Nestl I ndia Limited Financial Analysts Meet Nov 16, 2007 Agenda - - PowerPoint PPT Presentation

Nestlé I ndia Limited Financial Analysts’ Meet Nov 16, 2007

Agenda

Opening Remarks Martial Rolland Key Financials S hobinder Duggal Questions & Answers All

This presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward looking statements. The future involves certain risks and uncertainties that could cause actual results to differ materially from the current views being expressed. Potential risks and uncertainties include factors such as general economic conditions, availability and prices of commodities, competitive products and pricing pressures and regulatory developments etc. Responses can only be given to questions, which are not price sensitive.

Disclaimer

Opening Remarks

Over to SHD

Jan-Sep 07

RIG OG Gross Sales INR 27.1 Bio

INR 21.7 Bio

+ 24.7% +110bp

17.7% 16.6%

Volumes & Prices

20.1% 24.0%

11.7%

9.5% EBIT

+ 32.7%

INR 4.8 Bio INR 3.6 Bio

Snap shot

All calculations are based on non-rounded figures

Jan-Sep 06

Economic Profit

+ 30.7%

INR 2.8 Bio INR 2.1 Bio

Includes Figures from Nestle Internal Reporting Standards

What is delivering the results? Innovation & Renovation Organization Structure GLOBe Nutrition, Health & Wellness Consumer Insight Indian Economy Operational Efficiency People Engagement

SALES GROWTH (Value Driver -1)

20.6 22.9 23.9 26.7 29.7 22.0 27.4

24.0 20.1

• 4. 4

9.5 9.7

• 7. 9

10.4 11.3

• 12. 1

11.7 11.4 12.1 11.5

• 6. 3

10.0 14.0 18.0 22.0 26.0 30.0 34.0 2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

G ros s S ales in IN R B io

7 14 21 28

(% ) R IG & O G

Gross Sales INR Bio Real Internal Growth (% ) Organic Growth (% )

Sales Evolution

Basis Nestle Internal Reporting Standards

Growth over the quarters

• 1. 26
• 1. 23
• 1. 12
• 1. 03
• 1. 18
• 1. 20
• 1. 23
• 1. 03
• 1. 61
• 1. 46
• 1. 73
• 0.5

1.0 1.5 2.0

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07

INR Bio Gross Sales including excise duty

6.6 6.5 6.7 6.7 7.2 7.0 7.5 7.7 9.0 8.7 9.4

• 4. 5
• 5. 5
• 6. 5
• 7. 5
• 8. 5
• 9. 5

Q1-05 Q2-05 Q3-05 Q4-05 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07

EBIT

Volume (000’ Tons) Value@ (INR Bio) Jan-Sep 07 Jan-Sep 06 Var% Jan-Sep 07 Jan-Sep 06 Var% Domestic 187.4 162.3 15.5 24.8 19.7 25.6# Exports 12.6 12.3 2.4 2.4 2.0 16.3 Total 200.0 174.6 14.6 27.1 21.8 24.7 Domestic

• Contr. %

93.7 92.9 0.8 91.3 90.6 0.7 Exports

• Contr. %

6.3 7.1 (0.8) 8.7 9.4 (0.7)

Channel-wise Sales

@ Gross Sales including excise duty

# Net Domestic Sales up 26.4%

All calculations are based on non-rounded figures

Export sales Jan-Sep 2007 % Contribution

12.2 33.3 5.6 8.2 9.4 31.3 Russia South Asia Europe Asia-Others Africa America

Total Export sales 2,368 Mio

6.7 2.3 64.5 26.5 Beverages Milk Products & Nutrition Prepared Dishes & Cooking Aids Choc & Conf.

