Nestle India Ltd. — Call Transcript 2023

Feb 16, 2023

Nestlé India Limited

(CIN : L15202DL1959PLC003786) Nestlé House Jacaranda Marg ‘M’Block, DLF City, Phase – II Gurugram – 122002, Haryana Phone 0124 - 3940000 E-mail: investor@in.nestle.com Website www.nestle.in

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PKR:GA: 12:23

16.02.2023

BSE Limited Phiroze Jeejeebhoy Towers, Dalal Street, Fort, Mumbai – 400001

Scrip Code – 500790

Subject : Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"): Presentation for Earnings Call with Financial Analysts/ Investors on Financial Results for the Financial Year ended 31[st] December 2022

Dear Madam/ Sir,

Further to our letter PKR:GA:8:23 dated 31[st] January 2023 intimating about Earnings Call with Financial Analysts/ Investors on Audited financial results of the Company for the Financial Year ended 31[st] December 2022, and in terms of the requirement of Regulation 30 read with Part A of Schedule Ill of the Listing Regulations, please find enclosed herewith the presentation to be made to the Financial Analysts/ Investors at the Earnings Call scheduled to be held today at 4:15 P.M. (IST) and the same is also being uploaded on the website of the Company. The recording and transcript of the Earnings Call thereof will be uploaded, in due course on the website of the Company at www.nestle.in and the Stock Exchange, as prescribed under the Listing Regulations.

The above is for your information and further dissemination.

Thanking you,

Yours truly,

NESTLÉ INDIA LIMITED

PRAMOD Digitally signed by PRAMOD KUMAR RAI KUMAR RAI Date: 2023.02.16 15:54:38 +05'30'

PRAMOD KUMAR RAI COMPANY SECRETARY AND COMPLIANCE OFFICER

Encl.: as above

Regd. Office: 100 / 101, World Trade Centre, Barakhamba Lane, New Delhi – 110 001

CONSISTENCY IN THE FACE OF STORM Nestlé India Full Year Earnings Call

16 February 2023

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Disclaimers

• Except for the historical financial information contained herein, this presentation may contain statements which reflect Management’s current views and estimates and could be construed as forward-looking statements. You are cautioned not to place undue reliance on these forwardlooking statements, which holds only as of the date.

• • The future involves uncertainties and risks that could cause actual results to differ materially from the current views being expressed.

• • Potential uncertainties and risks include but are not limited to factors such as changes in general economic, political or market conditions, commodities and currency fluctuations, competitive product and pricing pressures, industrial relations and regulatory developments.

• • Significant disruptions in the operations due to unforeseen events (including spread of any disease) • Volume and Mix and Organic Growth (OG) are basis Nestlé Internal Reporting Standards.

• Figures are regrouped / reclassified to make them comparable.

• Calculations are based on non-rounded figures.

• ‘Analytical data’ are best estimates to facilitate understanding of business and NOT meant to reconcile reported figures.

• Answers to Questions may be given basis generally available information in public domain.

• No person is authorized to give any information or to make any representation not contained in and not consistent with this presentation and, if given or made, such information or presentation must not be relied upon as having been authorized by or on behalf of Nestlé India Limited

• • Current year and previous year numbers have been restated to include the financials of acquired Pet Food Business as per requirements of Ind AS 103 – Business Combinations under Common Control

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Agenda

16:15 – 16:55

Consistency in the face of storm by Suresh Narayanan

16:55 – 17:15

Q&A

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Nestlé India Full Year Earnings Call, 16th Feb 2023

CONSISTENCY IN THE FACE OF STORM

By Suresh Narayanan

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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Key Takeaways Last Time

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Confidence and Securing growth capability of strong matters brands to withstand Robust Petcare offers a Gerber entry - performance vibrant sign of the market continues opportunities potential

Nestlé India Full Year Earnings Call, 16th Feb 2023

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What We Will Go Through Today

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Financial highlights and underlying performance – FY 22, Q4 22

Unlocking our RURBAN potential

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Our digital analytics journey

Our millets journey

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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FINANCIAL HIGHLIGHTS AND UNDERLYING PERFORMANCE

