2% 6.2%

4.1%

4.9%

Organic Growth

EBIT margin *

2008

8.3%

10-year annual averages

Organic Growth 6.4%

Real Internal Growth 3.6%

2010

6.2%

2011

7.5%

14.4%

15.0%

TOP margin

* Before net trading items

6


Enhancing performance – EPS and DPS evolution

* Underlying EPS, excl. 2001 which is Basic EPS

1.72

1.89 2.02

1.93

2.13

2.41

2.80 2.82

3.09

3.32

3.08

0.64 0.70 0.72 0.80

0.90 1.04

1.22

1.40

1.60

1.85 1.95

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

EPS*

DPS

Proposed

All figures in CHF


A winning strategy driving superior shareholder returns

-18.1% -15.2%

8.3%14.4% 17.7% 20.7%

29.6%

43.2%52.6%

96.1%

Nestlé SA Total Shareholder Returns

2002-2011 CHF, dividends reinvested

USA 7 USA 6 USA 5 USA 4 USA 3 USA 2 USA 1 EUR 3 EUR 2

Source: Bloomberg

8


Growth opportunities – consumers increasingly focusing on

Nutrition, Health and Wellness as per-capita income rises

Sources: UNIDO (value-added), WIDER and World Bank; Nestlé

US$ 1,500

*PPP = Popularly Positioned Products

Sustenance

Convenience

5,000 13,000 22,000

Per-capita income

28,000

‘Premiumisation’

*PPP

Nutrition Well-Being

Consumption of food manufacturing value-

added actual US$, per-capita

Pleasure and diversity Nestlé per-capita

sales

Battleground for growth in the emerging markets

‘Aggressive’ local competitors with growing and dominant position (low price/low margin)

1.4 Billion new consumers primarily sourced from emerging

markets where competitive environment is much more widespread and dynamic

Population in developed markets in general is in decline


Organisational

Transformation

Create an agile fleet of

businesses/markets

Focus on demand generation

Leverage scale through an efficient

support structure

Tackle under-performers

From traditional businesses into a Nutrition,

Health and Wellness company

Strategic

Transformation

The transformational opportunity

WHAT HOW

10


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

•Ice cream Partners NA

•HOD Waters USA

•Garoto Brazil

•Fonterra milk

powder AMS

•BPW

•Powwow EUR

•Osem Israel Medical

Nutrition

Significant acquisitions added new growth platforms

and strengthened market leadership

•Ruzanna RU

Acquisitions 2000 to 2011:

Sales in CHF ~30 bn

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http://brands.kraftfoods.com/Digiorno


2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

•Findus EUR

•Frozen Potato USA

•Minag Water GER

•Eugene Perma

EUR (cosmetics)

•FIS International

•Project Perm UK

• Dallmayr R&G

• Chilled Dairy GER

•Trinks GER

•Eismann EUR

•Private Label Ice

cream GER

•Canned & Liquid

Milk AOA

•San Sepolcro Italy

•Frozen Meat GER

•Family Frost

•Dry cut pasta Italy

•Crosse & Blackwell

South Africa

Significant divestitures rationalized the portfolio and

eliminated non strategic and loss-making businesses

•Eden Springs Water FR

•Barnaul Conf RU

Divestitures 2000 to 2011:

Sales in CHF ~ -17 bn

23% 25% 52%


Nestlé Innovation Territory: expanding to new dimensions

Personalized

Solutions

Customized

Products

Cu

sto

miz

ed

S

tan

da

rd

Product Systems Services

Product-linked

systems & services


27%

49% 52%

2005 2011 2012

Split by Region

Developed

Emerging

Capital expenditure driven by emerging markets, powdered beverages, nutrition and investments in capacity and new products & technology

12% 22% 25%

4% 11% 10%

2005 2011 2012

Split by Product Category

Others

PetCare

Confectionery

Culinary

Nutrition

Dairy / Ice cream

Water

Powd. Beverages

44% 54% 57%

2005 2011 2012

Split by Type

Capacity and new products & technology

Replacement


2005 2006 2007 2008 2009 2010 2011

TNWC as % of sales

Trade Net Working Capital is an area of focus and improvement

Notes:

