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Feb 20 2012 - Nestlé 2011 Full-year roadshow presentation

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Nestlé 2011 Full Year Roadshow presentationwebcast slides

Nestlé 2011 Full Year Roadshow presentationwebcast slides


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  • 1. 2011 Full Year Roadshow Paul Bulcke Chief Executive Officer Jim Singh Chief Financial Officer Wan Ling Martello Chief Financial Officer DesignateFebruary 21st, 2012 2011 Full Year Roadshow
  • 2. 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 February 21st, 2012 2011 Full Year Roadshow
  • 3. 2011 Full Year Roadshow Jim Singh Chief Financial OfficerFebruary 21st, 2012 2011 Full Year Roadshow
  • 4. Delivering progress sustainably in a New Reality3 February 21st, 2012 2011 Full Year Results Roadshow
  • 5. 2011: Strong Full Year Performance At constant As reported 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 15.0% +60 bps +90 bps (vs. 2010 continuing operations) Net Profit 9.5 bn +8.1% (vs. 2010 continuing operations) Net Profit Margin 11.3% +130 bps (vs. 2010 continuing operations) Underlying EPS 3.08 +7.8% (vs. 2010 Group) Dividend 1.95 +5.4% (proposed)All figures in CHF4 February 21st, 2012 2011 Full Year Results Roadshow
  • 6. Delivering the Nestlé Model in 2011 Former Nestlé Model FY 2011 Enhanced Nestlé Model FY 2011 Organic growth 5-6% +7.5% Organic growth 5-6% +7.5% Increased EBIT margin +10 bps Increased trading operating +90 bps in constant currencies margin in constant currencies Increased underlying EPS +7.8% Improvement in capital efficiency in constant FX Improvement in capital efficiency5 February 21st, 2012 2011 Full Year Results Roadshow
  • 7. 10 years of the Nestlé Model Driving Organic Growth & EBIT Margin Improvement 15.0% 14.3% 14.6% 14.0% 13.5% 14.4% 12.9% 12.5% 12.6% 12.3% 11.8% 10-year annual averages 9.7% Organic Growth 6.4% 8.3% 7.4% 7.5% Real Internal Growth 3.6% 6.2% 6.2% 6.2% 4.9% 5.1% 4.5% 4.1% Organic Growth EBIT margin * TOP margin 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Before net trading items Data corresponds to published figures – not restated for accounting changes6 February 21st, 2012 2011 Full Year Results Roadshow
  • 8. Enhancing performance – EPS and DPS evolution 3.32 3.09 3.08 2.80 2.82 2.41 2.13 2.02 1.89 1.93 1.95 Proposed 1.85 1.72 EPS* 1.60 DPS 1.40 1.22 1.04 0.90 0.80 0.70 0.72 0.64 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Underlying EPS, excl. 2001 which is Basic EPS All figures in CHF7 February 21st, 2012 2011 Full Year Results Roadshow
  • 9. A winning strategy driving superior shareholder returns Nestlé SA Total Shareholder Returns 2002-2011 96.1% CHF, dividends reinvested 52.6% 43.2% 29.6% 17.7% 20.7% 14.4% 8.3% -18.1% -15.2% USA 7 USA 6 USA 5 USA 4 USA 3 USA 2 USA 1 EUR 3 EUR 2 Source: Bloomberg8 February 21st, 2012 2011 Full Year Results Roadshow
  • 10. Growth opportunities – consumers increasingly focusing on Nutrition, Health and Wellness as per-capita income rises ‘Aggressive’ local competitors with growing and dominant position (low price/low margin) ‘Premiumisation’ Battleground for growth in the emerging markets Consumption of food manufacturing value- added actual US$, per-capita Convenience Sustenance Pleasure and Nutrition Well-Being diversity Nestlé per-capita sales 1.4 Billion new consumers primarily sourced from emerging markets where competitive PPP* environment is much more widespread and dynamic Per-capita income US$ 1,500 5,000 13,000 22,000 28,000 Population in developed markets in general is in decline *PPP = Popularly Positioned Products Sources: UNIDO (value-added), WIDER and World Bank; Nestlé9 February 21st, 2012 2011 Full Year Results Roadshow
  • 11. The transformational opportunity WHAT HOW Strategic Organisational Transformation Transformation Create an agile fleet of From traditional businesses/markets businesses into a Nutrition, Focus on demand generation Health and Wellness Leverage scale through an efficient company support structure Tackle under-performers10 February 21st, 2012 2011 Full Year Results Roadshow
  • 12. Significant acquisitions added new growth platforms and strengthened market leadership Acquisitions 2000 to 2011: Sales in CHF ~30 bn •Ruzanna RU •Garoto Brazil •Osem Israel •Fonterra milk Medical powder AMS •Powwow EUR Nutrition •BPW •Ice cream Partners NA •HOD Waters USA 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201111 February 21st, 2012 2011 Full Year Results Roadshow
