2007 full year conference call

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1 2007 full year conference call 2007 full year conference call - 21 February 2008

2 Disclaimer full year conference call - 21 February 2008 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.

3 2007 Highlights full year conference call - 21 February 2008 Successful delivery of the Nestlé Model Food and Beverages the driver of growth and profitability Significant improvement in key metrics despite environment Nutrition, health and wellness transformation Completion of the Healthcare and Gerber acquisitions Annualised sales of over CHF 11 billion for Nestlé Nutrition Organisational transformation agile fleet Individual businesses focused on individual opportunities Strategic brands drive growth Billionaire brands enabling both volume growth & pricing First mover advantage Early identification of input costs & pre-emptive strategies mean they have no material impact on 07 performance

4 2007 Highlights all metrics improve Delivering the Nestlé Model full year conference call - 21 February 2008 Improvements FY 07 v 06 FY 07 Total Sales total +9.2 % + CHF 9.1 bn Organic growth % CHF bn EBIT % + CHF 1.7 bn CHF 15.0 bn EBIT margin + 50 bps 14.0 % Net profit Net profit margin % + 60 bps + CHF 1.4 bn CHF 10.6 bn 9.9 % Working capital (% of sales) - 10 bps 6.6 % Operating cash flow % + CHF 1.7 bn CHF 13.4 bn ROIC - before goodwill - after goodwill bps + 50 bps 22.2 % 12.2 %

5 Food and Beverages All metrics improve full year conference call - 21 February 2008 CHF bn 7.1 % CHF 12.6 bn 12.6 % % Strong % on-going growth % + 40 bps 2006 CHF 91.8 bn 4.2 % 5.9 % CHF 11.2 bn 12.2 % Sales RIG OG EBIT EBIT margin

6 Continued strong growth Group and Food & Beverages full year conference call - 21 February 2008 Total Group CHF bn Food & Beverages CHF bn % RIG % % total % OG % Pricing % % OG % total % Acq./Div % % Exchange Rates % + CHF 9.1 bn + CHF 8.5 bn

7 full year conference call - 21 February 2008 Total Food & Beverages* % Growth % RIG % Organic Growth x.x 0 Sales CHF bn Europe 39.0 Americas 42.5 Asia, Oceania, Africa 18.8 * each region includes sales of Food & Beverages, Nestlé Waters and Nestlé Nutrition businesses, Nespresso and F&B JVs

8 Product groups RIG & organic growth % Growth % RIG % Organic growth Sales CHF bn Powdered & Liquid Beverages (ex-nestlé Waters) Nestlé Waters Dairy (incl. Ice cream) Nestlé Nutrition Prepared dishes & cooking aids Confectionery PetCare Pharma Total Beverages (RIG 6.6 % OG 8.9 %) Total Milk, Nutrition & Ice cream (RIG 2.8 % OG 8.3 %) full year conference call - 21 February 2008

9 14 Primary: RIG & Organic growth % Growth % RIG % Organic Growth Sales CHF bn Zone Europe 28.5 Zone Americas 32.9 Zone AOA 16.6 Nestlé Waters 10.4 Nestlé Nutrition 8.4 Other F&B 3.5 Total F&B full year conference call - 21 February 2008

10 F&B "Billionaire Brands" represent about 70 % of F&B sales full year conference call - 21 February 2008

11 Accelerating trend in pricing % Cumulative Pricing F&B Q1 07 H full year conference call - 21 February M 07 FY

12 2007 Full Year Results Key factors of margin improvement GROUP EBIT MARGIN + 50 bps (+ 60 constant currency) F&B EBIT MARGIN + 40 bps (+ 50 constant currency) 13.5 % + Operation Excellence + Mix - Input costs CHF spend bn Media % up with sales + Trade spend efficiencies + Volume growth + GNBS + Growth + Efficiencies + 20 Spend % 14.0 % EBIT % + CHF 1.7 bn EBIT COGS Distribution Marketing Administration R&D EBIT full year conference call - 21 February 2008

13 High quality results full year conference call - 21 February 2008 Increased input cost pressure Currency translation impact of 10 bps Increased media spend Improved trade spend efficiency Increased R&D spend Improved management of Admin costs Increased EBIT by CHF 1.7 bn Improved EBIT margin by 50 basis points 2007 performance demonstrates value of growth

14 EBIT Primary reporting full year conference call - 21 February 2008 % EBIT 2006 % EBIT bps bps + 30 bps + 50 bps bps bps bps Zone EUR Zone AMS Zone AOA Nestlé Waters Nestlé Nutrition Other F&B Total F&B 2006 EBIT figures restated to reflect internal changes in management responsibility as of

