Analysts Meet Finance Mar 11

8/4/2019 Analysts Meet Finance Mar 11

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Excerpts from Analysts' Reports 2011Consistent RawCut instrong sa es

growth..Momentumto continue

material

costpressurecontinue

No signs ofcompetitive

pressure

plansfirming up

dividend

payout ratioto 56%

Margins

Performancein line with

Highpricing

Best playon

Strong longterm

growth

GoingBand of

concernpower pac a efoodspotential

,pressure from

input costinflation

Commendablecost

management

strategy

improve dueto price hikes

Fading taxsops reducePAT growth

Input costpressure

Nestle Modeldelivers again

Outperformspeers &

Diversified &dominant

Positivebudget

softensroa mar et pro uctportfolio

measures oboost FMCG

growth


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Analysts' Rating on Nestle India

Bu Sell Hold Not rated

90

100

70

80

(%

)

50

60

30

40

10

20

0

2008 2009 2010 Q1 2011


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INR 62.5 BioINR 11.4 Bio

Full Year highlights

18.2%16.9

22.3INR 8.2 Bio

2010

+ 21.9% + 30 bps

Volumes

& Prices+ INR 2.2 Bio + 25.0%+ INR 11.3 Bio

+ INR 1.6 Bio


18.7

2009

17.9%. .

% %Net Sales

Includes figures from Nestl Internal Reporting Standards

Net Profit


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Successive quarters of double digit growthQ3Q1 Q2 Q4NET SALES

26.4 23.5 22.2 21.7 16.0 16.8 17.6 24.0 16.9 21.3 25.7 23.6% YoY

growth 43.2 Bio = 23.4% 51.3 Bio = 18.6% 62.5 Bio = 21.9%

10.9 10.4 11.1 10.9 12.7 12.1 13.0 13.5 14.8 14.7 16.4 16.7

2008

INR Bio

2009 2010

OPBIT

20.2 16.6 16.8 16.9 22.0 18.6 18.8 12.5 19.2 17.8 18.3 17.6% ofNet Sales

7.6 Bio = 17.6% 9.2 Bio = 17.9% 11.4 Bio =18.2%

2.2 1.7 1.9 1.8 2.8 2.2 2.4 1.7 2.8 2.6 3.0 2.9INR Bio


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Doubled sales in less than 4 years

22.316.9

24.2

.

20.0

16.2

23.319.8

. . . .

2007 2008 2009 2010

RIG & OG are basis Nestl Internal Reporting Standards in relation to third party sales only


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Our strong pillars

% Share% Share

Chocolate &

26.027.5

.. Confectionery

Prepared Dishes

14.913.6

Beverages

Milk Products &

.. u r on

2010 2009


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All the pillars grow

x = 17.0 Prepared Dishes &

17.230)

Milk Products& Nutrition

oo ng s

27 8

9.1

20

25

rowth(% x

=21Chocolate &

15ValueG

.9Confectionery

.

5

10

Beverages

-

0 5 10 15 20 25 30

Volume Growth (%)

Bubble shows Net Sales (INR Bio)

2010


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Our Cost Structure

2010 200948.9 % Net Sales

47.7

One-Offcost

5.0 4.8

6.9 8.4 Effectiveincrease14.0%

.

4.73.5

3.1

.

2.0

2.2

3.03.14.3 2.2 1.32.44.3 2.7 1.6 1.1INR Bio 30.6 24.5

Figures have been regrouped / reclassified to make them comparable. Not to scale


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Margins remain within a healthy band

18.217.9

17.617.5

7.6 9.2 11.46.1

25

OPBIT (INR Bio) OPBIT % of Net Sales


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OPBIT Bridge

120 bps

Mix

One-Off in2009

30 bps

20 bpsMaterials

Others

Scale

ASP and

60 bps

18.2%Power & Fuel

mpa rmen s. anDistribution

OPBIT2009

OPBIT2010

% & bps are with reference to Net sales


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Increased selling prices while retaining growth

5.35.4

7.06.6Price increase

.(RIG)

14.3 14.9 19.6 18.7 16.9

1 2 3 4 Full Year

Material Cost as % ofNet Sales

. . . . .

2010 49.8 49.0 49.1 47.6 48.9

Change

bps


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Effective tax rate 100% tax holiday drops to30% from 1 Apr 2011 for5 years at PANTNAGARFACTORY

33.9 34.0 34.033.4

29.8

. .

. . . .

2007 2008 2009 2010

Tax Expense (INR Bio) Marginal Tax Rate (%) Effective Tax Rate (%)

Excludes Fringe Benefit & Dividend Distribution Tax


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Operating working capital within tolerance levels,

5.15.4

4.6.

2.3 2.4 3.12.0

Operating working capital (INR Bio) % of Net Sales

O eratin Workin Ca ital = Inventories + Debtors Trade Pa ables excludin Staff

Basis Nestl Internal Reporting Standards

Costs, Contingencies, Capex & Taxes)

Operating Working capital is average for 5 quarter end data points


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Operating cash flow back to normal levelsEmployees Cost

Payables

16.6.

14.8 15.5

. .. .

2007 2008 # 2009 2010

Operating cas f ows (INR Bio) % of Net Sa es

# excludes one off inflows. Reported 16.7%


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How have we used the cash generated from operations ?

