nestle india financial analysts meet
TRANSCRIPT
-
8/9/2019 Nestle India Financial Analysts Meet
1/48
Nestl India Limited
Financial Analysts Meet
May 17 , 2007
-
8/9/2019 Nestle India Financial Analysts Meet
2/48
Agenda
Opening Remarks Martial Rolland
Key Financials Shobinder Duggal
Questions & Answers All
-
8/9/2019 Nestle India Financial Analysts Meet
3/48
This presentation may contain statements which reflect
Managements 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 viewsbeing expressed. Potential risks and uncertainties
include factors such as general economic conditions,
availability and prices of commodities, competitive
products and pricing pressures and regulatorydevelopments etc.
Responses can only be given to questions, which are not
price sensitive.
Disclaimer
-
8/9/2019 Nestle India Financial Analysts Meet
4/48
Opening Remarks
-
8/9/2019 Nestle India Financial Analysts Meet
5/48
Over to SHD
-
8/9/2019 Nestle India Financial Analysts Meet
6/48
Key Financials
-
8/9/2019 Nestle India Financial Analysts Meet
7/48
Q1 07
Q1 06
R I G O G E B I T
m a r g i n
G r o s s S a l e s
I N R 9 . 0 B i o
I N R 7 . 2 B i o
+ 24.7% +150bp
1 7 . 9 %
1 6 . 4 %
Strong
on-goinggrowth
1 7 . 9 %
2 2 . 0 %
1 2 . 4 %
9 . 3 %
E B I T
+ 36.2%
I N R 1 . 6 B i o
I N R 1 . 2 B i o
Snap shot of the quarter
All calculations are based on non-rounded figures
PAT crosses INR 1 Billion milestone
-
8/9/2019 Nestle India Financial Analysts Meet
8/48
Our Business
We manage a diversified food & beverages business
addressing different need states having a complex
value chain with focus on value drivers to enhance
total shareholders return.
We maintain a high standard of Corporate
Governance and are a responsible corporate citizen.
-
8/9/2019 Nestle India Financial Analysts Meet
9/48
Our Structure
A Multi-focal Organization with an agile fleet of businesses
-
8/9/2019 Nestle India Financial Analysts Meet
10/48
The Good Food Good Life Portfolio
Convenience, Pleasure, Nutrition, Health, Wellness
Purc
hasingPowe
r
-
8/9/2019 Nestle India Financial Analysts Meet
11/48
Complex Value Chain
Some Examples
Number of Stock Keeping Units 390
Number of Product Recipes 400
Number of Ingredients 330
Number of Packing Materials 800
Number of Quality Tests Performed 190
-
8/9/2019 Nestle India Financial Analysts Meet
12/48
Driving Total Shareholders Return
1. Sales Growth
2. Profit Margin
3. Working Capital Intensity
4. Fixed Capital Intensity
5. Income Tax Rate
6. Cost Of Capital
7. Value Growth Duration
The Value Drivers
-
8/9/2019 Nestle India Financial Analysts Meet
13/48
SALES GROWTH (1)
-
8/9/2019 Nestle India Financial Analysts Meet