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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A Decade Of Strong Domestic Sales Growth

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170 20.2
14.8 20.0
13.5
150 11.0 10.9 10.9 10.7
8.6 8.5
7.1 10.0
130 8.2
-
110
(18.3)
( 10.0)
90
( 20.0)
70
( 30.0)
50
30 ( 40.0)
71 79 84 92 75 88 95 105 117 126 140 161
10 ( 50.0)
2011 2012 2013 2014 2015 ** 2016 2017 2018 2019 2020 2021 2022
Domestic Sales(Bio) * Reported Growth %
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*2016 growth is restated due to IND-AS implementation

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**2015 Sales impacted due to MAGGI issue

Highest Growth In A Decade Profit From Operations Impacted

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FY

2022

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Total SalesTotal Sales Profit from Operations [#] Net ProfitNet Profit Earnings Per Share (EPS)Earnings Per Share
190 20.0 50.0 Growth
Growth 58
350
170 14.5% 53 22.0% 20.0% 37 15.7% 30.0 12.8%/4.1%
150 48 - 32 14.4% 14.2% 10.0 ( 10.0) 300
250
130 43 Growth ( 20.0) 27 Growth ( 30.0)
38 4.2% 12.8%/4.1% ( 50.0) 200 238
110
( 40.0) ( 70.0)
33 22
90 ( 90.0) 150
28
( 60.0) ( 1 0.0)
70 17 100
23
146.6 167.9 32.3 33.7 21.2 23.9 ( 130.0) 220 248
50 18 ( 80.0) 12 ( 150.0) 50
FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022
Profit from Operations (INR Bio) # Net Profit (INR Bio)
Total Sales (INR Bio) % of Sales % of Sales (Reported) Earnings Per Share (INR)
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Profit from Operations is derived from Profit before Tax less Other Income and adding back Finance Costs (Including Interest Cost on Employee Benefit Plans), Net Provision For Contingencies (Others), Corporate Social Responsibility Expense and Exceptional Items.

*Comparable values without the impact of Exceptional Item in base period

(Transition cost of Pension Plan)

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Robust Growth Continues Profit From Operations Improved

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Q4

2022

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Total SalesTotal Sales
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Profit from Operations [#]
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Earnings Per Share

Net ProfitNet Profit

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60 35 20.0 20 40.0 Growth
Growth 18 75
50 30 +65.5%/12.9%
14.0% 20.9% 21.1% - 16 15.0% 20.0 65
25 14
40 10.2% 14.8% - 55
20 ( 20.0) 12 ( 20.0) 45 58
30 10 Growth
15 Growth ( 40.0) 8 +65.5%/12.9% ( 40.0) 35
20 14.9% 25
10 6 ( 60.0)
15
10 ( 60.0) 4
5 ( 80.0)
37.1 42.3 7.8 8.9 2 3.8 6.3 5 39 65
- - ( 80.0) - ( 100.0) ( 5) Q4 2021 Q4 2022
Q4 2021 Q4 2022 Q4 2021 Q4 2022 Q4 2021 Q4 2022
Profit from Operations (INR Bio) Net Profit (INR Bio)
Total Sales (INR Bio) Earnings Per Share (INR)
% of Sales % of Sales (Reported)
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*Comparable values without the impact of Exceptional Item in the base period (Transition cost of Pension Plan)

Profit from Operations is derived from Profit before Tax less Other Income and adding back Finance Costs (Including Interest Cost on Employee Benefit Plans), Net Provision For Contingencies , Corporate Social Responsibility Expense and Exceptional Items.

