creating competitive gaps through manufacturing - nestl©

June 7, 2011 Nestlé Investor Seminar

Creating Competitive Gaps Through Manufacturing

Mr. José LopezExecutive VP, Operations & GLOBE

These slides differ to those shown at

the Nestlé Investor Seminar 2011


Disclaimer

1

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.


Agenda

MANUFACTURING REVIEW

MANUFACTURING STRATEGY

MANUFACTURING EXCELLENCE

2


We are coming from a long-term commitmentto Operational Excellence…

3

Performance

MH'97

Target 2004+

OperationEXCELLENCE

2007

CI

Time2008200520011997

Performance Improvement is

part of our DNA and sustains on-going

savings to support business growth

Average annual savings of CHF 1 Bn over 10 years


Increasing Production Volume with fewerFactories

481 480

456449

443100

108

113 117123

2006 2007 2008 2009 2010

# of factories Index production volumeIndex of production volume per factoryNumber of factories

4


Achieving Efficiency throughout the wholeValue Chain

5

100

105

2006 2007 2008 2009 2010

Case Fill RateIndex

100

106

2006 2007 2008 2009 2010

FreshNes Index [a]

100

79

2006 2007 2008 2009 2010

Bad GoodsIndex

[a] FreshNes Index calculated as FreshNes at Shipment (% of Remaining Shelf Life) multiplied by

Case Fill Rate.

June 7, 2011 Nestlé Investor Seminar6

Improving trend in Finished Goods and Raw & Packaging stock

10096

88

2008 2009 2010

Stock ValueIndex


Contributing to positive trend in Working Capital

100

78

2006 2007 2008 2009 2010

TNWCIndex


-51%

-16%

-44%

-3%

-61%

-32%

Strong Performance on the major EnvironmentIndicators over the last 10 years…

(absolute change)

Water(m3/ton)

Energy(gigajoules/ton)

Green House

Gas(kg CO2/ton)

(per tonne of product)

(absolute change)


(absolute change)


Production Volume: + 73%

8


…Whilst driving Excellence in Safety

9

4.8

3.7

2.8

2.01.8

0

1

2

3

4

5

2006 2007 2008 2009 2010

-63%

[a] per million of hours worked

Lost time injuries [a]


Agenda




10


A unique and unmatched spread of Factoriesaround the World

11

Americas

168(Sales 45%)

Asia, Oceania, Africa

125(Sales 21%)

Europe

150(Sales 34%)

443 Factories

81 Markets

> 150,000 Employees


Our Manufacturing Footprint…

…One Strategy does not fit all !

12

Araras – BrazilWorld’s largest Soluble Coffee exporting

Factory

Feira de Santana – BrazilTailored to fit regional needs and boost

economy


Production: 237,000 T

13

Araras

Brazil – World’s Biggest Soluble Coffee Plant

Leveraging economies of scale and

expertise whilst increasing flexibility

of supply


Production Capacity: 8.8 Bn Capsules(incl. extension to 2012)

14

Nespresso – Avenches

Switzerland – World’s Biggest Center of Coffee Excellence

Leveraging economies of scale and

expertise to deliver exclusivity

and differentiation


Production Capacity: 4.1 Bn Bottles

15

North America – World’s Biggest Water Plant

Hollis Maine

Leveraging economies of scale to

market the uniqueness of the source


China – World’s Biggest Culinary Factory

Production Capacity: 206,000 T(incl. extension to 2015)

16

Totole, Shanghai

Totole’s best selling

product

Newly launched product

Leveraging economies of scale whilst

being local for local


Production Capacity: 92,500 T

17

Feira de Santana, Brazil

PPP Factory

Producing closer to our Consumers and localising Opportunity

Feira de Santana

Leveraging economies of scale

whilst servicing one consumer

at a time


This Manufacturing Strategy supports ourROIC

34.8%

35.1%

36.1%

2008 2009 2010

Excluding Goodwill


Agenda




19


Summary

Nestlé has delivered significant improvements in operational

efficiency over many years

Our Manufacturing Strategy follows what best serves our

Consumer and Customer needs

Nestlé Continuous Excellence (NCE) is accelerating efficiency

improvements

And we expect to deliver this for many years to come…

20

June 7, 2011 Nestlé Investor Seminar21 J. Lopez

creating competitive gaps through manufacturing - nestl©

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