Like for like estimate

2010 and 2011 figures exclude Alcon, Hsu Fu Chi and Yinlu


MH'97

Target 2004+

Operation EXCELLENCE

2007

CI

Performance

2011... 2005 2001 1997 2008

Nestlé’s Operational Efficiency Delivering the highest quality, lowest cost & best customer service leveraging GLOBE

Manufacturing

• Manufacturing

• Physical Logistics

• Bad Goods

• Manufacturing


• Bad Goods

• MOGE

Focus on projects to

generate cost improvements

Focus on change in mind-set to

generate continuous improvement

• Manufacturing


• Bad Goods

• MOGE

• PFME

• Capital Charges

• Financing Costs


The Nestlé Model

Organic growth 5-6%

Increased trading operating margin in constant currencies

Increased underlying EPS in constant currencies


17



Paul Bulcke

Chief Executive Officer


The New Reality

19


Deliver shorter term

Uncertainty and volatility

Different dynamics in different markets

To win:

Fast moving

Entrepreneurial

Decentralised


Growing populations, global affluence

increasing, health awareness, etc

To win:

Build and innovate brands

Enhance capacities and capabilities

Invest in strategic opportunities



To win:

Fast moving

Entrepreneurial

Decentralised

21

Deliver shorter term Manage for longer term




To win:






To win:

Fast moving

Entrepreneurial

Decentralised

Concise strategy

Aligned values

Firm principles

22

Deliver shorter term Manage for longer term


Deliver shorter term



To win:






To win:

Fast moving

Entrepreneurial

Decentralised

Manage for longer term

The Nestlé Roadmap

23


The Nestlé Roadmap

24

Operational

Pillars

Growth

Drivers

Competitive

Advantages

Appropriate

to the New Reality

Driving

Sustainable

Performance


The Nestlé Roadmap

Addressing changing

consumer behaviour –

perceived values,

expectations and

impulses

Operational

Pillars

Growth

Drivers

Competitive

Advantages


It’s all about Engaging with Consumers

26


Year I&R NHW Premium PPP OOH Zones Countries

2011

Countries

2012

Dolce Gusto ‘06 3 56 3

Gold Blend ‘11 3 62 0

3-in-1 By Market

every 2 yrs 3 70 3

Green Blend ‘09 2 29 5

RTD ’07** 2 24 1

Driving Innovation Globally: NESCAFÉ

** 2007 RTD coffee integrated into NESTLÉ from BPW

Viaggi by

Nescafé ’10 1 4 2

Milano ‘10 3 20 12

Alegria ‘09 3 62 10

27



2011

Countries

2012



3-in-1 By Market

every 2 yrs 3 70 3


RTD ’07** 2 24 1



Viaggi by


Milano ‘10 3 20 12

Alegria ‘09 3 62 10

28



2011

Countries

2012



3-in-1 By Market

every 2 yrs 3 70 3


RTD ’07** 2 24 1



Viaggi by


Milano ‘10 3 20 12

Alegria ‘09 3 62 10

29



2011

Countries

2012



3-in-1 By Market

every 2 yrs 3 70 3


RTD ’07** 2 24 1



Viaggi by


Milano ‘10 3 20 12

Alegria ‘09 3 62 10

30



2011

Countries

2012



3-in-1 By Market

every 2 yrs 3 70 3


RTD ‘07** 2 24 1



Viaggi by

Nescafé ‘10 1 4 2

Milano ‘10 3 20 12

Alegria ‘09 3 62 10

31


Category Year I&R NHW Premium PPP OOH Zones Countries

2011

Countries

2012

Ice Cream Peelable ‘10 3 12 25

Nespresso Lattissima

+ ‘11 3 30+ 20+

Nutrition L. reuteri ‘10 3 16 20

Food Crispy ‘11 3 10 14

Dairy Nido ’11 2 10 14

PetCare ONE

Beyond ’11 1 1 1

Professional Milano ‘10 3 20 12

Innovation Aligned with Growth Drivers

32



2011

Countries

2012



+ ‘11 3 30+ 20+

Nutrition Lactogen ‘10 3 16 20



PetCare ONE

Beyond ’11 1 1 1



33



2011

Countries

2012



+ ‘11 3 30+ 20+




PetCare ONE

Beyond ’11 1 1 1



34



2011

Countries

2012



+ ‘11 3 30+ 20+




PetCare ONE

Beyond ’11 1 1 1



35



36


Communication trends

37

Earn Attention

Start a Conversation

Buy Space

Deliver a Message

Spend gets brands visibility: Paid media

Creativity gets people ‘liking’ them: Earned media


From Brand Communication to Brand Conversation while increasing ROBBI*

38

*Return On

Brand Building

Investment


How Nestlé is Driving Profitable Brand Conversation

Digital opportunities are an integral part of Brand Campaigns

Rapid increase in brand building investment in Digital and Social Media

Build internal Digital competencies as competitive advantages

Nestlé and Social Media – brand conversation in action

39


Brand Building the Nestlé Way

40

Fundamentals of Brand Building

Targeting Consumer

Inspiring Brand

Big Brand Idea

Measurable Results


Brand Building the Nestlé Way

41


Effectiveness of Nestlé’s Messaging

42

% in Upper

quartile

% in Upper

middle quartile 34 31 21

30 40 51

2009 2010 2011

Base: All Nestle Aired adverts

Quartiles are based on all ads on database.

Effective recall and

persuasiveness of

message


Creating Competitive Gaps for our Markets

43

Excellence

in Brand Building

Brand Building

the Nestlé Way

Excellence

in Listening,

Engaging

and Inspiring

Digital & Social

Media Strategy


Winning in Digital & Social Media

Digital Measurements

Conversation Analysis

Search Analysis

44

Nurturing Brand Advocacy

Consumer Conversations

Content, Apps & Services

Social by Design

Breakthrough Insights

& Innovation

24/7 Sense & Respond

Listening

Engaging

Inspiring &

Transforming

Increasing Return on Brand Building Investment

(ROBBI)







45


Over 1000 brand websites

Over 250 Nestlé brand pages on Facebook

Over 50 Apps launched

Trend in Digital Investment

46







47


Sharing Internal Digital Best Practices

48







49


Brand Conversation through Apps

50

Downloaded by 10% of

smart-phone users in France


France Hong Kong Germany

Brand Conversation through Apps

51

Maggi Apps launched successfully

across the globe


Brand Conversation through Facebook

52

250+ Nestlé brand pages with 40+ million Facebook fans

7 brands have 1+ million fans each


Brand Conversation through Earned Media

53

Over 10 million earned media viewings each



54


Reaching and Engaging with the Consumer

55



56



57



58



59



60



61


Reaching and Engaging with the Consumer B2B

62



63


1,000,000 new outlets in AOA

between 2010 and 2012

64



65


Roadmap Driving Performance in New Reality

66

Operational

Pillars

Growth

Drivers

Competitive

Advantages



Wan Ling Martello


Designate


11.8% 12.3%

12.5% 12.6% 12.9%

13.5% 14.0%

14.3% 14.6%

Driving Organic Growth & Margin Improvement

Data corresponds to published figures – not restated for accounting changes

7.4%

2009 2001 2002 2003 2004 2005 2006 2007

9.7%

5.1% 4.5%

6.2% 6.2%

4.1%

4.9%

2008

8.3%

10-year annual averages

Organic Growth 6.4%

Real Internal Growth 3.6%

2010

6.2%

2011

7.5%

14.4%

15.0%

Organic Growth

EBIT margin *

TOP margin

* Before net trading items

68


The Nestlé Model

Organic growth 5-6%

Increased trading operating margin in constant currencies

Increased underlying EPS in constant currencies


69



Discussion

Feb 20 2012 - Nestlé 2011 Full-year roadshow presentation

Investor Relations

capabilities

longer term

fast moving

brand building

constant currencies

volatility

competitive

markets increasing