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Sustained Volume Led Growth

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600
500
CAGR
400 2016-22
300 8.2%
200
100 Engine of Growth
343 382 424 457 468 522 550 Continuesto be
-
2016 2017 2018 2019 2020 2021 2022 Penetration Led Volume
#
# Growth
Domestic Vol ('000 Tons)
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600
500
400
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300
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200
100
138 138 148 126
-
Q1-22 Q2-22 Q3-22 Q4-22
Domestic Vol ('000 Tons)
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Leading To Strong Value Growth

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16.9 35.0
160 8.2 10.9 10.9 8.5 10.8 14.8
5.0
140
( 25.0)
120
( 5 .0)
100
( 85.0)
80
( 1 5.0)
60
( 145.0)
40
88 95 105 117 126 140 161
20 ( 175.0)
2016 2017 2018 2019 2020 2021 2022
Domestic Sales (Bio) Reported Growth %
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16.5 18.3
13.8
10.4
130
5.0
110
( 25.0)
CAGR
2016-22 90 ( 5 .0)
10.7% 70 ( 85.0)
50 ( 1 5.0)
30 ( 145.0)
38 39 44 41
10 ( 175.0)
Q1-22 Q2-22 Q3-22 Q4-22
Domestic Sales (Bio) Reported Growth %
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Town Class Growth In Mega Cities And Metros

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Mega City Metro
23 28140 19 18 17 21
140 10 9 16 15
120 14 12 12 18120 8 8 6
8
(6) 100
100
(2)
80
80
(12)
60
60
(22)
40
40
(32)
20
20 (42)
100 95 101 100 118 109 118 121
100 97 107 108 112 112 132 121
0
0 (52)
Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22
Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22
NNS (Indexed to Q1 2021) OG% NNS (Indexed to Q1 2021) OG%
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Town Class based on population

Mega City > 40L Metro >=10L & <40L

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Town Class Growth In Small Cities/Villages

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TC1

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TC 2-6
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Villages
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30
31
16 14 16 19 19 20140 17 17 30140 21 25 26
7 6 4 10120 12 14 11 14 13 20120 12 10 9 15
5 10
100
100
-
-
80 80
(10)
(10)
(20)60 (20)60
(30)40 (30)40
(40)20 (40)20
100 94 100 98 114 109 119 117 100 97 109 101 111 111 123 106 100 98 98 97 115 129 122 122
(50)0 (5 0 )
Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 Q3'22 Q4'22
NNS (Indexed to Q1 2021) OG% NNS (Indexed to Q1 2021) OG% NNS (Indexed to Q1 2021) OG%
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Town Class based on population

TC 1 >=1L & <10L TC 2-6 <1L Villages: 70%+ population occupation is agriculture

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Acceleration Of Our Route To Market – Overall Reach End Of The Year

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	Strengthening our distribution
2016 2017 2018 2019 2020 2021 2022	# 1.3 1.3 1.3 1.3 1.4 1.4 1.5 2.7 2.9 3.2 3.3 3.3 3.7 3.6 Indirect Nestlé Direct Reach Total Reach	4.0 4.2 4.5 4.6 4.7 (Nielsen)		5.1 5.1

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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Severe Commodit Headwinds
y
Milk SMP Edible Oils 245
166
+57% 157 +145%
+40%
140 172
133
123 [124] 118 134
115 126
111 121 121
SMP 100 99 Edible
100 100 [106]
Milk 98 7% oils
20% 12%
Wheat Green Coffee Packaging
+29% 129 +45% 145 +44% 144
114 114 126
119
109
105 112
110 110
108
100 99 [106] [107] [106]
100 100 [104]
Wheat Coffee Packaging
11% 6% 16%
2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022 2016 2017 2018 2019 2020 2021 2022
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Note: Year values have been indexed taking 2016 as the base

Global Commodity Prices High Except Edible Oil And Packaging Material

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Unprecedented Commodity Headwinds 2022 Inflation - 6X Of Trend

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3% 18.5%
2021
2022
CAGR 2018-
2020
5%
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Nestlé India Full Year Earnings Call, 16th Feb 2023

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Navigating Commodity Headwinds What Did We Do Right

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SHARK saving
programme
reached new
highs
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Calibrated consumer
insight-based pricing
decisions across all
categories
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Accelerated

economies of scale and

sharp procurement strategies

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Over 7,500 projects across Nestlé India, cost reduction, enhanced efficiency, speed of making decision

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Alignment, courage and exceptional teamwork

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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Robust Profit From Operations