14/48
2 0 . 6
2 2 . 9
2 3 . 9
2 6 . 7
2 9 . 7
7 . 3
9 . 1
1 7 . 9
2 2 . 0
1 1 . 3
1 0 . 4
7 . 9
9 . 7
9 . 3
4 . 4
6 . 3
1 1 . 5
1 2 . 1
1 1 . 4
1 2 . 4
1 2 . 1
5 . 0
1 0 . 0
1 5 . 0
2 0 . 0
2 5 . 0
3 0 . 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
G
r
o
s
s
S
a
l
e
s
i
n
I
N
R
B
i
o
4
8
1 2
1 6
2 0
2 4
(
%
)
R
I
G
&
O
G
G r o s s S a l e s I N R B i o R e a l I n t e r n a l G r o w t h ( % ) O r g a n i c G r o w t h ( % )
Sales Evolution
Basis Nestle Internal Reporting Standards
-
8/9/2019 Nestle India Financial Analysts Meet
15/48
6 . 2 5 . 4 6 . 0 6 . 1 6 . 6 6 . 5 6 . 7 6 . 7 7 . 2 7 . 0 7 . 5 7 . 7 9 . 0
4 . 5
6 . 0
7 . 5
9 . 0
Q 1 - 0 4 Q 2 - 0 4 Q 3 - 0 4 Q 4 - 0 4 Q 1 - 0 5 Q 2 - 0 5 Q 3 - 0 5 Q 4 - 0 5 Q 1 - 0 6 Q 2 - 0 6 Q 3 - 0 6 Q 4 - 0 6 Q 1 - 0 7
Consistently grown over the quarters
Gross sales including excise duty
Sales
i
n
I
N
R
B
i
o
-
8/9/2019 Nestle India Financial Analysts Meet
16/48
V o l u m e ( 0 0 0 T o n s ) V a l u e
@
( I N R B i o )
Q 1 0 7 Q 1 0 6 V a r % Q 1 0 7 Q 1 0 6 V a r %
D o m e s t i c
6 1 . 9 5 3 . 4 1 6 . 0 8 . 1 6 . 7 2 1 . 3 #
E x p o r t s
4 . 7 3 . 4 3 6 . 0 0 . 9 0 . 5 6 9 . 9
T o t a l
6 6 . 6 5 6 . 8 1 7 . 2 9 . 0 7 . 2 2 4 . 7
D o m e s t i c
C o n t r . %
9 3 . 0 9 3 . 9 ( 0 . 9 ) 9 0 . 4 % 9 3 . 0 % ( 2 . 6 )
E x p o r t s
C o n t r . %
7 . 0 6 . 1 0 . 9 9 . 6 % 7 . 0 % 2 . 6
Channel-wise Sales
@ Gross Sales including excise duty# Net Domestic Sales up 24.3%
All calculations are based on non-rounded figures
-
8/9/2019 Nestle India Financial Analysts Meet
17/48
Balancing Export Portfolio
INR Bio
7 2
6 7
4 8
4 4
3 2
3 5
2 9
2 8
3 3
5 2
5 6
6 8
6 5
7 1
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
E x p o r t s t o R u s s i a O t h e r s
2 . 62 . 42 . 6 2 . 8 2 . 4 0 . 5
Contr.
(%)
0 . 9
-
8/9/2019 Nestle India Financial Analysts Meet
18/48
3,801 3,193
1,472
1,798 1,320
1,900
1,2261,495
Q1 07 Q1 06
Milk Products and Nutrition Beverages
Prepared Dishes and Cooking Aids Chocolate and Confectionery
7,2108,994 INR Mio.
42.3%
20.0%
21.1%
16.6%
44.3%
20.4%
18.3%
17.0%
G r o s s S a l e s i n c l u d i n g e x c i s e d u t y
A Balanced Product Portfolio
-
8/9/2019 Nestle India Financial Analysts Meet
19/48
Product Categories: Jan - Mar 2007
1 . 5
9 . 0
3 . 8
1 . 8
1 . 9
1 5
2 0
2 5
3 0
3 5
4 0
6 1 2 1 8 2 4 3 0 3 6
V o l u m e G r o w t h ( % )
O
r
g
a
n
i
c
G
r
o
w
t
h
(
%
)
T o t a l
C h o c o l a t e &
C o n f e c t i o n e r y
M i l k P r o d u c t s &
N u t r i t i o n
B e v e r a g e s
P r e p a r e d D i s h e s &
C o o k i n g A i d s
B u b b l e s i z e r e p r e s e n t s G r o s s S a l e s ( I N R B i o )
-