15 EBIT Secondary segment % EBIT 2006 % EBIT bps bps bps bps bps + 10 bps Powdered & liquid Beverages (ex-nestlé Waters) Dairy (incl. Ice Cream) Prep. Dishes & Cook. Aids Confectionery PetCare Pharma. products full year conference call - 21 February 2008

16 Increased earnings per share, proposed dividend and payout ratio Dividend per share CHF Earnings per share (Full) CHF CHF 4.4 bn of shares bought back in 2007 on going % % full year conference call - 21 February 2008

17 full year conference call - 21 February 2008 Improved management of working capital Working capital total (in % sales) bps improvement Working capital total includes Trade receivables, Inventories, Trade payables, Other receivables, Prepayments, Accruals, Current tax payables and Other short term payables. Calculation is based on year-end figures.

18 Strong cash flow generation full year conference call - 21 February CHF billion OCF + CHF 1.76 bn FCF + CHF 1.21 bn Free cash flow (FCF) Operating cash flow (OCF)

19 2007 Summarised full year conference call - 21 February % sales growth; 7.4 % organic growth EBIT margin up 50 bps to 14 % Nestlé generated an additional - CHF 9.1 billion of sales - CHF 1.7 billion of EBIT - CHF 1.4 billion of net profit - CHF 1.7 billion of operating cash flow Well placed for further improvement in another year of delivering the Nestlé Model - Strong EPS & share buyback contribute to outperforming long-term shareholder value creation

20 Questions & Answers 2007 full year conference call - 21 February 2008

21 full year conference call - 21 February 2008 We plan to deliver the Nestlé Model annually over the next 10 years 5-6 % organic growth Sustainable improvement in EBIT Improving trend in Return on Invested Capital

22 Background slides 2007 full year conference call - 21 February 2008

23 full year conference call - 21 February 2008 Nestlé Raw Materials, Packaging & Energy 190 Nestlé Weighted Average Commodity Price Index (Raw Materials, Packaging and Energy in CHF) (Jan 1998=100) to December Price Index Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08

24 Nestlé Main Agricultural Commodities full year conference call - 21 February Nestlé Weighted Average Main Agricultural Commodities Index in CHF (Jan 1998=100) to end December 2007 Price Index Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08

25 full year conference call - 21 February 2008 P&L: EBIT to Net profit As % of sales FY 2006 FY 2007 Diff. basis points (rounded) EBIT Net other income/expenses (0.5) (0.6) - 10 Financial income Financial expense (1.2) (1.4) - 20 Profit before taxes Taxes (3.4) (3.2) + 20 Share of results of Associates Net profit/loss on disc. operations Profit for the period Attrib. to the shareholders of the parent (Net profit) Net profit (CHF million) 9,197 10, %

26 full year conference call - 21 February 2008 FY 2007 underlying tax rate & EPS Underlying full year tax rate 25.7 %, down from 27.8 % in 2006 Underlying EPS CHF 28.01, up 16.1 % from CHF Underlying Earning Per Share (EPS) definition: Net profit before, impairments, restructuring costs, results on disposals, significant one-off items. The above items have been adjusted for tax.

27 Cash conversion cycle full year conference call - 21 February 2008 Days Definition Cash conversion cycle: (AVG trade receivables/sales) x (AVG inventory/ COGS) x (AVG trade payables/ COGS) x 365

28 Return on invested capital improves full year conference call - 21 February % 22.2 % bps 20.8 % 18.9 % 19.9 % 19.9 % 12.2 % 11.7 % + 50 bps 11.4 % 11.0 % 11.0 % 10.8 % including goodwill excluding goodwill

29 Net indebtedness* CHF bn ** 9.7** Figures at period end H1 H2 H1 H2 H1 H2 H1 H H1 H * Total financial liabilities minus liquid assets. Liquid assets do not include the carrying value of treasury shares of CHF 8.0 billion. ** Restated full year conference call - 21 February 2008

30 Currencies full year conference call - 21 February 2008 Weighted average FX rates CHF per FY 2006 FY 2007 % change Euro (1) % U.S. dollar (1) (4.3 %) sterling (1) % Real (100) % Yen (100) (5.2 %) Mex. Pesos (100) (4.4 %)

31 2007 full year conference call 2007 full year conference call - 21 February 2008

2007 half year results conference call

2007 half year results conference call 2007 half year results conference call - 15 August 2007 Disclaimer This presentation contains forward looking statements which reflect Management s current views