beating the benchmark - nestlé · 2019-07-14 · e.g. skus, structures, reporting - leverage scale...

Name of chairman

Beating the benchmark

Bellevue meets management seminar – January 2007

Peter BrabeckChairman &

Chief Executive Officer

11 January 2007



11 January 2007

2 Name of chairmanBellevue meets management seminar – January 2007

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.


Agenda

� Introduction – strategy and the Nestlé Model

� 2006 in review and 2007 previewed

� Nutrition, Health and Wellness – no longer a vision; becoming a reality

� Conclusion


Organisational Transformation

• Create an agile fleet of businesses/markets

• Focus on profitable growth• Leverage scale• Tackle under-performers

From traditional businesses into a

Nutrition, Health and Wellness company

Strategic Transformation

Nestlé's transformational strategy


The delivery of 5-6% organic growth, combined with sustainable increase in EBIT margin, driving an improving

Return on Invested Capital

The Nestlé Model


2006 in review and 2007 previewed


2006 in review

• To be another year of record results, achieving the Nestlé Model, led by Food and Beverage

• 39% increase in cash returned to shareholders

• Savings programmes on track – CHF 1.2 billion

• Focus on profitable growth - GLOBE and shared services

• Accelerating transformation to Nutrition, Health and Wellness – Uncle Toby's, Jenny Craig, Novartis Healthcare Nutrition

• Addressing underperformers – divestitures


Divestitures

Disposal of Perrier bottle making (2006)

Disposal of Japanese vending (2006)

Agreement with Lactalis for the Chilled dairy activities in Europe (2005 / 2006)

Disposal of Vlachas in Greece (Dairy in 2006)

Disposal of Trinks in Germany (2004)

Disposal of Eismann in Europe (2004)

Disposal of Schöller Private Label business in Germany (announced Sep 2006)


2007 previewed - strategic

• Accelerating transformation to Nutrition, Health and Wellness - Integrating Novartis Healthcare Nutrition- Driving 60/40+, Branded Active Benefits- The Nutritional Compass

• Bigger, better bolder innovation


2007 previewed - organisation

• Reorganisation of R&D, operations & supply chain –now under separate leadership

• New FoodServices structure in place – increased focus

• GLOBE focus now on leveraging the benefits:- Business benefits through best practices- Decision Support as a competitive advantage- Organisational Transformation to manage

complexity with efficiency

• Shared services to accelerate – first benefits


2007 previewed - financial

Expecting to deliver the Nestlé Model, led by F&B

- Drive simplicity across the F&B businessesE.g. SKUs, structures, reporting

- Leverage scale for competitive advantageE.g. GLOBE, GNBS, shared services, procurement

- Tackle underperformers: Invest phase, core, non-core

- Increase discipline/ execution in all we doE.g. Working capital, dynamic forecast, real time data, project tracking


-10%

-5%

0%

5%

10%

15%% Growth

20051996 1997 1998 1999 2000 2001 2002 2003 2004

RIG Pricing & Other Acquisitions/Divestitures FX ImpactNot restated; in 2001: including TTS effect

10 yearsaverage

OG5.7%

OG: OrganicGrowth

3.4%

2.3%

-1.4%

1.0%

The Four Factors of Group Sales 1996-2005

Consistent track record to continue


10.2% 10.3% 10.3%

11.8% 11.8%12.3% 12.5%

12.7%13.0%

11.1%

01'0002'0003'0004'0005'0006'0007'0008'0009'000

10'00011'00012'00013'00014'000

mio

CH

F

9.0%

9.5%

10.0%

10.5%

11.0%

11.5%

12.0%

12.5%

13.0%

13.5%

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

% of SalesEBIT (mio CHF)

2005 & 2004 restated - New NPS definition in 2001

Sustainable improvement in EBIT

Consistent track record to continue


Nutrition, Health and Wellness


Pleasure anddiversityPleasure anddiversity

ConvenienceConvenience NutritionNutrition

Health andwellnessHealth andwellness

WellBeingWellBeing

US$ 4,000 US$ 13,000 US$ 22,000

Per-capita income (PPP)