  • 13. Significant divestitures rationalized the portfolio and eliminated non strategic and loss-making businesses Divestitures 2000 to 2011: Sales in CHF ~ -17 bn 23% 25% 52% •San Sepolcro Italy •Eden Springs Water FR •Frozen Meat GER •Barnaul Conf RU •Family Frost •Canned & Liquid •Trinks GER Milk AOA •Eismann EUR •Dry cut pasta Italy •Crosse & Blackwell •Minag Water GER • Dallmayr R&G •Private Label Ice South Africa •Eugene Perma • Chilled Dairy GER cream GER EUR (cosmetics) •Findus EUR •Frozen Potato USA •FIS International •Project Perm UK 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 201112 February 21st, 2012 2011 Full Year Results Roadshow
  • 14. Nestlé Innovation Territory: expanding to new dimensions Customized Customized Personalized Products Solutions Product-linked systems & services Standard Product Systems Services13 February 21st, 2012 2011 Full Year Results Roadshow
  • 15. Capital expenditure driven by emerging markets, powdered beverages, nutrition and investments in capacity and new products & technology Split by Region Split by Product Category Others PetCare Confectionery Developed 4% 10% Culinary 11% Emerging Nutrition Dairy / Ice cream 49% 52% Water 27% 22% 25% 12% Powd. Beverages 2005 2011 2012 Split by Type 2005 2011 2012 44% 54% 57% Capacity and new products & technology Replacement 2005 2011 201214 February 21st, 2012 2011 Full Year Results Roadshow
  • 16. Trade Net Working Capital is an area of focus and improvement 2005 2006 2007 2008 2009 2010 2011 TNWC as % of sales Notes: Like for like estimate 2010 and 2011 figures exclude Alcon, Hsu Fu Chi and Yinlu15 February 21st, 2012 2011 Full Year Results Roadshow
  • 17. Nestlé’s Operational Efficiency Delivering the highest quality, lowest cost & best customer service leveraging GLOBE Performance • Manufacturing • Manufacturing • Physical Logistics • Physical Logistics • Bad Goods • Bad Goods • MOGE • MOGE • PFME • Capital Charges • Manufacturing • Financing Costs • Physical Logistics • Bad Goods Operation EXCELLENCE 2007 Focus on change in mind-set to Target generate continuous improvement Manufacturing 2004+ MH97 Focus on projects to CI generate cost improvements 1997 2001 2005 2008 2011...16 February 21st, 2012 2011 Full Year Results Roadshow
  • 18. The Nestlé Model  Organic growth 5-6%  Increased trading operating margin in constant currencies  Increased underlying EPS in constant currencies  Improvement in capital efficiency17 February 21st, 2012 2011 Full Year Results Roadshow
  • 19. 2011 Full Year Roadshow Paul Bulcke Chief Executive OfficerFebruary 21st, 2012 2011 Full Year Roadshow
  • 20. The New Reality19 February 21st, 2012 2011 Full Year Results Roadshow
  • 21. Deliver shorter term Uncertainty and volatility Different dynamics in different markets To win:  Fast moving  Entrepreneurial  Decentralised20 February 21st, 2012 2011 Full Year Results Roadshow
  • 22. Deliver shorter term Manage for longer term Uncertainty and volatility Growing populations, global affluence Different dynamics in different markets increasing, health awareness, etc To win: To win:  Fast moving  Build and innovate brands  Entrepreneurial  Enhance capacities and capabilities  Decentralised  Invest in strategic opportunities21 February 21st, 2012 2011 Full Year Results Roadshow
  • 23. Deliver shorter term Manage for longer term Uncertainty and volatility Growing populations, global affluence Different dynamics in different markets increasing, health awareness, etc To win: To win:  Fast moving  Build and innovate brands  Entrepreneurial  Enhance capacities and capabilities  Decentralised  Invest in strategic opportunities Concise strategy Aligned values Firm principles22 February 21st, 2012 2011 Full Year Results Roadshow
  • 24. Deliver shorter term Manage for longer term Uncertainty and volatility Growing populations, global affluence Different dynamics in different markets increasing, health awareness, etc To win: To win:  Fast moving  Build and innovate brands  Entrepreneurial  Enhance capacities and capabilities  Decentralised  Invest in strategic opportunities The Nestlé Roadmap23 February 21st, 2012 2011 Full Year Results Roadshow
  • 25. The Nestlé Roadmap Competitive Advantages Appropriate to the New Reality Driving Sustainable Performance Operational Growth Pillars Drivers24 February 21st, 2012 2011 Full Year Results Roadshow