11.8 9.7 4.3 5.8 4.4 5.2 3.4 4.3

Jan-Sep 07 Jan-Sep 06

Milk Products and Nutrition Beverages Prepared Dishes and Cooking Aids Chocolate and Confectionery 21.8 27.1 INR Bio. 43.5 21.4 19.3 15.8 44.8 19.7 20.0 15.5

Gross Sales including excise duty

Product Portfolio

Contribution % Contribution %

21.1 33.2 22.3 27.4

%

Product Categories: Jan - Sep 2007

4.3 11.8 5.8 5.2 18 24 30 2 12 22

Volume Growth (% ) Organic Growth (% )

Chocolate & Confectionery Milk Products & Nutrition Beverages Prepared Dishes & Cooking Aids Bubble size represents Gross Sales (INR Bio) X = 24.7 X = 14.6

19.3 21.4 15.8 43.5

78.2 82.0 73 75 77 79 81 83 Jan-Sep 06 Jan-Sep 07 9.7 11.8 9 10 11 12 Jan-Sep 06 Jan-Sep 07

Milk Products & Nutrition

Sales Volume (000’ tons)

4.9%

Sales (INR Bio)

21.1%

• Market Leader in Baby Foods and

Sweetened Condensed Milk

• Very close to market leader in

Infant Formula

• No. 2 in Dairy Whitener
• Growing presence in Fresh Dairy

% Contribution to Total Sales Jan-Sep 07 Innovation & Renovation

21.4 15.8 19.3 43.5

% Contribution to Total Sales

16.5 17.9 16 17 18 Jan-Sep 06 Jan-Sep 07

Sales (INR Bio)

4.3 5.2 4.0 4.5 5.0 5.5 Jan-Sep 06 Jan-Sep 07

22.3% 8.9%

Beverages

Sales Volume (000’ tons)

• Market Leader in Instant Coffee

Jan-Sep 07

Innovation & Renovation

43.5 19.3 15.8 21.4

% Contribution to Total Sales

4.4 5.8 4.0 4.5 5.0 5.5 6.0 Jan-Sep 06 Jan-Sep 07

33.2%

57.0 72.9 50.0 58.0 66.0 74.0 Jan-Sep 06 Jan-Sep 07

Sales Volume (000’ tons)

Prepared Dishes & Cooking Aids

27.8%

Sales (INR Bio)

• Market Leader in instant

Noodles and Ket chups

• No. 2 in Healthy Soups

Jan-Sep 07

Innovation & Renovation

43.5 19.3 21.4 15.8

% Contribution to Total Sales

3.4 4.3 3.0 3.4 3.8 4.2 4.6 5.0

Jan-Sep 06 Jan-Sep 07

22.9 27.2 20 23 26 29

Jan-Sep 06 Jan-Sep 07

Chocolate & Confectionery

Sales Volumes (000’ tons)

18.6%

Sales (INR Bio)

27.4%

• Market Leader in Wafers and

white chocolat es

• No. 2 in Chocolates
• Market Leader in Eclairs

volumes with 32.4% share. Jan-Sep 07

Innovation & Renovation

PROFIT MARGINS (Value Driver -2)

4.0 4.5 5.3 4.7 3.6 4.8 4.4 5.4 5.2 4.1 3.5 4.6 4.0 3.9 19.7 18.9 18.3 19.7 19.0 19.5 19.5 17.7

17.1 17.5 16.9 17.6

16.6

16.0 3.0 4.0 5.0 6.0

2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

6 12 18 24

EBITD-INR.Bio EBIT-INR.Bio EBITD %

• f Gross Sales

EBIT %

• f Gross Sales

Evolution of Operating Margins

INR Bio.

INR Mio. Description Jan-Sep 07 % Net Sales Jan-Sep 06 % Net Sales Var. % Total Expenditure

• of which

21,291 81.6 17,183 82.6 23.9 Materials 12,594 48.3 9,782 47.0 28.7 Staff Cost 2,036 7.8 1,674 8.0 21.6 Advt + Sales Promotion 1,197 4.6 1,002 4.8 19.4 Distribution 1165 4.5 961 4.6 21.2 Power & Fuel 895 3.4 853 4.1 4.8 Depreciation 542 2.1 486 2.3 11.6

Total Expenditure

Figures have been regrouped / reclassified to make them comparable.

3.2 2.0 2.6 2.5 3.1 3.2 2.5 9.8 11.5 10.6 11.7 10.7 11.6 11.8

1.5 2 2.5 3 3.5

2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

4 6 8 10 12 14 16 18

Amount % of Gross Sales

Evolution of Net Profit Margins

INR Bio.

WORKING CAPITAL INTENSITY ( Value Driver -3)

Trade Net Working Capital (TNWC)

INR Mio

30th Sep 2007 30th Sep 2006 Receivables from Customers 588 750 Inventories 3,354 2,288 Less: Trade Payables * 2,171 1,946 TNWC 1,771 1,092 As %

• f Gross Sales (12 rolling months )

4.8 3.7

Basis Nestle Internal Reporting Standards and including affiliated customers and vendors * Excludes payables for taxes, Staff Costs, Capex, provisions for contingencies etc.

