2006 full year roadshow 2006 full year roadshow - February 2007 Name of chairman 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. 2 2006 full year roadshow - February 2007 Name of chairman Agenda Paul Polman – 2006 update € 2006 Financial highlights € Strategic and operational transformation as drivers of 2006 performance Peter Brabeck – longer term perspective € Strategic and operational transformation as drivers of longer term performance € The demographic opportunity € Popularly positioned products 3 2006 full year roadshow - February 2007 Name of chairman Paul Polman 2006 full year roadshow - February 2007 Name of chairman 2006 Highlights – all metrics improve FY06 total Improvements FY 06 v 05 Sales – total + 8.1% + CHF 7.3 bio CHF 98.5 bio Organic growth + 6.2% EBIT + 12% + CHF 1.4 bio CHF 13.3 bio EBIT margin + 50bps 13.5% Net profit + 13.8% + CHF 1.1 bio CHF 9.2 bio Net profit margin + 40bps 9.3% Working capital + 100 bps - CHF 1.0 bio 6.7% (% of sales) Operating cash flow +14.4% + CHF 1.5 bio CHF 11.7 bio + 70 bps ROIC - before goodwill + 40 bps 21.2% - after goodwill + 30 bps 11.7% 5 2006 full year roadshow - February 2007 Name of chairman Food and Beverages Delivering the Nestlé Model CHF 91.8 bio 5.9% CHF 11.2 bio 12.2% 4.2% 2006 Strong + 7.8% on-going + 11.2% +40bp growth CHF 85.1 bio 6.0% CHF 10.0 bio 11.8% 3.8% 2005* Sales RIG OG EBIT EBIT margin * Restated to be on comparable basis 6 2006 full year roadshow - February 2007 Name of chairman 2006 Highlights € Successful delivery of the Nestlé Model Food and Beverage the driver of growth and profitability Performance improves across all key metrics € Strategic brands drive growth "Billionaire" brands over 70% of F&B sales, with new members Nespresso, Dog Chow, Poland Spring, Nestlé Pure Life € Nutrition, health and wellness transformation Uncle Tobys, Jenny Craig, Novartis Medical Nutrition 60/40+, BABs, Nutritional Compass Divestitures of commoditised low value business € Organisational transformation Leverage GLOBE, accelerate shared services Profit responsibility pushed down the company Stand-alone Nestlé Nutrition and FoodServices 7 2006 full year roadshow - February 2007 Name of chairman "Billionaire Brands" deliver robust growth Growth % BABs AV market growth 8 2006 full year roadshow - February 2007 Name of chairman Nestlé Waters High growth and margin improvement Performance Highlights Sales CHF: 9.6 bio • North America share gains driven by OG: 8.2% Poland Spring, Deer Park, Ozarka and Nestlé Pure Life Mkt share*: € • Nestlé Aquarel growth driver Europe • Panna and S.Pellegrino most successful international brands EBIT +60 bps • Efficiency projects, HOD and growth contribute to improved EBIT margin 8.7% 8.1% 0.7 bio 0.8 bio 2005 2006 * Billionaire Brands 9 2006 full year roadshow - February 2007 Name of chairman Nestlé Waters Growth drivers in 2007 € North America CHF 100bio € Middle East & Turkey market € Mexico € Innovation & renovation in Europe and North America € Water + 10 2006 full year roadshow - February 2007 Name of chairman Powdered & Liquid Beverages Dynamic growth; strong innovation Performance Highlights Sales CHF: 16.3 bio • Mixes & premium drive strong Nescafé performance OG: 7.9% • Succesful launch of Nescafé Dolce Gusto Mkt share*: € • Nespresso grows 40% to over CHF 1 bio 35 boutiques opened in ’06 EBIT -30 bps • MILO: continuous good growth • Ready to drink near double digit growth in 22.4% Americas Nesquik, Juicy Juice 22.7% 3.4 bio 3.6 bio 2005 2006 * Billionaire Brands 11 2006 full year roadshow - February 2007 Name of chairman Powdered & Liquid Beverages Growth drivers in 2007 € BRIC CHF 60bio € Dolce Gusto Market* € Nespresso – boutique openings € Nescafé 3-1; Cappuccino € Nesquik / Nescafé RTD € MILO - continued growth *Coffee 12 2006 full year roadshow - February 2007 Name of chairman Nutrition: transition year to global business Move into Weight Management Performance Highlights Sales CHF: 6 bio • Growth up by 200 bps in H2 OG: 6.1% • Innovation in infant formula Mkt share: & cereals key drivers • NAN HA & NAN probiotic roll-out at 85% EBIT -80 bps • Leader in 3 out of BRIC • Successful Nestlé Nutrition set-up 16.9% 17.7% • Phasing of start-up costs • Jenny Craig 30% growth but EBIT impact 0.9 bio 1.0 bio 2005 2006 13 2006 full year roadshow - February 2007 Name of chairman Nutrition Growth drivers for 2007 € Further roll-out of NAN HA & NAN probiotic to 95% € Innovation across Infant Formula Boost ReSource Optifast € PowerBar relaunch € Jenny Craig € Medical Nutrition integration NovaSource IsoSource Vivonex CHF 100bio Peptinex Impact Compleat Market 14 2006 full year roadshow - February 2007 Name of chairman Dairy: Milk products build on success Ice cream improves Performance Highlights Sales CHF: 19.5 bio Milk products OG: 5.1% • Americas & AOA grew 8%+ on shelf stable Mkt share* (MP):€ • Key drivers: Nido, Ninho, Bear Brand, Focus on segmentation / value-add Mkt share* (IC): € • CoffeMate grew double digit - good consumer understanding and interaction EBIT +100 bps Ice cream 10.3% • Dreyer’s “Quality of sales” strategy improved margin 9.3% • Eskimo pie to strengthen impulse position • Successful product launches in Western 1.7 bio 2.0 bio Europe building on low fat and Dibs innovation • Balanced top and bottom line growth for ‘07 2005 2006 * Billionaire Brands 15 2006 full year roadshow - February 2007 Name of chairman Dairy and Ice cream Growth drivers 2007 Dairy € BRIC opportunity € Children 1-5 – Nido € Adult nutrition – Nesvita € CoffeeMate Ice cream € Super premium in Europe € Continued roll-out of LTF & extensions € Innovation in Impulse CHF 70bio Market* *CHF 30 bio Core Shelf Stable; CHF 40 bio Ice cream 16 2006 full year roadshow - February 2007 Name of chairman Prepared dishes and cooking aids AOA and Americas deliver high growth Performance Highlights Sales CHF: 17.6 bio • Good growth in Frozen in North America OG: 4.8% and France (Davigel) Mkt share*: • Stouffer’s and Lean Cuisine star in US, € Panini launch exceeds $100mio • Hot Pockets US growth poor but good EBIT +10 bps margin • Double digit growth in Culinary from Maggi 13.2% and local brands in AOA 13.1% • Buitoni performs well in Chilled in US and frozen pizza performs well in Europe 2.2 bio 2.3 bio 2005 2006 * Billionaire Brands 17 2006 full year roadshow - February 2007 Name of chairman Prepared dishes and cooking aids Growth drivers in 2007 € Stouffer's, Lean Cuisine € Buitoni Chilled Culinary US € Maggi AOA € Wagner Germany € Hot Pockets acceleration 18 2006 full year roadshow - February 2007 Name of chairman Chocolate, confectionery and biscuits Success in many markets undone by two Performance Highlights Sales CHF: 11.4 bio • Kit Kat* grew 7% - trend to lighter snacks OG: 2.6% • Latin America, AOA & Eastern Europe strong Mkt share: • Western Europe focused on margins • UK “Magnificent 7” brands achieve share gains EBIT -10 bps • US market declined in '06 • Strong growth in Japan 11.6% 11.5% • Acquisition of Uncle Tobys and move into “Healthy snacking” • Nestlé #1 player in branded dark chocolate, 1.3 bio 1.3 bio high in antioxidants 2005 2006 * Billionaire Brands 19 2006 full year roadshow - February 2007 Name of chairman Chocolate, confectionery and biscuits Growth drivers in 2007 € BRIC opportunity CHF 80bio € KitKat Market € Key local brands € Improvement in the UK 20 2006 full year roadshow - February 2007 Name of chairman PetCare Good growth and margin improvement Performance Highlights Sales CHF: 11.4 bio • Innovation in strategic premium and super premium brands drives profitable growth OG: 7.1 • Beneful sales up 44%: “Healthy” lines, Mkt share: € expansion in Europe & launch of prepared meals EBIT +60 bps • North America: Successful launch of “natural” and “fully organic” lines: ONE 15.1% Naturals, Dog & Cat Chow Naturals and Pro Plan Selects 14.5% • Europe: successful focus on super premium and premium products • High growth on Gourmet, ProPlan, ONE, 1.5 bio 1.7 bio Darling and Beneful driven by innovation and growth in speciality and grocery channels 2005 2006 * Billionaire Brands 21 2006 full year roadshow - February 2007 Name of chairman PetCare Growth drivers in 2007 € Premium and super premium brands CHF 50bio € European roll-outs of successful Market US initiatives € ONE into new markets € Hyper premium wet cat, Perle, Diamante € Continued development of ProPlan 22 2006 full year roadshow - February 2007 Name of chairman Improving performance of Nestlé F&B Finance Focus areas € Drive simplicity to capture scale € Tackle underperformers € Improve capital efficiency € All with discipline in execution 23 2006 full year roadshow - February 2007 Name of chairman Driving Simplicity, scale and Tackling underperformers Simplicity 2006 2007 SKU optimisation -7% -10% Legal Structures 20% of project target -10% Scale GLOBE 80% leverage Shared Services 30% 50% Operational Excellence CHF 1.2 bio CHF 1.2 bio Underperformers Reduce Value Destroyers sales over ongoing CHF 2 bio Capital efficiency Working capital -100bps further improvement 24 2006 full year roadshow - February 2007 Name of chairman Drive simplicity across the business SKU optimisation - Russia Actions Results 140 • Cross-functional team 130 131 • Action plan against each 120 underperforming SKU 118 x e d 110 • Defined responsibilities & timing n I • Hurdles rates for new SKUs 100 • Tracking results • Enabled by GLOBE 90 85 80 Current Portfolio New Portfolio (excluding natural Market growth) EBIT Margin NPS/Sales # SKUs Focus on core SKUs drives financial performance 25 2006 full year roadshow - February 2007 Name of chairman Shared Services Achieve critical mass and sustainability 2006 2007 2008 GNBS (Shared Services) implementation Approx.