  • 26. The Nestlé Roadmap Competitive Advantages Addressing changing consumer behaviour – perceived values, expectations and impulses Operational Growth Pillars Drivers25 February 21st, 2012 2011 Full Year Results Roadshow
  • 27. It’s all about Engaging with Consumers26 February 21st, 2012 2011 Full Year Results Roadshow
  • 28. Driving Innovation Globally: NESCAFÉ Countries Countries Year I&R NHW Premium PPP OOH Zones  2011  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 Viaggi by Nescafé ’10   1 4 2 Milano ‘10   3 20 12 Alegria ‘09  3 62 10 ** 2007 RTD coffee integrated into NESTLÉ from BPW27 February 21st, 2012 2011 Full Year Results Roadshow
  • 29. Driving Innovation Globally: NESCAFÉ Countries Countries Year I&R NHW Premium PPP OOH Zones  2011  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 Viaggi by Nescafé ’10   1 4 2 Milano ‘10   3 20 12 Alegria ‘09  3 62 10 ** 2007 RTD coffee integrated into NESTLÉ from BPW28 February 21st, 2012 2011 Full Year Results Roadshow
  • 30. Driving Innovation Globally: NESCAFÉ Countries Countries Year I&R NHW Premium PPP OOH Zones  2011  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 Viaggi by Nescafé ’10   1 4 2 Milano ‘10   3 20 12 Alegria ‘09  3 62 10 ** 2007 RTD coffee integrated into NESTLÉ from BPW29 February 21st, 2012 2011 Full Year Results Roadshow
  • 31. Driving Innovation Globally: NESCAFÉ Countries Countries Year I&R NHW Premium PPP OOH Zones  2011  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 Viaggi by Nescafé ’10   1 4 2 Milano ‘10   3 20 12 Alegria ‘09  3 62 10 ** 2007 RTD coffee integrated into NESTLÉ from BPW30 February 21st, 2012 2011 Full Year Results Roadshow
  • 32. Driving Innovation Globally: NESCAFÉ Countries Countries Year I&R NHW Premium PPP OOH Zones  2011  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 Viaggi by Nescafé ‘10   1 4 2 Milano ‘10   3 20 12 Alegria ‘09  3 62 10 ** 2007 RTD coffee integrated into NESTLÉ from BPW31 February 21st, 2012 2011 Full Year Results Roadshow
  • 33. Innovation Aligned with Growth Drivers Countries Countries Category Year I&R NHW Premium PPP OOH Zones  2011  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 1232 February 21st, 2012 2011 Full Year Results Roadshow
  • 34. Innovation Aligned with Growth Drivers Countries Countries Category Year I&R NHW Premium PPP OOH Zones  2011  2012 Ice Cream Peelable ‘10   3 12 25 Nespresso Lattissima + ‘11   3 30+ 20+ Nutrition Lactogen ‘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 1233 February 21st, 2012 2011 Full Year Results Roadshow
  • 35. Innovation Aligned with Growth Drivers Countries Countries Category Year I&R NHW Premium PPP OOH Zones  2011  2012 Ice Cream Peelable ‘10   3 12 25 Nespresso Lattissima + ‘11   3 30+ 20+ Nutrition Lactogen ‘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 1234 February 21st, 2012 2011 Full Year Results Roadshow
  • 36. Innovation Aligned with Growth Drivers Countries Countries Category Year I&R NHW Premium PPP OOH Zones  2011  2012 Ice Cream Peelable ‘10   3 12 25 Nespresso Lattissima + ‘11   3 30+ 20+ Nutrition Lactogen ‘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 1235 February 21st, 2012 2011 Full Year Results Roadshow
  • 37. It’s all about Engaging with Consumers36 February 21st, 2012 2011 Full Year Results Roadshow
  • 38. Communication trends  Buy Space  Earn Attention  Deliver a Message  Start a Conversation Spend gets brands visibility: Paid media Creativity gets people ‘liking’ them: Earned media37 February 21st, 2012 2011 Full Year Results Roadshow
  • 39. From Brand Communication to Brand Conversation while increasing ROBBI* *Return On Brand Building Investment38 February 21st, 2012 2011 Full Year Results Roadshow
  • 40. 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 action39 February 21st, 2012 2011 Full Year Results Roadshow
  • 41. Brand Building the Nestlé Way Fundamentals of Brand Building  Targeting Consumer  Inspiring Brand  Big Brand Idea  Measurable Results40 February 21st, 2012 2011 Full Year Results Roadshow
  • 42. Brand Building the Nestlé Way41 February 21st, 2012 2011 Full Year Results Roadshow
  • 43. Effectiveness of Nestlé’s Messaging Effective recall and persuasiveness of message % in Upper 30 40 quartile 51 % in Upper middle quartile 34 31 21 2009 2010 2011Base: All Nestle Aired advertsQuartiles are based on all ads on database.42 February 21st, 2012 2011 Full Year Results Roadshow