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40.0
35.0
52
30.0
42 21.7 22.0 25.0
21.0 21.1
20.0
17.6 18.1 20.0
32
15.0
10.0
22
5.0
-
12
( 5. 0)
17 18 24 26 29 32 34
2 ( 10.0)
2016 2017 2018 2019 2020 2021 2022
Profit from Operations (INR Bio)
% of Net Sales
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40.0
35.0
52
30.0
42 20.9 21.1 25.0
20.1
18.0 20.0
CAGR
32
2016-22 15.0
10.0
22
12.6% 5.0
-
12
( 5. 0)
8 7 9 9
2 ( 10.0)
Q1-22 Q2-22 Q3-22 Q4-22
Profit from Operations (INR Bio)
% of Net Sales
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Nestlé India Full Year Earnings Call, 16th Feb 2023

And Sustained Net Profit

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50 50 25.0 25.0 40 25.0
Net Profit for 2021 reduced by
45 45 Exceptional Item (Transition cost 35
for Pension Plan)
40 40 20.0 20.0 20.0
30
35 35
16.0 15.7 15.7
14.9 14.8
14.3 25 14.5
30 30 14.2 15.0 15.0 15.0
CAGR 12.7
12.1 14.4
25 25 10.6 2016-22 20
20 20 10.0 10.0 10.0
15
15 15
10
15.6%
10 10 5.0 5.0 5.0
5
5 5
10 12 16 20 21 21 24 6 5 7 6
- - - - - -
2016 2017 2018 2019 2020 2021 2022 Q1-22 Q2-22 Q3-22 Q4-22
% of Net Sales…
Net Profit (INR Bio) % of Net Sales Net Profit (INR Bio) % of Net Sales
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Domestic Sales: Strong, Almost Double Digit Across All Product Groups

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Milk Products and Prepared dishes Powdered and
Confectionery
Nutrition and cooking aids liquid beverages
40.4% 9.5% 32.2% 15.6% 16.0% 25.0% 11.4% 19.2%
Contribution Growth Contribution Growth Contribution Growth Contribution Growth
Data represents Jan-Dec 2022 39% Growth 14.8% Domestic Sales Growth
Out of Home
Nestlé Professional
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Products Launched Since 2015 Now Contribute To Over 5% Of Sales

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Over 110 new
products in
last 7 years
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10,0 0 6.0
9,000 4.9 5.4
8,000 4.4 5.0
4.3
7,000
4.0
3.4
6,000 2.7
5,000 3.0
4,000 1.5 2.0
3,000
2,000
1.0
1,000
- -
2016 2017 2018 2019 2020 2021 2022
NPDI Sales (Mio) % Contribution to domestic sales
~ 30 new Projects in Pipeline
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Thereby, Creating Significant Value For Investors

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Total Shareholders Return

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3,814%
Annualized Return
19.1%
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Market
INR
Capitalization
1,890 Bn
INR 50
Up 38.0 times vs. FMCG
Bn Benchmark Index 17.2
times
2022
USD 22.9 Bn
2001 (1 USD= INR 82.7)
USD 1.1 Bn
(1 USD= INR 47.2)
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*As at 31[st] Dec 2022

INR Billion is INR 100 crore. Source: Bombay Stock Exchange.

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Consistent Media Support To Our Brands

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Strong investment Improved
behind the growth- efficiencies in
pillars buying media
Targeted communication by
leveraging consumer clusters
Investing in building
1.0x 1.4x 1.5x 1.5x 1.5x 1.4x
brand equity
Accelerated digital
2017 2018 2019 2020 2021 2022 vs
spend
short term
A&SP Spend promotion
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Note: Year values have been indexed taking 2017 as the base

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Rapidly Accelerating Our Footprint On E-Commerce

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Growing contribution of E- commerce to domestic sales
2016 2017 2018 2019 2020 2021 2022
6.5
E-Commerce
5.3
grew by
3.7 41%
2022
2022 vs 2021
2021
1.9
2020
1.3 2019
0.9 2018
0.6 2017
2016
Contribution
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Nestlé India Full Year Earnings Call, 16th Feb 2023