8/9/2019 Nestle India Financial Analysts Meet
20/48
2 1 . 1
2 0 . 0
1 6 . 6
4 2 . 3
2 6 . 0
2 8 . 1
2 0 . 0
2 2 . 0
2 4 . 0
2 6 . 0
2 8 . 0
3 0 . 0
Q 1 0 6 Q 1 0 7
3 . 2
3 . 8
3 . 0
3 . 5
4 . 0
Q 1 0 6 Q 1 0 7
Milk Products & Nutrition
S a l e s V o l u m e ( 0 0 0 t o n s )
8 . 0 %
S a l e s ( I N R B i o )
1 9 . 0 %
M a r k e t L e a d e r i n B a b y F o o d s a n d
S w e e t e n e d C o n d e n s e d M i l k
V e r y c l o s e t o m a r k e t l e a d e r i n
I n f a n t F o r m u l a
N o . 2 i n D a i r y W h i t e n e r
G r o w i n g p r e s e n c e i n F r e s h D a i r y
C o n t r i b u t i o n t o T o t a l S a l e s
Q 1 0 7
-
8/9/2019 Nestle India Financial Analysts Meet
21/48
2 0 . 0
1 6 . 6
2 1 . 1
4 2 . 3
C o n t r i b u t i o n t o T o t a l S a l e s
Q 1 0 7
5 . 5
6 . 5
5
6
7
Q 1 0 6 Q 1 0 7
S a l e s ( I N R B i o )
1 . 5
1 . 9
1 . 0
1 . 5
2 . 0
Q 1 0 6 Q 1 0 7
2 9 . 1 %
1 6 . 8 %
Beverages
S a l e s V o l u m e ( 0 0 0 t o n s )
M a r k e t L e a d e r i n I n s t a n t C o f f e e
-
8/9/2019 Nestle India Financial Analysts Meet
22/48
4 2 . 3
2 1 . 1
1 6 . 6
2 0 . 0
C o n t r i b u t i o n t o T o t a l S a l e s
Q 1 0 7
1 . 3
1 . 8
1 . 0
1 . 5
2 . 0
Q 1 0 6 Q 1 0 7
3 6 . 3 %
1 6 . 9
2 2 . 5
1 5 . 0
1 7 . 0
1 9 . 0
2 1 . 0
2 3 . 0
Q 1 0 6 Q 1 0 7
S a l e s V o l u m e ( 0 0 0 t o n s )
Prepared Dishes & Cooking Aids
3 3 . 1 %
S a l e s ( I N R B i o )
M a r k e t L e a d e r i n i n s t a n t N o o d l e s
a n d K e t c h u p s
N o . 2 i n H e a l t h y S o u p s
-
8/9/2019 Nestle India Financial Analysts Meet
23/48
4 2 . 3
2 1 . 1
2 0 . 0
1 6 . 6
C o n t r i b u t i o n t o T o t a l S a l e s
Q 1 0 7
1 . 2
1 . 5
0 . 8
1 . 2
1 . 6
Q 1 0 6 Q 1 0 7
8 . 3
9 . 5
7
8
9
1 0
Q 1 0 6 Q 1 0 7
Chocolate & Confectionery
S a l e s V o l u m e s ( 0 0 0 t o n s )
1 4 . 3 %
S a l e s ( I N R B i o )
2 2 . 0 %
M a r k e t L e a d e r i n W a f e r s a n d
w h i t e c h o c o l a t e s
N o . 2 i n C h o c o l a t e s
M a r k e t L e a d e r i n E c l a i r s w i t h
3 2 . 4 % v o l u m e s h a r e .
-
8/9/2019 Nestle India Financial Analysts Meet
24/48
PROFIT MARGINS (2)
l i f O i i
-
8/9/2019 Nestle India Financial Analysts Meet
25/48
4 . 0 4 . 5 1 . 8 4 . 7 1 . 2 1 . 6 4 . 4 5 . 4 5 . 2 1 . 4 3 . 5 4 . 6 4 . 03 . 9
1 9 . 9
1 8 . 6
1 8 . 3
1 9 . 7
1 9 . 0
1 9 . 5 1 9 . 5
1 7 . 9
1 7 . 1
1 7 . 5
1 6 . 9
1 7 . 6
1 6 . 4
1 6 . 0
0 . 0
1 . 0
2 . 0
3 . 0
4 . 0
5 . 0
6 . 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
3
6
9
1 2
1 5
1 8
2 1
E B I T D - I N R . B i o E B I T - I N R . B i o E B I T D % o f G r o s s S a l e s E B I T % o f G r o s s S a l e s
Evolution of Operating Margins
I N R B i o .
