NestléInvestor Seminar 2007 · 22 Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of...
Transcript of NestléInvestor Seminar 2007 · 22 Nestlé Investor Seminar – Vevey June 7-8, 2007 Name of...
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Nestlé Investor Seminar 2007
Nutrition, Health and Wellness as a Growth Engine
Paul PolmanChief Financial Officer
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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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1. Sustainable Organic Growth of 5 - 6%
2. Continued year after year improvement of EBIT margin
3. Responsible capital management(Working Capital / Business ROIC)
Nestlé Model
Resulting in an industry outperforming,long-term total shareholder return
1998 2000 2002 2004 2006 2008 2010
EBITA Margin
→ focus on F&B
→ focus on F&B
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-10%
-5%
0%
5%
10%
15%
% Growth
10 yearsaverage
Acquisitions
DivestituresForex
OG: OrganicGrowth
3.6%
2.2%
2.5%
-1.4%
OG5.8%
-1.5%
RIG Pricing & Other Acquisitions Divestitures FX Impact
Organic Growth5.8% in average over last 10 years
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
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Group EBIT Margin over last 10 years30 bps improvement in average per annum
Figures correspond to published figures - not restated for accounting changes
10.3% 10.3%
11.1%
11.8%11.8%
12.3%12.5%
12.6%12.9%
13.5%
2'000
4'000
6'000
8'000
10'000
12'000
14'000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
EBIT (in mio CHF)EBIT (in % Sales)
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Mix drives growth and margin improvement
Perrier bottle making
Japanese vending
Vlachas (Dairy) Greece
Schöller Private Label
Chilled Dairy Europe
DivestituresAcquisitions +
Liquid milk businesses in Asia
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“It is not the strongest of the species whichsurvives, nor the most intelligent.
It is those most adaptive to change.”Charles Darwin
Innovations drive growth and margin improvement
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Growing
World population is expected to increase by 2.6 billion
to 9.1 billion in 2050 from over 6.5 billion in 2005
Global trends changing consumer demands and needs
Percentage of people aged 60 years & older will grow to 21%
in 2050 from 10% in 2000
Ageing population&
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From calorific scarcity to optimum to excess
Adu
lt en
ergy
con
sum
ptio
n (k
cal)
Life
exp
ecta
ncy
(yea
rs)
Life Expectancy
CalorieIntake
?
30
60
90
1800 1850 1900 1950 2000 20502000
2500
3000Optimum ExcessScarcity
?
Global trends changing consumer demands and needs
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Nestlé NutritionCritical mass leveraging Scale
NumicoCHF 4.8 bn *
NestléNutrition
CHF 10 bn +
* 2007E Rabo Securities CHF/EUR = 1.6 + 2007 FY run-rate including recent acqusitions
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Nestlé NutritionCritical mass leveraging Scale
NumicoCHF 4.8 bn *
NestléNutrition
CHF 10 bn +
* 2007E Rabo Securities CHF/EUR = 1.6 + 2007 FY run-rate including recent acqusitions
NestléNutrition+ BABs
CHF 14 bn +
BABs
Adding relevant nutrition, health & wellness benefits to strong brands in a proprietary way
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Leverage nutritional science across total product portfolio
Corporate Wellness Unit
Exploiting scale & nutrition know-how to leverage bigger, better innovation faster
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Ø Nutrition & affordability in developing markets
Ø Nutrition, health and wellness in Nestlé Food and Beverages
Ø Nutrition for specific need states
Nutrition, health and wellness as a growth engine
Opportunity
$100bn
$75bn
$70bn
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Popularly Positioned Products:
winning the emerging consumer
A $70 billion opportunity
Nutrition and affordability
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Ø Nutrition & affordability in developing markets
Ø Nutrition, health and wellness in Nestlé Food and Beverages
Ø Nutrition for specific need states
Nutrition, health and wellness as a growth engine
Opportunity
$100bn
$75bn
$70bn
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BONE HEALTH
HEART HEALTH
BODY ENHANCEMENT
Beauty Vitality
Adult health & wellness solutions
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Ø Nutrition & affordability in developing markets
Ø Nutrition, health and wellness in Nestlé Food and Beverages
Ø Nutrition for specific need states
Nutrition, health and wellness as a growth engine
Opportunity
$100bn
$75bn
$70bn
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Global leadership in Nutrition
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ValueValue--forfor--money brands (economy)money brands (economy)
Mainstream brandsMainstream brands
Premium brandsPremium brands
InfantInfant
SpecialtiesSpecialties
Infant Nutrition for every income group
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R&D the engine for nutrition, health & wellness
Health Benefits
• Protection
• Growth & development
• Digestive comfort• Weight management
• Performance
• Healthy ageing• Skin health & beauty
Science aligned with consumer benefits
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Breakthrough innovations and bolder solutions…
2002:Coffee
Next: Culinary2004:
Creamer
Booster technology
Extrusiontechnologyeg LTF*
BABs
Systems
Packaging
* LTF: Low temperature freezing/ Ice cream
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Opening the R&D process to significant external innovation assets
Nestlé Internally
• More than 1 million researchers• Top emerging technologies plus
world- class expertise in Nestlésciences
• 1,500+ science universities• Venture Capital• Nestle Suppliers: more than 50,000
scientists/engineers among our strategic suppliers
• Government Labs: 50,000+ Scientists/Engineers
External Innovation Assets
Worldwide staff in R&D:Nationalities:
Global R&D costs: CHF 1.7 bioR&D spending: 1.8 % of sales
over 704500
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The creation of sustainable shareholder value is dependent upon creating sustainable value in communities where Nestlé operates
COMPLIANCELaws, Business Principles, codes of conduct
SUSTAINABILITYProtect the future
CREATESHARED VALUE
Reduce poverty, Improve health
Empower people
Nestlé’s concept of Corporate Social Responsibility – built into the Nestlé Model
• Long-term shareholder value creation
• TSR• Sustainable
profitable growth
• Corporate governance
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Nestlé Corporate Business Principles
120+ projects supporting UNDG 2006CSR reports: Africa 2005, Latin America 2006 CSR = Corporate Social Responsibility
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Consumer needs in mid-19th century: Scarcity of calories for infants
• Death in first year of life– Europe: 15% to 25% – Switzerland: 1 in 5
• Key factors– Socio-economics– General hygiene– Nutrition
• Infant nutrition on market– Wet nurses – Different animal milks– Milk & flour mixtures
“Shared value creation”engrained in Nestlé’s DNA
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Henri Nestlé: Science-based approach to infant nutrition
• Nestlé's infant cereal– Based on scientific criteria
for infant nutrition – Innovation: based on more
than 30 years of research
• Breakthrough in 1867– Premature baby:
sick, weak, unable to feed – Neighbour suggests using
Nestlé's infant food product, which saved the baby's life
“Shared value creation”engrained in Nestlé’s DNA
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Developing products for today's nutritional needs
• Applying 140 years' nutrition knowledge – Building ranges
(water, dairy, etc) – Renovating/
reformulating (less fat, sugar, salt)
– Innovating across categories (branded active benefits)
• Making nutrition key to all our activities– Nestlé Research
Centre– Corporate Wellness
Unit: cross-business driver
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We plan to deliver the Nestlé Model annually over the next 10 years
5-6% organic growth Sustainable improvement in EBIT margin
Improving trend in Return on Invested Capital
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Nestlé Investor Seminar 2007