Full-year results 2017 Conference 1 | February 15, 2018 - - PowerPoint PPT Presentation

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Full-year results 2017 Conference 1 | February 15, 2018 - - PowerPoint PPT Presentation

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Full-year results 2017 Conference 1 | February 15, 2018 | Nestl full-year results 2017 Disclaimer This presentation contains forward looking statements which reflect Managements current views and estimates. The

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Full-year results 2017 Conference

| February 15, 2018 | Nestlé full-year results 2017 1

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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.

| February 15, 2018 | Nestlé full-year results 2017 2

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Mark Schneider, CEO

| February 15, 2018 | Nestlé full-year results 2017 3

Full-year results 2017

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Key messages

| February 15, 2018 | Nestlé full-year results 2017 4

  • Organic growth at the higher end of industry, at lower end of our

guidance

  • Solid improvement of underlying trading operating margin puts us on

track for our 2020 margin target

  • Continued focus on organic sales growth and operating efficiencies
  • Encouraging progress with our portfolio management strategy
  • 2020 growth and margin targets confirmed
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Underlying TOP margin*

+50 bps

2017 performance highlights

Sales

89.8 bn

Organic growth

+2.4%

| February 15, 2018 | Nestlé full-year results 2017 5

CHF

Real internal growth

+1.6%

* In constant currency

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  • Industry-leading volume growth; all categories

with positive sales growth; UTOP +50 bps*

  • U.S. Confectionery, Atrium, Blue Bottle Coffee…
  • Adjustment of management structures (Nestlé

Nutrition, Nestlé Professional)

  • 18.2% TSR improvement in 2017**

Delivering on our commitments

| February 15, 2018 | Nestlé full-year results 2017 6

Commitments 2017 Achievements

* In constant currency ** In CHF (Source: Bloomberg)

  • Deliver balanced growth with margin

improvement

  • Optimize portfolio
  • Drive speed and simplicity in our global
  • rganization
  • Commitment to long-term value creation
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| February 15, 2018 | Nestlé full-year results 2017 7

Actual 2017 OG (+x)

2.4% Mid-single digit

2020 OG Target Portfolio management Fixing base business High-growth categories 2017 examples:

  • Yinlu stabilized
  • Gerber baby food

line relaunched in U.S. 2017 examples: Acquisitions: Atrium, Blue Bottle Coffee, Sweet Earth, Chameleon Disposals: U.S. Confectionery 2017 examples:

  • E-commerce sales: +32%* OG
  • Nespresso U.S.: mid-teens OG
  • Petcare in emerging markets:

+17% OG

  • Perrier & S. Pellegrino: +7% OG

* Excluding Nespresso

Clear path to achieving mid-single digit growth by 2020

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18.7% 19.2% 19.6% 19.2%

Operating efficiencies driving margin improvement

| February 15, 2018 | Nestlé full-year results 2017 8

FY structural costs* as a % of sales (Manufacturing, Procurement, G&A)

2014 2015 2016 2017

* On comparable basis, excluding Froneri

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Active portfolio management

U.S. Confectionery/Atrium example

| February 15, 2018 | Nestlé full-year results 2017 9

Acquired: USD 2.3 billion

  • Sales:

~USD 700 million

  • 2015-2017 CAGR: double-digit sales growth

Disposed: USD 2.8 billion

  • Sales:

~USD 900 million

  • 2015-2017 CAGR:

negative sales growth

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2018 outlook

| February 15, 2018 | Nestlé full-year results 2017 10

  • Organic sales growth of 2% to 4%
  • Underlying trading operating margin improvement in line with 2020

target

  • Restructuring costs* of around CHF 700 million
  • Increase in underlying EPS** and capital efficiency

* Not including impairment of fixed assets, litigation and onerous contracts ** In constant currency

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François-Xavier Roger, CFO

| February 15, 2018 | Nestlé full-year results 2017 11

Full-year results 2017

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Underlying EPS*

+4.7%

2017 performance highlights

Growth

OG +2.4% RIG +1.6%

+40 bps on a reported basis +4.6% on a reported basis

| February 15, 2018 | Nestlé full-year results 2017

9.5% of sales

Free cash flow

8.5 bn

Underlying TOP margin*

+50 bps

CHF

* in constant currency

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Broad-based growth across geographies

Each geography includes zones, Nestlé Waters, Nestlé Nutrition, Nestlé Professional, Nespresso, Nestlé Health Science and Nestlé Skin Health

AMS EMENA AOA

Sales

(in CHF)

40.7 bn 26.1 bn 23.0 bn RIG 0.6% 1.8% 3.3% OG 1.3% 2.5% 4.3%

| February 15, 2018 | Nestlé full-year results 2017 13

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Accelerated RIG in emerging markets

Developed Emerging

Sales (in CHF)

% of group sales

51.3 bn

57%

38.5 bn

43%

RIG 0.7% 3.0% OG 0.7% 4.8%

| February 15, 2018 | Nestlé full-year results 2017 14

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Driving growth through innovation

| February 15, 2018 | Nestlé full-year results 2017 15

I&R product launches increased by 8% in 2017 Nutrition Culinary Confectionery Coffee Dairy Petcare

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| February 15, 2018 | Nestlé full-year results 2017 16

2012 12 2014 14 2017 17

11% 16% 21%

Premium as % of group sales

Driving value through premiumization

Premium products grew twice as fast as group average in 2017

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| February 15, 2018 | Nestlé full-year results 2017 17

Channel innovation by going direct to consumer

DTC channel contributing an increasing share of sales

2015 2017

6.6% 7.9%

DTC as a % of Group sales

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Underlying TOP +50 bps* driven by structural cost reduction

| February 15, 2018 | Nestlé full-year results 2017 18

Underlying TOP FY 2016 COGS & Distribution Marketing & Administration Underlying TOP FY 2017*

  • 70 bps

+110 bps

16.0%

  • 30

16.5%

Currency impact

  • Commodity

costs

  • Structural cost

reduction

  • Structural cost

reduction

  • Marketing

efficiencies

+10 bps

*In constant currency

40 bps structural cost savings

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6.5% 5.3% 4.7% 2.8% 2.2%

| February 15, 2018 | Nestlé full-year results 2017 19

2013 2014 2015 2016 2017

Further progress on working capital

Working capital as a % of sales, calculated on a 5-quarter average

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2018 focus

| February 15, 2018 | Nestlé full-year results 2017 20

2018 priorities 2018 outlook

  • Maintain volume growth
  • Margin improvement, in line with our

2020 target

  • Continued focus on structural savings

program

  • Capital efficiency
  • Organic sales growth of 2% to 4%
  • Underlying trading operating margin

improvement

  • Restructuring costs* of around CHF 700m
  • Increase in underlying EPS** and capital

efficiency

* Not including impairment of fixed assets, litigation and onerous contracts ** In constant currency

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Full-year results 2017

| February 15, 2018 | Nestlé full-year results 2017 21

Discussion

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Abbreviations

OG RIG AMS EMENA AOA EPS COGS FCF TOP Underlying TOP/ UTOP Organic growth Real internal growth Zone Americas Zone Europe, Middle East, and North Africa Zone Asia, Oceania, and sub-Saharan Africa Earnings per share Cost of goods sold Free cash flow Trading operating profit Trading operating profit before net other trading income / (expenses). Net other trading income / (expenses) includes restructuring, impairment and results on disposals of PP&E, onerous contracts and litigations.

| February 15, 2018 | Nestlé full-year results 2017 22