Manufacturing value-added in food purchased

actual US$, per capita$ 500

$ 100

US$ 28,000

$ 300

SustenanceSustenance

NestlNestlééper capita per capita

salessales

Attractive food market dynamics


An opportunity for enhanced value creation

0

100

200

300

400

500

600

700

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

10-year TSR08/95 = 100 )

Source: MA Analysis

Health

Wellness

Food & Beverages

Attractive market – Health & wellness


Drive the Nutrition, Health & Wellness orientation across

Food & Beverage

Strengthen our leadership position in the core nutrition

business

Nestlé Nutrition CompanyCorporate Wellness Unit

Health, Nutrition & Wellness at Nestlé


Infant Infant NutritionNutrition

HealthCare HealthCare NutritionNutrition

Performance Performance NutritionNutrition

WeightWeightManagementManagement

2005 Sales (CHF billion) 5.2 10% OG

2005 EBIT margin 17.6% 20%

Nestlé Nutrition

2005 Objectives


Nestlé Nutrition – transformed in 2006


Nestlé Nutrition – transformed in 2006

Novartis Medical Nutrition

Boost ReSource

NovaSource IsoSource Vivonex

Peptinex Impact Compleat

Optifast


Creates No. 2 global player in Healthcare Nutrition• Strengthens our position in the U.S. and Europe• Creates a stronger foothold in Rest of World• Larger organization, broader product range,

faster speed to market• Strong and experienced management team

Increased R&D capability • Complementary core competencies (Nestlé

nutrition science and food technology, Novartis Pharma heritage)

• Increased access to Key Opinion Leaders (KOLs) and medical organisations

A Winning Combination


A Winning Combination

Significant step up in scale delivering benefits across R&D, product portfolio, commercial organisation

and access to distribution channels

Broader product portfolio of strong brands supported by clinical data • Full range of general and disease-specific

products: Diabetes, Oncology, Critical care / Gastro-intestinal, Geriatric care

Increased presence in attractive retail channels • U.S. retail with Boost brand• Europe and Rest of World – Retail pharmacies


Enhanced R&D Profile

Complementary competencies will result in better innovations, brought to market faster, globally

• Nutrition science• Food technology excellence

(taste, texture, sensory)• Consumer-centric approach

Pipeline

• Pharma heritage• Health economics data• Regulatory competences• Clinical trial design• Access to Key Opinion

Leaders


Nestlé acquisition criteria

• To be category No.1 or strong No.2

• Generate value for shareholders

• Focused approach on value-added growth categories

• Strong brands in leadership positions

• RIG, cash flow and earnings enhancing

• High degree of certainty of successful integration

• Maintain strong credit ratings and financial flexibility

Novartis MN acquisition meets these criteria


Conclusion


Over 10-year period, Nestlé's TSR position # 2.

Source: Bloomberg

Nestlé has delivered in the past ...

n.a.18.020.230.5Kraft

8.514.52.623.1Coca Cola

28.047.455.433.4Campbell

94.444.236.037.9Heinz

134.712.635.012.7Unilever

137.425.637.519.9General Mills

172.161.236.4-8.1Hershey

187.480.436.513.4Procter & Gamble

193.844.344.52.1Cadbury Schweppes

260.736.750.212.8Nestlé

399.283.387.132.4Danone

10 Years5 Years3 Years1 Year


... and remains rich with opportunity

Brands & Innovation

� Generating sales growth � Growing market shares� Enhancing mix� Improving F&B margin

� Driving focus & discipline� Tackling underperformers� Improving F&B margin � Improving working cap/fixed asset turns� Increasing capital efficiencies & returns

Scale & Structure

Strategic transformation

Organisational transformation


• Transformation to Nutrition, Health and Wellness is accelerating

• Organisational transformation is freeing up our markets to focus on profitable growth

• Nestlé Food, Beverage & Nutrition will be the key drivers of the Nestlé Model

• Nestlé is opportunity-rich: innovation for growth and mix; scale for growth and efficiencies

Conclusion

Name of chairman

Beating the benchmark

Bellevue meets management seminar – January 2007



11 January 2007



11 January 2007

beating the benchmark - nestlé · 2019-07-14 · e.g. skus, structures, reporting - leverage scale...

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