 For over 150 year, Nestle has been a part of our life with

the sole purpose in providing nutritious food and beverages

that enhances quality of life and contribute to a healthier
future. .

 World’s largest food and beverage company that offer

people and their pets, tastier, healthier and convenient
choices for all life stages and all times of the day.

 Combining global strategies with local engagement in

order to offer affordable high-quality nutrition and adding
value to their brands and product through meaningful
differentiation and innovation.
Paul Bulcke U.Mark Schneider
Chairman Chief Executive Officer

Message

“We are executing on our Nutrition, Health and Wellness strategy

and creating sustained value for shareholders and society over the
short and long term.”
 Letters to the shareholders
2020 objective – The outcome from 2018 demonstrate the company’s
performance to achieve future targets:
Organic growth 3.0%
Increment in sales 2.1% to CHF 91.4 billion
Underlying trading operating profit (UTOP) margin reached 17.0%
up to 50 basis points.
Trading operating profit (TOP) reached 15.1% up to 30 basis points.

Sharpening strategic focus by:

Continuous investment in advancing the high-growth categories of
coffee, pet-care, nutrition, water as well as Nestle Health Science.
Board decision to explore strategic options for Nestle Skin Health in
the best long-term interest of business and shareholders.
Through acquiring the global license of Starbucks consumer
packaged goods and foodservice products.
 Letters to the shareholders
Speeding up growth via innovation in volatile environment
Rapid prototyping and leverage R&D network in launching new products
for quick in-market testing. Ex.- KitKat Ruby, Garden Gourmet.
Delivering personalized products and services to consumers by digital
marketing such as social media and E-commerce.
2018 e-commerce sales grew by +18% and reached 7.4% of total Nestle
sales.

Improving operational efficiency

Analyzing operational efficiencies and reducing structural cost to ignite
company’s growth and improving returns.
Penetrating shared service centers from 17 to 35%.
Procuring three global purchasing hubs enable to source 55% of
requirements.
Simplifying factory footprints and increase capacity utilization.
Organizational structure to speed up decision-making and responsiveness
to new consumer trends.
Letters to the shareholders
Increasing cash returns to shareholders
In 2018, through dividends and share repurchases, company returned CHF
13.9 billion to their shareholders.
Over the last ten years, Nestle has returned CHF 104 billion to
shareholders.

Board of Directors engagement

Deeply engaged in analyzing recent trends in the food and beverages
industry along with company’s responses to them.
Analyzing financial structure
Exploring strategic options
Continuously monitors the returns and strategic option of financial
investment in L'Oreal.
Company’s governance policies and compensation to ensure best
practices.
Letters to the shareholders
Value for all stakeholders

Company’s recognition in need to continually

earn the trust of all stakeholders.
Emphasizing balanced approach by taking an
inclusive view of these stakeholder as company
manage their business placing Nutrition, Health
and Wellness at the core of our strategy.
Company’s appreciation to shareholders for
continued support, trust and confidence.
Financial review
Group sales

Real internal growth (RIG) increased to 2.5% and Pricing was

0.5%
By adding we get 3.0% of Organic Growth (OG)
Net acquisitions (M&A) increased sales by 0.7%
Foreign exchange reduced by 1.6%
Hence, total reported sales increased by 2.1% to CHF 91.4 billion
as comparing to the 2017 full year sales which was CHF 89.6
billion.

Note - CHF is the abbreviation for the Swiss franc. The Swiss Franc is often
called the swissie by currency market traders, and it is the seventh most traded
currency in the world.
 Financial review

Underlying Trading operating profit

Increased by 5.1% to CHF 15.5 billion.

The underlying trading operating profit margin

increased by 50 basis points in constant currency and
on a reported basis to 17%.

Mainly driven by cost reductions including Pricing,

Structural cost reduction in manufacturing, operational
efficiencies and product mix.
 Financial review
Net financial expenses and Income tax
Grew by 9.3% to CHF 761 million, largely reflecting an increase in
net debt.
Group Tax rate decreased to 26.5%.
The underlying tax rate declined to 23.8%, as a result of United states
Tax reform.

Net profit and Earnings per share

Net profit grew by 41.6% to CHF 10.1 billions
Earnings per share increased by 45.5% to CHF 3.36

Cash flow
Grew by 15% and reached CHF 10.8 billion, resulted from higher
operating profit, improved working capital and efficient capital
expenditure.
 Financial review
Net debt
Increased to CHF 30.3 billion at the end of 2018, as
compared to CHF 21.4 billion at the end of 2017.

Return of invested capital

Increased to 12.1% due to lower goodwill impairment
and improved operating performance.

Dividend
The proposed dividend by Board of Director is CHF
2.45 per share which is increased by 0.1 per share last
year.
NESTLE BRANDS
Operating segments
Zone AMS – North and South America
North America and Brazil returned to positive growth in 2018 in
Nescafe, Purina pet care, nestle Professional and confectionery.

Zone EMENA – Europe, Middle East and North Africa

Premium products grew strongly at 10%, led by Purina Pet care
and infant nutrition
Western Europe saw moderately declined growth with other
geographies growing at mid single-digit.

Zone AOA – Asia, Oceania and sub-Saharan Africa

China’s growth improved with the support of innovations and e-
commerce.
Key products for the zone were infant nutrition, Maggi and Milo
Operating segments
Nestle Waters
Growth in North America and Europe,
especially in UK and France with international
premium brands S.Pellegrino and Perrier.

Other Business
Nespresso maintained a sustainable Growth in
North America.
Nestle Skin Health and Nestle Health Science
had mid single-digit growth.
 Supply chain
Collaboration with the commercial teams to develop the demand
forecast, and also with our suppliers around the world to ensure
responsibly sourced materials.

An aligned, agile and adaptable organization committed to delivering

results, not only within supply chain, but also in supporting of overall
business priorities.

Different paths such as Demand and supply planning, Procurement,

Physical logistics or Customer service enables to gain a real
competitive edge by bringing closer to company’s customers and
making surety the products are available at the right time in the best
condition.