nestlé india financial analyst and institutional investor

Nestlé India

Financial Analyst and Institutional Investor Webcast

26th Feb 2021

Nestlé India - Financial Analyst and Institutional Investor Webcast, 26th Feb 2021

Disclaimer

This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. You are cautioned not to place undue reliance on these forward-looking statements, which holds only as of the date.

The future involves uncertainties and risks that could cause actual results to differ materially from the current views being expressed.

Potential uncertainties and risks include but are not limited to factors such as changes in general economic, political or market conditions, commodities and currency fluctuations, competitive product and pricing pressures, industrial relations and regulatory developments.

Significant disruptions in the operations due to unforeseen events (including as a result of the spread of disease)

Volume and Mix and Organic Growth (OG) are basis Nestlé Internal Reporting Standards.

Figures are regrouped / reclassified to make them comparable.

Calculations are based on non-rounded figures.

‘Analytical data’ are best estimates to facilitate understanding of business and NOT meant to reconcile reported figures.

Answers to Questions may be given basis generally available information.


Agenda

15.55 – 16.30: Q&A

15.30 – 15.55 : Report Card of a

Resilient Organization –Presentation by

Suresh Narayanan


Report Card of a Resilient Organization


Our Vision


Key Highlights 2020

Strong domestic sales growth, broad based and largely driven by volume and mix.

Nearly two thirds of our key products, boosted by in home consumption, posted double digit growth.

Innovation and Renovation pipeline continues to be a thrust area.

Demand in Out of Home channels continued to improve.

E-Commerce continues to contribute better towards Domestic Sales.


Prepared dishes and cooking aids

Milk Products and Nutrition

Confectionery

Powdered and liquid beverages

Contribution

8.9%

11.4%

Growth % 10.5%Contribution

Data represents Jan-Dec 2020

Sales: Broad Based Performance Across All Product GroupsFY2020


Report Card of a Resilient Organization

The Consumption Opportunity

Our Growth ModelA History of Sustainable

PerformanceCreating Shareholder

Value

A Strong Thrust on Innovation

Rapidly Accelerating our Footprint

Consistent Media Support to our Brands

Navigating Commodity Headwinds

Our People Matter

Unwavering Commitment to

Sustainability and Tackling Climate Change

Continuing with Our Proven Growth Model


The Consumption Story – Exciting Opportunities Ahead

Source- Bain & Company report on Future of Consumption in India 2018-2030


Our Growth Model

Strong Cost and Efficiency Management

Penetration Led Growth

Investing and Innovating

Competitive advantage through R&D expertise

Brand Salience

Leadership Position In Seven Out Of Eight Categories in most years


10 Years of Sustainable Volume & Mix Led Growth

* Volume and Mix Growth computed as per Internal reporting standards# 2015 impacted by MAGGI Issue

430 432 436 433 269 343 382 424 457 468 116 103 128 121

14.5 9.2 6.8

2.5

(20.9)

1.8 8.4

11.6 9.6 5.7

8.5

(0.3)

6.7 7.8

(70.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

-

10.0

20.0

-

100

200

300

400

500

600

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20

Domestic Vol ('000 Tons) * Volume & Mix Growth %

#


10 Years of Sustainable Domestic Value Growth

* Reported growth rates in 2017 & 2018 are adversely impacted due to lower reported sales by the change in structure of indirect taxes and reduction in realizations to pass on the GST benefits # 2015 impacted by MAGGI Issue

71 79 84 92 75 88 95 105 117 126 31 29 34 33

11.0 7.1 8.6

(18.3)

16.9

8.2 10.9

10.9 8.5 10.7

2.6

10.2 10.1 11.8 14.3

(80.0)

(70.0)

(60.0)

(50.0)

(40.0)

(30.0)

(20.0)

(10.0)

-

10.0

20.0

10

30

50

70

90

110

130

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20

Domestic Sales (Bio) * Reported Growth % Comparable Growth %

#


10 Years of Accelerating Profit from Operations

# 2015 impacted by MAGGI Issue

14 15 16 18 13 17 18 24 26 29 7 7 8 7

18.5 18.5 18.1 18.3

16.4 17.6

18.1

21.0 21.1 21.7 21.7 22.0

22.9

20.0

10.0

12.0

14.0

16.0

18.0

20.0

22.0

24.0

2

12

22

32

42

52

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20

Profit from Operations (INR Bio) % of Net Sales

#

Profit from Operations is derived from Profit before Tax less Other Income and adding back Finance Costs (Including Interest Cost on Employee Benefit Plans), Net Provision For Contingencies (Others) and Corporate Social Responsibility Expense.