-
8/9/2019 Nestle India Financial Analysts Meet
26/48
I N R M i o .
Description Q1 07 % NetSales
Q1 06 % NetSales
Var.%
Tot. Expenses - of
which 6,843 79.3 5,421 80.2 26.2Materials
4,149 48.1 3,098 45.8 33.9
Staff Cost646 7.5 543 8.0 19.0
Advt. + salesPromotion
399 4.6 391 5.8 1.9
Distribution 385 4.5 306 4.5 25.6
Power & Fuel 313 3.6 279 4.1 12.1
Total Expenditure
P r e v i o u s p e r i o d f i g u r e s h a v e b e e n r e g r o u p e d / r e c l a s s i f i e d t o m a k e t h e m c o m p a r a b l e .
l lk
-
8/9/2019 Nestle India Financial Analysts Meet
27/48
9 7
1 0 9
1 1 6
1 0 3
9 1
9 5
1 0 0
9 7
8 8
9 4
9 7
1 0 6
9 5
8 0
9 0
1 0 0
1 1 0
1 2 0
1 3 0
Q 1 Q 2 Q 3 Q 4
Period
Indexe
d
price
Per
Kg
Evolution Milk Fat Prices
122
Current
Indexed with base Q1-04
2004
2005
2006
2007
E l i Milk F P i
-
8/9/2019 Nestle India Financial Analysts Meet
28/48
1 0 0
8 8
9 5
1 1 6
1 0 3
9 4
9 7
9 5
9 7
1 0 6
9 1
9 7
1 0 9
8 0
9 0
1 0 0
1 1 0
1 2 0
2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7
Q 1 Q 2 Q 3 Q 4
Indexed Price per kg
Evolution - Milk Fat Prices
Indexed with base Q1-04
E l ti G C ff P i
-
8/9/2019 Nestle India Financial Analysts Meet
29/48
1 0 1
1 2 1
1 5 2
1 5 3
2 3 8
1 0 0
1 0 0
1 0 1
1 1 4
1 8 7
1 7 0
1 7 4
1 5 8
9 0
1 1 0
1 3 0
1 5 0
1 7 0
1 9 0
2 1 0
2 3 0
2 5 0
Q 1 Q 2 Q 3 Q 4
Period
Indexedp
rice
perKG
236 Current
Evolution Green Coffee Prices
Indexed with base Q1-04
2004
2005
2006
2007
E l ti HVF P i
-
8/9/2019 Nestle India Financial Analysts Meet
30/48
9 8
8 8
9 0
8 7
108
1 0 2
1 0 0
1 0 6
9 3
9 4
9 6
1 0 1
1 0 3
8 0
9 0
1 0 0
1 1 0
Q 1 Q 2 Q 3 Q 4
Period
Indexed
pr
ice
perKG
108
Current
Evolution HVF Prices( 3 2 9 m i o , 1 2 % o f R M c o s t s , 5 % o f N e t S a l e s )
Indexed with base Q1-04
2004
2005
2006
2007
Evolution Sugar Prices
-
8/9/2019 Nestle India Financial Analysts Meet
31/48
1 1 6
1 2 8
1 3 2
1 2 0
1 1 1
1 0 0
1 1 3
1 3 4
1 3 0
1 3 8
1 4 5
1 4 6
1 4 1
100
110
120
130
140
150
Q 1 Q2 Q3 Q4Period
Indexed
price
perKG
117
Current
Evolution Sugar Prices( 3 2 9 m i o , 1 2 % o f R M c o s t s , 5 % o f N e t S a l e s )
Indexed with base Q1-04
2004
2005
2006
2007
Evolution Wheat Flour Prices
-
8/9/2019 Nestle India Financial Analysts Meet
32/48
1 0 4
9 6
9 7
1 0 4
1 3 9
9 6
1 0 0
9 5
9 9
1 1 5
1 1 6
1 1 8
1 3 5
9 0
1 0 0
1 1 0
1 2 0
1 3 0
1 4 0
Q 1 Q 2 Q 3 Q 4
Period
Indexedp
rice
perKG
127 Current
Evolution Wheat Flour Prices( 3 2 9 m i o , 1 2 % o f R M c o s t s , 5 % o f N e t S a l e s )
2004
2005
2006
Indexed with base Q1-04
2007
Evolution of Net Profit Margins
-
8/9/2019 Nestle India Financial Analysts Meet
33/48
1.12.0 2.6 2.5 3.1 3.2 0.9
9.8
11.5
10.6
11.7
10.7
12.3 12.1
0 . 5
1
1 . 5
2
2 . 5
3
3 . 5
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
0
2
4
6
8
10
12
14
A m o u n t % o f G r o s s S a l e s
Evolution of Net Profit Margins
INR Bio.