Operating Cash Flows

INR Mio

Jan-Sep 2007 Jan-Sep 2006 Operating Cash Flows 3,641 3,095 As %

• f Gross Sales

13.3 14.1

Basis Nestle Internal Reporting Standards

Rotation of Average TNWC

Times

24.6 25.4 34.8 36.2 32.7 25.5 21.8 10 20 30 40

2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

Adjusted

28.0 29.5 27.0

Nestle Internal Reporting Standards. Including affiliated customers and vendors

Average of TNWC at period ends

FIXED CAPITAL INTENSITY ( Value Driver -4)

681 742 781 1,522 849 596 1,054 3.0 3.1 3.0 5.2 2.9 3.1 4.8 200 400 600 800 1000 1200 1400 1600 2002 2003 2004 2005 2006 J-S 06 J-S 07 1.0 3.0 5.0 7.0 Amount %

• f Gross sales

INR mio. %

• f Gross sales
• Dep. 494 463 491 498 555 404

463

Investment in Fixed Assets

6.2 6.3 6.5 6.6 6.6 7.0 5.4 4.4 4.8 5.2 5.6 6.0 6.4 6.8 7.2

2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

Rotation of Average Tangible Fixed Assets

Times

Basis Nestle Internal Reporting Standards

INCOME TAX RATE ( Value Driver -5)

36.8 36.6 33.9 34.7 34.4 35.0 33.3 34.5 33.7 35.9 33.7 34.1 33.6 33.6 30 32 34 36 38 2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

Marginal Rate % Effective Rate %

Evolution of Tax Rate

(rates are a %

• f pre-tax profit excluding FBT)

%

COST OF CAPITAL ( Value Driver -6)

9.4 9.7 10.8 10.8 11.3 7.2 5.3 6.6 7.2 7.2 7.7 10.5 14.2 9.0 0.0 3.0 6.0 9.0 12.0 15.0 2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

WACC Risk Free Rate

Evolution – Cost of Capital

Basis Nestle Internal Reporting Standards

VALUE GROWTH DURATION (Value Driver 7)

1.8 2.3 2.2 2.7 2.7 2.1 2.8 67.0 69.7 78.5 87.4 81.0 62.3 78.9 71.6 54.0 49.0 60.0 61.1 62.1 59.4 1.0 1.5 2.0 2.5 3.0 2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

EP (Economic Profitability) in INR Bio

40 80 120

(% ) Economic Profit INR Bio Return on Equity (% ) Economic Profitability (% )

EP Basis Nestle Internal Reporting Standards Invested Capital basis average at quarterly rests

Creating Shareholder Wealth

18.0 20.0 20.0 25.0 25.5 20.9 27.3 26.1 32.1 32.7 26.2 33.2 200 200 255 180 250 10 15 20 25 30 35

2002 2003 2004 2005 2006 Jan-Sep 06 Jan-Sep 07

100 200 300

DPS EPS %

Returning cash to Shareholders

INR / Share

2004 - Excludes special dividend of INR 4.5 / Share 1.7 1.9 1.9 2.4 2.5 Dividend (INR Bio)

Dividend as a %

• f Share Capital

2006 1st interim 60% May 06 2007 1st interim 65% Mar 07

QUESTIONS

Thank You

25.4 35.9

• 23.4

15.6 11.7

• 40
• 30
• 20
• 10

10 20 30 40

Indexed price increase %

Commodity Prices - Ongoing Challenge

Jan-Sep 06

Reference point - Jan-Sep 2006 prices

Green Coffee Milk Solids Wheat Flour Fats Sugar

Jan-Sep 07

100 88 95 116 103 94 97 122 95 97 106 128 91 97 109 80 90 100 110 120 130 2004 2005 2006 2007

Q1 Q2 Q3 Q4

Indexed Price per kg

Evolution - Milk Fat Prices

Indexed with base Q1-04

COFFEE – ROBUSTA [LIFFE]

COFFEE – PLANTATION [LIFFE]

PALM OIL - KLE

WHEAT - CBOT

SUGAR - LIFFE