10 Years of Accelerating Net Profit

# 2015 impacted by MAGGI Issue

10 11 11 12 6 10 12 16 20 21 5 5 6 5

12.8 12.9 12.3 12.1

6.9

10.6 12.1

14.3 16.0 15.7 15.9 16.0 16.7

14.1

-

5.0

10.0

15.0

20.0

25.0

-

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20

Net Profit (INR Bio) % of Net Sales

#


14.3 24.2 32.0 32.1 28.4 31.8 33.9 35.8 28.3 20.10

5

10

15

20

25

30

35

40

2011 2012 2013 2014 2015 2016 2017 2018* 2019* 2020

Invested capital : Average Equity + Long Term BorrowingInvested Capital

(INR Billion)

67.6

44.835.6 37.3

19.831.4 36.2

44.9

69.5

103.5

ROIC %

10 Years of Strong Value Creation

Return on Invested Capital (ROIC)

* Restated values post implementation of Accounting Standard on Leases


Leading to….Creating Significant Value For Investors

*As on 31st Dec 2020

INR Billion is INR 100 crore.

Source: Bombay Stock Exchange.

Market Capitalization

INR1,773 Bn

INR50 Bn

2001 2020*

Total Shareholders Return3,324%

20.3%Annualized Return

USD 24.3 Bn(1 USD= INR 73.1)

USD 1.1 Bn(1 USD= INR 47.2)


A Strong Thrust on Innovation

#

1.5

2.7

3.4

4.4 4.3

-

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

2016 2017 2018 2019 2020

New Product Sales % Contribution to Domestic Sales

Over 80 new

products in 5 years

Over 40 New Innovation Projects in Pipeline


Rapidly Accelerating our Footprint – Our Actions

Availability, Visibility & Consumer Connect

Widen Penetration

Consumer Connect

People/StructurePortfolio Visibility

Map not to scale


Rapidly Accelerating our Footprint – Overall Reach

4.0

4.2

4.5

4.6

4.7

1.3

1.3

1.3

1.3

1.4

2.7

2.9

3.2

3.3

3.3

2016

2017

2018

2019

2020

Strengthening Our Distribution Muscle

Indirect Nestlé Direct Reach Total Reach (Nielsen)


Rapidly Accelerating our Footprint - RURBAN

6,486

6,447

6,657

7,012

976

916

1,818

2,780

1000

8,909

51,584

89,288

2016

2017

2018

2019

Enhancing Rural Reach

Villages Covered Wholesale HUB Small Distributors

7935Consistent presence across all Urban towns in last 5 years

~ 120,000 villages by end

2024


Rapidly Accelerating our Footprint – New Channels

20162017

20182019

2020

Contribution

0.6

0.9

1.3

1.9

3.7

GROWING CONTRIBUTION OF E- COMMERCE TO DOMESTIC SALES

2016 2017 2018 2019 2020

2020E-Commerce grew by

111%


Consistent Media Support to Our Brands

1.0x 0.9x 1.3x 1.4x 1.3x 1.0y 0.6y 1.3y 1.6y -

1

2

3

4

5

6

7

8

9

2016 2017 2018 2019 2020 Q1-20 Q2-20 Q3-20 Q4-20

A&SP SpendNote: Year values have been indexed taking 2016 as the base Note: Quarter values have been indexed taking Q1 2020 as the base


Navigating Commodity Headwinds

100 99 105

114 114

2016 2017 2018 2019 2020

100

119110 112 110

2016 2017 2018 2019 2020

100

111

98

115

123

Wheat

Milk

Green Coffee

Indexed with base 2016

Green Coffee6%

100

118

99

133

166

SMP

SMP10%

Milk27%

Wheat10%


People Matter @ Nestlé

9.0 10.2 11.2 12.6 15.0

9.6 10.0 10.0 10.2 11.3

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

-

5

10

15

20

25

30

35

40

2016 2017 2018 2019 2020

Employee Cost (INR Bio) % of Net Sales (Indexed to 2016)

7.6 7.5 7.6 7.7 7.8

1.0x1.1x

1.2x1.3x

1.4x

0

20

40

60

80

100

120

140

160

180

-

2

4

6

8

10

12

14

2016 2017 2018 2019 2020

Number of Employees ('000) Turnover per Employee (indexed to 2016)

Higher due to COVID Related Cost and Long Term Compensation

Arrangements


Sustainable Packaging

Commitments on Water

Responsible Sourcing

Reach Zero Net Green House Gas Emissions

Unwavering Commitment to Sustainability and Tackling Climate Change

1.0x 1.6x 1.8x -

20

40

60

80

100

120

2018 2019 2020

Accelarating our Sustainability Spend

Indexed 2018


We Continue With Our Proven Growth Model

Strong Cost and Efficiency Management

Penetration Led Growth

Investing and Innovating

Competitive advantage through R&D expertise

Brand Salience

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