-
8/9/2019 Nestle India Financial Analysts Meet
34/48
WORKING CAPITAL INTENSITY (3)
Operating Working Capital
-
8/9/2019 Nestle India Financial Analysts Meet
35/48
Operating Working Capital
INR Mio
5.8%6.5%As % of Gross Sales
1,6912,356Operating Capital tied up
1,9342,424Less: Payables
3,1634,094Inventories
462686Receivables from Customers
31s t Mar
2006
31s t Mar
2007
Basis Nestle Internal Reporting Standards
P a y a b l e s e x c l u d e a m o u n t s p a y a b l e o n a c c o u n t o f t a x e s , S t a f f C o s t s , C a p i t a l E x p e n d i t u r e , r e l a t e d
p r o v i s i o n s e t c .
Rotation of Average Operating Working Capital
-
8/9/2019 Nestle India Financial Analysts Meet
36/48
Rotation of Average Operating Working Capital
Times
2 5 . 2
2 7 . 7
3 4 . 8
3 6 . 2
2 3 . 5
2 1 . 8
2 1 . 8
1 6
2 0
2 4
2 8
3 2
3 6
4 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
A d j u s t e d
2 8 . 0
Basis Nestle Internal Reporting Standards andaverage of two period ends
2 9 . 5
2 1 . 4
Investment in Fixed Assets
-
8/9/2019 Nestle India Financial Analysts Meet
37/48
6 8 1 7 4 2 7 8 1 1 , 5 2 2 1 5 5 5 9 6 2 5 7
3 . 0
3 . 1
3 . 0
5 . 2
2 . 9
1 . 7
3 . 6
0
2 0 0
4 0 0
6 0 0
8 0 0
1 0 0 0
1 2 0 0
1 4 0 0
1 6 0 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
1 . 0
3 . 0
5 . 0
7 . 0
A m o u n t % o f G r o s s s a l e s
INR mio. % of Gross sales
D e p . 4 9 4 4 6 3 4 9 1 4 9 8 5 5 5 1 3 1 1 5 3
Investment in Fixed Assets
Rotation of Average Tangible Fixed Assets
-
8/9/2019 Nestle India Financial Analysts Meet
38/48
6.26.3
6.56.6
7.0
7.2
5.4
4.4
4.8
5.2
5.6
6.0
6.4
6.8
7.2
2002 2003 2004 2005 2006 Q1 06 Q1 07
Rotation of Average Tangible Fixed Assets
T i m e s
Basis Nestle Internal Reporting Standards
-
8/9/2019 Nestle India Financial Analysts Meet
39/48
INCOME TAX RATE (5)
Evolution of Tax Rate
-
8/9/2019 Nestle India Financial Analysts Meet
40/48
3 6 . 8
3 6 . 6
3 4 . 5
3 3 . 7
3 4 . 7
3 4 . 4
3 5 . 0
3 3 . 3
3 3 . 7
3 5 . 9
3 3 . 7
3 5 . 3
3 3 . 5
3 3 . 6
3 0
3 2
3 4
3 6
3 8
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
M a r g i n a l R a t e % E f f e c t i v e R a t e %
( r a t e s a r e a % o f p r e - t a x p r o f i t e x c l u d i n g F B T )
%
-
8/9/2019 Nestle India Financial Analysts Meet
41/48
COST OF CAPITAL (6)
Evolution Cost of Capital
-
8/9/2019 Nestle India Financial Analysts Meet
42/48
9 . 4
9 . 7
1 0 . 8 1 0 . 8
1 1 . 2
7 . 2
5 . 3
6 . 6
7 . 2 7 . 2
7 . 7
1 0 . 5
1 4 . 2
9 . 0
0 . 0
3 . 0
6 . 0
9 . 0
1 2 . 0
1 5 . 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
WACC Risk Free Rate
p
Basis Nestle Internal Reporting Standards
-
8/9/2019 Nestle India Financial Analysts Meet
43/48
VALUE GROWTH DURATION (7)
Value Growth Duration
-
8/9/2019 Nestle India Financial Analysts Meet
44/48
TSR of 94% over the last 13 quarters.