STRENGTHENING OUR RURBAN APPROACH

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RURBAN Footprint Is Growing

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RURBAN IN LAST 5 YEARS
GROWTH%
2022 13.0
2021 15.0
2020 12.5
2019 11.9
#
2018 10.6
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*Before 2019, we did not have RURBAN classification, therefore 2018 growth is for Town Class C and D (population below 1 lac)

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Deepening Rural Reach

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91683
165367
Ambition
61427
120,000 110200
Villages by 2024
(Population
40739
over 2000) 68578
2020 2021 2022 2020 2021 2022
Villages >2000 population
Total Village Coverage
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Increasing Presence In RURBAN

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1. Strengthened distribution infrastructure

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Distribution Touch Points
8006
7618
7188
6123
3980
# 3303
2020 2021 2022
Redistributors
Wholesale HuB
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Increasin Presence In RURBAN g

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2. Scaled up HAAT activation

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HAAT Activity as Consumer Engagement
20,605
2,502
2021 2022
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Increasing Presence In RURBAN

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3. Improved in-shop visibility

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RURBAN Smart Stores
16,000
9,728
3,486
2020 2021 2022
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Project Swabhimaan - Empowering Rural Women

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Fostering entrepreneurial spirit in rural women

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Upskilling and training Scaled up in 2022 to 19 states with more than 600+ rural women entrepreneurs

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Building Portfolio, Leveraging Technology To Win RURBAN

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Increasing Category Relevance

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Power of Data Analytics & Digital Must Sell SKU @ Pincode Sales Automation

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Real People And Real Voices From Rural India

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Nestlé India Full Year Earnings Call, 16th Feb 2023

OUR DIGITAL ANALYTICS JOURNEY

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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Enhanced Customer Experience

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POWER OF ANALYTICS
INTEGRATION
INTEGRATION &
&
ENRICHMENT
ENRICHMENT
E-commerce Nescafe
Stackline E-Mug Revamp
Marketing &
Sales Automation
2023 Consumer Insights
Contract Form digitization STRENGTHNING Smart Data Hub
RD – DMS
Ask Nestlé
VALUE CHAIN DIGITALIZATION
Revamp
D2C
Brand.com
CIAM Integration 2022
SEO Optimization Simplification and
Conversational AI VALUE CHAIN consolidation
DIGITALIZATION
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Nestlé India Full Year Earnings Call, 16th Feb 2023

Nestlé Business Services

Managing Transactions, Digitalisation, Analytics at Scale

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HR Business Procurement
Financial Services
Services Support Services
Customer
Talent Acquisition Tax Support
Management
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Total Employees
189
67%
Gender Diversity
48.7% 17% 17%
2020 2021 2022
Women in leadership
People with
Disabilities
7
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Nestlé India Full Year Earnings Call, 16th Feb 2023

2023: UN YEAR OF MILLETS

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Integrating Millet Into Product Categories

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MOU with Nestlé R&D Centre India subsidiary of Nestlé S.A and Nutrihub, ICAR-Institute of Millet Research

Creating Millet Moments

Unlocking the Power of Food

• Millet Processing

• 20% of global millet production is from India

• Launching new products

• Health and nutrition benefits

• Consumer awareness

• Smart food with high nutritional content

• Sustainable and regenerative agricultural practices

• Millet recipes

• Climate resilient

• Building consumer awareness

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• Start-up collaborations

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2023 UN The International Year of the Millets

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Nestlé India Full Year Earnings Call, 16th Feb 2023

OUR MILLET JOURNEY

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Nestlé India Full Year Earnings Call, 16th Feb 2023

Key Takeaways

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Strong and sustained almost double-digit growth across all categories

Strong comeback of Out Of Home (Nestlé Professional)

Acceleration in E-commerce, entry into D2C exploring new channels of growth

Unleashing our power of SHARK methodology for cost effectiveness, efficiency and speed

Accelerated digitalization, analytics and building scale competencies

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Invested to unlock RURBAN opportunities

Pragmatic, bold, insight-based decision on pricing

Power of people and partnerships

Excitement and opportunity of millets – locally and globally relevant

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Nestlé India Full Year Earnings Call, 16th Feb 2023

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