  • 44. Creating Competitive Gaps for our Markets Brand Building Digital & Social the Nestlé Way Media Strategy Excellence Excellence in Brand Building in Listening, Engaging and Inspiring43 February 21st, 2012 2011 Full Year Results Roadshow
  • 45. Winning in Digital & Social Media Inspiring & Transforming  Social by Design Engaging  Breakthrough Insights  Nurturing Brand Advocacy & Innovation Listening  Consumer Conversations  24/7 Sense & Respond  Digital Measurements  Content, Apps & Services  Conversation Analysis  Search Analysis Increasing Return on Brand Building Investment (ROBBI)44 February 21st, 2012 2011 Full Year Results Roadshow
  • 46. 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 action45 February 21st, 2012 2011 Full Year Results Roadshow
  • 47. Trend in Digital Investment Over 50 Apps launched Over 250 Nestlé brand pages on Facebook Over 1000 brand websites46 February 21st, 2012 2011 Full Year Results Roadshow
  • 48. 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 action47 February 21st, 2012 2011 Full Year Results Roadshow
  • 49. Sharing Internal Digital Best Practices48 February 21st, 2012 2011 Full Year Results Roadshow
  • 50. 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 action49 February 21st, 2012 2011 Full Year Results Roadshow
  • 51. Brand Conversation through Apps Downloaded by 10% of smart-phone users in France50 February 21st, 2012 2011 Full Year Results Roadshow
  • 52. Brand Conversation through Apps France Germany Hong Kong Maggi Apps launched successfully across the globe51 February 21st, 2012 2011 Full Year Results Roadshow
  • 53. Brand Conversation through Facebook 250+ Nestlé brand pages with 40+ million Facebook fans 7 brands have 1+ million fans each52 February 21st, 2012 2011 Full Year Results Roadshow
  • 54. Brand Conversation through Earned Media Over 10 million earned media viewings each53 February 21st, 2012 2011 Full Year Results Roadshow
  • 55. It’s all about Engaging with Consumers54 February 21st, 2012 2011 Full Year Results Roadshow
  • 56. Reaching and Engaging with the Consumer55 February 21st, 2012 2011 Full Year Results Roadshow
  • 57. Reaching and Engaging with the Consumer56 February 21st, 2012 2011 Full Year Results Roadshow
  • 58. Reaching and Engaging with the Consumer57 February 21st, 2012 2011 Full Year Results Roadshow
  • 59. Reaching and Engaging with the Consumer58 February 21st, 2012 2011 Full Year Results Roadshow
  • 60. Reaching and Engaging with the Consumer59 February 21st, 2012 2011 Full Year Results Roadshow
  • 61. Reaching and Engaging with the Consumer60 February 21st, 2012 2011 Full Year Results Roadshow
  • 62. Reaching and Engaging with the Consumer61 February 21st, 2012 2011 Full Year Results Roadshow
  • 63. Reaching and Engaging with the Consumer B2B62 February 21st, 2012 2011 Full Year Results Roadshow
  • 64. Reaching and Engaging with the Consumer63 February 21st, 2012 2011 Full Year Results Roadshow
  • 65. 1,000,000 new outlets in AOA between 2010 and 201264 February 21st, 2012 2011 Full Year Results Roadshow
  • 66. It’s all about Engaging with Consumers65 February 21st, 2012 2011 Full Year Results Roadshow
  • 67. Roadmap Driving Performance in New Reality Competitive Advantages Operational Growth Pillars Drivers66 February 21st, 2012 2011 Full Year Results Roadshow
  • 68. 2011 Full Year Roadshow Wan Ling Martello Chief Financial Officer DesignateFebruary 21st, 2012 2011 Full Year Roadshow
  • 69. Driving Organic Growth & Margin Improvement 15.0% 14.3% 14.6% 14.0% 13.5% 14.4% 12.9% 12.5% 12.6% 12.3% 11.8% 10-year annual averages 9.7% Organic Growth 6.4% 8.3% 7.4% 7.5% Real Internal Growth 3.6% 6.2% 6.2% 6.2% 4.9% 5.1% 4.5% 4.1% Organic Growth EBIT margin * TOP margin 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 * Before net trading items Data corresponds to published figures – not restated for accounting changes68 February 21st, 2012 2011 Full Year Results Roadshow
  • 70. The Nestlé Model  Organic growth 5-6%  Increased trading operating margin in constant currencies  Increased underlying EPS in constant currencies  Improvement in capital efficiency69 February 21st, 2012 2011 Full Year Results Roadshow
  • 71. 2011 Full Year Roadshow DiscussionFebruary 21st, 2012 2011 Full Year Roadshow