Cash

Generated 5.2 7.2 9.3 10.4

(INR Bio)

13.4 14.04.5

71.7 51.758.5

52.5

(%)

32.5 34.9 27.5 .

(4.2)2007 2008 2009 2010

Cash retained Dividends Fixed Assets


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ROIC is 5 times ACC

61 62 62 64

49

3.3 4.1 4.9 6.2

2007 2008 2009 2010

Economic Profit (INR Bio) Economic Profitability (%) Return on Invested Capital (%)

ACC % 11.3 11.6 12.8 12.9

Risk Free rate % 7.7 7.9 8.5 8.0

Basis Nestl Internal Reporting Standards

Group risk 2.5 2.5 3.0 3.5

Premium%


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Retained shareholders wealth increases &ROE % decreases

8.6

1179 1544 1987 3021

Average

SharePrice (INR)

99

113 113

96

4.7

.

4.267.9

84.9

48.548.555.4

42.933.0

2007 2008 2009 2010

Period end Shareholders fund (INR Bio) DPS (INR) EPS (INR) ROE %


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CAPEX on high trajectory

6.5

7.1

5.9

4.74.8

..

5.8

1.7 2.8 2.4 4.5 7.70.7 1.0 0.7

2007 2008 2009 2010

Capex (INR Bio) Commitment Capex as % of Net sales FA Rotation

Dep. 0.64 0.82 1.01 1.19(INR Bio)

Fixed Assets exclude Intangibles

Capex excludes Capital advances which are shown in commitments


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Impact of Union Budget 2011

Impact basis 2010 actualBUT without factorin miti atin measures

~(Excise Duty & Service Tax)

Positive impact in Direct Taxes ~ 10 bps

Negative impact on PAT ~ 22 bps


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Volatility in commodity prices!

March 2011

1/Mar

2/Mar

3/Mar

4/Mar

5/Mar

6/Mar

7/Mar

8/Mar

9/Mar

10/Mar

11/Mar

12/Mar

13/Mar

14/Mar

15/Mar

Indexed with base 1 March 2011

Sugar - LIFFE Robusta - LIFFE Arabica - ICE Palm Oil - BMD Wheat - CBOT


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Nestl India's Commodity Basket Price Index

123

110 112+11

+12

2007 2008 2009 2010


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Green500

Key Raw Materials 2010

0.9

2.3

1.2

Coffee

60Mio)

Fats

represents consumption in (INR Bio)

2.0.

2.1

2.5

(500)

Oil Cocoa

ange(IN

MSK

Flour Sugar

fpricec

res

Impacto

.(1500)

Price indices (%)

(2000) Total Adverse Price Variance INR 2.4 Bio

Impact of price change & Price indices reflect YoY change. Based on production and Internal Accounting Standards


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Fresh Milk Fat prices 20.1 % over 2009Current

.152.5

.154.9

132.2

138.7

118.8122.4

118.5

123.4

115.0

110.1

105.2

.

111.1

100.0

Q 1 Q2 Q3 Q4

2007 2008 2009 2010

Indexed with base Q1-07


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MSK prices 12.3 % over 2009140.9

Current

119.0

113.3

108.3

109.7 110.4109.2

100.0

105.1

108.7 10 .7105.4

98.6

98.

96.3

95.5.

Q 1 Q2 Q3 Q4

2007 2008 2009 2010



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Green Coffee prices 10.4 % over 2009156.9Current

128.4 135.0131.1132.5

117 0119.7 118.6

114.3

109.3

100.0 100.1101.6

104.0102.8

100.499.1

2007 2008 2009 2010



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Wheat Flour prices 8.5% over 2009

120.1

.

117.4

116.1

112.6

Current

103.5102.1 102.1102.4106.2

100.8100.0

97.2

.101.0

.

.

Q 1 Q2 Q3 Q4

2007 2008 2009 2010



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Palm Oil prices 6.4 % over 2009123.2Current

119.7 119.2.

114.4

102.0107.3

106.5

99.7100.1100.0

91.5

82 0

87.8

.87.6

88.2

Q 1 Q2 Q3 Q4

47

2007 2008 2009 2010



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CurrentEvolution Crude Oil Prices [NYMEX]

99USD/Barrel

Mean 201079.9 USD/Barrel

ean62.1 USD/Barrel

.

New York Mecantile Exchange


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Fuel Oils

30.2

23.5

+28.5%

34.1 30.7+11.4%

Furnace Oil HSD

2010 2009Price - Rs./ltr

Share % in total Power & Fuel cost

Furnace Oil ~ 49%

HSD ~ 14%


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COFFEE ROBUSTA [LIFFE]

London International Financial Futures Exchange


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COFFEE ARABICA [ICE]

Inter Continental Exchange


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SUGAR [LIFFE]

London International Financial Futures Exchange


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PALM OIL [BMD]

Bursa Malaysia Derivatives


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Fourth Quarter highlights

17.6%18.7

25.7INR 2.0 Bio

Oct-Dec 10

+ 23.6% + 510 bps

Volumes

& Prices+ INR 1.3 Bio + 80.1%+ INR 3.2 Bio

+ INR 0.9 Bio

INR 13.5 Bio23.722.5

12.5%

.

Oct-Dec 09

INR 1.1 Bio

% %Net Sales

Includes figures from Nestl Internal Reporting Standards

Net Profit

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Analysts Meet Finance Mar 11

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