Market Capitalization increased by 75% overlast 13 quarters - INR 63 Bio. to INR 110 Bio.
Top performer on Return on Capital employed
Amongst top performers on Return on Equity
Performance since last Analyst Meet
-
8/9/2019 Nestle India Financial Analysts Meet
45/48
7 5
8 0
8 5
9 0
9 5
1 0 0
1 0 5
1 1 0
D e c - 0 6 J a n - 0 7 F e b - 0 7 M a r - 0 7 A p r - 0 7 M a y - 0 7
N e s t l e B S E F M C G I n d e x B S E S E N S E X
1 4 , 1 2 7
1 , 1 2 4
1 , 8 3 9
Returning cash to Shareholders
-
8/9/2019 Nestle India Financial Analysts Meet
46/48
1 8 . 0
2 0 . 0 2 0 . 0
2 5 . 0
2 5 . 5
2 0 . 9 2 7 . 3 2 6 . 1 3 2 . 1 3 2 . 7 9 . 2 1 1 . 3
2 0 0 2 0 0
2 5 5
1 8 0
2 5 0
0
5
1 0
1 5
2 0
2 5
3 0
3 5
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
1 0 0
3 0 0
D P S E P S %
I
N
R
/
S
h
a
r
e
2 0 0 4 - E x c l u d e s s p e c i a l d i v i d e n d o f I N R 4 . 5 / S h a r e
1 . 7 1 . 9 1 . 9 2 . 4 2 . 5
D i v i d e n d
( I N R B i o )
D
i
v
i
d
e
n
d
a
s
a
%
o
f
S
h
a
r
e
C
a
p
i
t
a
l
2 0 0 6 1 s t i n t e r i m 6 0 % M a y 0 6
2 0 0 7 1 s t i n t e r i m 6 5 % M a r 0 7
Creating Shareholder Wealth
-
8/9/2019 Nestle India Financial Analysts Meet
47/48
1 . 8 2 . 3 2 . 2 2 . 7 2 . 7 0 . 8 1 . 0
1 0 1 . 9
6 9 . 7
7 8 . 5
8 7 . 4
8 1 . 0
8 0 . 1
7 8 . 9
8 2 . 1
5 4 . 0
4 9 . 0
6 0 . 0
6 1 . 1
7 9 . 0
5 9 . 4
0 . 5
1 . 0
1 . 5
2 . 0
2 . 5
3 . 0
2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 Q 1 0 6 Q 1 0 7
E
P
(
E
c
o
n
o
m
i
c
P
r
o
f
i
t
a
b
i
l
i
t
y
)
i
n
I
N
R
B
i
o
-
4 0 . 0
8 0 . 0
1 2 0 . 0
( % )
E c o n o m i c P r o f i t I N R B i o R e t u r n o n E q u i t y ( % ) E c o n o m i c P r o f i t a b i l i t y ( % )
EP - Basis Nestle Internal Reporting Standards
QUESTIONS
-
8/9/2019 Nestle India Financial Analysts Meet
48/48
Thank You