Annual Report 2014 - Nestlé
Annual Report 2014
CONTENTS26Letter to our shareholdersEnhancing lives and well-being26The strategyThe highlightsThe future34Our brands42Financial review4356Leading positions in dynamic categoriesBusiness reviewPrincipal risks and uncertaintiesGeographical data: factories58Corporate Governance and Compliance59Corporate GovernanceBoard of Directors of Nestlé S.A.Executive Board of Nestlé S.A.ComplianceShareholder information814445560626364Accompanying reportsCorporate Governance Report 2014Compensation Report 2014Financial Statements 2014Corporate Governance Report 2014Compensation Report 2014Financial Statements 2014Nestlé in societyCreating Shared Value and meeting our commitments 2014Nestlé in societyCreating Shared Value and meetingour commitments 2014
NESTLÉ IN NUMBERSGroup sales (in CHF)Trading operating profit (in CHF)91.6 billion14.0 billionEmployeesCountries we operate in339 000197Where we sell (in CHF billion)Our top 10 Markets plus Switzerland (in CHF billion)23.5UNITED STATESEUROPE25.96.6GREATER CHINA REGION5.5FRANCE5.1BRAZIL3.3GERMANY3.0UNITED KINGDOMAMERICASASIA,OCEANIAAND A2.0SWITZERLAND1.6What we sell (in CHF billion)20.316.713.513.111.39.86.9POWDERED ANDLIQUID BEVERAGESMILK PRODUCTSAND ICE CREAMPREPARED DISHESAND COOKING AIDSNUTRITION ANDHEALTH SCIENCEPETCARECONFECTIONERYWATERNestlé Annual Report 20141
NESTLÉ IN SOCIETY98%73of our children’s products met all of theNestlé Nutritional Foundation criteria (a) forchildren at the end of 2014.Our Healthy Kids Global Programme reached morethan 7.6 million children in 73 countries in 2014.Top 373%We are ranked one of the top 3 global food andbeverage manufacturers in the current Accessto Nutrition Index.We audited 8700 of our 10 000 Tier 1 suppliers andfound 73% fully complied with our Supplier Code.FTSE4GoodLeaderWe remain the only infant formula manufacturerincluded in FTSE’s responsible investment index,based on our performance in human rights, labourrights, responsible marketing of breast-milksubstitutes and more.We were ranked number one by the charity Oxfamin its 2014 scorecard, Behind the Brands. The surveyscored 10 food and beverage companies on theirefforts to improve food security.38%52%Volume of high-priority categories of raw materialthat are traceable back to the primary source.Water discharges per tonne of product cutby 52% since 2005.7212 458factories achieving zero waste for disposal in 2014.farmers sensitised on child labour issues in 2014.11 83226%Nestlé Needs YOUth helped 11 832 young peoplein Europe find work or apprenticeship opportunitiesin 2014.Energy consumption per tonne of product cutby 26% since 2005.(a) The Nestlé Nutritional Foundation criteria are basedon nutrition science and public health dietaryrecommendations, such as those of the World HealthOrganization (WHO), the Institute of Medicine and otherglobal or local authorities. Our products are evaluatedagainst these criteria, using the Nestlé NutritionalProfiling System, which determines their nutritionalvalue and whether they achieve the Nestlé NutritionalFoundation status.
KEY FIGURES (CONSOLIDATED)In millions of CHF(except for data per share and employees)20132014ResultsSales92 15891 612Trading operating profit14 04714 019as % of sales15.2%15.3%Profit for the period attributable to shareholders of the parent (Net profit)10 01514 456as % of sales10.9%15.8%Balance sheet and Cash flow statementEquity attributable to shareholders of the parent62 57570 130Net financial debt14 69012 325Ratio of net financial debt to equity (gearing)23.5%17.6%Operating cash flow14 99214 700102.1%119.3%10 48614 137Capital expenditure4 9283 914as % of sales5.3%4.3%as % of net financial debtFree cash flow (a)Data per share3 1913 188Basic earnings per shareWeighted average number of shares outstanding (in millions of units)CHF3.144.54Underlying earnings per share (b)CHF3.503.44Dividend as proposed by the Board of Directors of Nestlé S.A.CHF2.152.20208 279231 136333339Market capitalisation, end DecemberNumber of employees (in thousands)(a) Operating cash flow less capital expenditure, expenditure on intangible assets, investments (net of divestments) in associatesand joint ventures, and other investing cash flows.(b) Profit per share for the year attributable to shareholders of the parent before impairments, restructuring costs, results on disposalsand significant one-off items. The tax impact from the adjusted items is also adjusted for.
LETTER TO OUR SHAREHOLDERSDear fellow shareholder,The business environment was again marked by great uncertainty in 2014. Disruptive socio-economic and political changecontinued to affect growth in many parts of the world. In theemerging markets, economic volatility worsened as growthrates slowed and currencies weakened. In the developedmarkets, deflationary pressures and soft consumer demandresulted in a continued challenging trading environment. Inthe face of such uncertainty it was more important than everto stay the course and remain loyal to our strategy, drivingshort-term performance while ensuring we made the rightdecisions to deliver our long-term goals. We took decisivesteps to further our ambition to be the world’s recognisedleading Nutrition, Health and Wellness company, trusted byall stakeholders, while again delivering financial results in2014 that outperformed the market.Sales were CHF 91.6 billion, with organic growth of 4.5%,composed of real internal growth of 2.3% and pricing of2.2%. The Group’s trading operating profit was CHF 14.0 billion and the margin increased by 10 basis points to 15.3%,up 30 basis points in constant currencies. This performancewas achieved whilst we again increased consumer facingmarketing support for our brands. The net profit rose toCHF 14.5 billion. The CHF 4.4 billion increase in net profit alsoreflects the profit realised on the disposal of part of the stakein L’Oréal and the revaluation gain on the 50% of Galdermaalready held when the Group brought its ownership from 50%to 100% (see below). Earnings per share were CHF 4.54, up44.6%. Underlying earnings per share were up 4.4% in constant currencies. The Group’s operating cash flow remainedstrong at CHF 14.7 billion. In view of this performance and thecompany’s strong financial position, the Board is proposinga dividend of CHF 2.20 per share up from CHF 2.15 last year.Through continuous innovation and renovation of our foodand beverages portfolio we are able to offer people healthierand tastier choices at every stage of their life, at any timeof the day. Science-based innovation enables us to enhancethe quality of people’s diets, using our knowledge and ourresearch and development capability to make a positive contribution to society. Wherever you are in the world, we havesafe, nutritious products to help you care for yourself andyour family. A few years ago, we expanded the boundariesof Nutrition, Health and Wellness with the creation of NestléHealth Science, motivated by the opportunity to forge a majortherapeutic role for nutrition in the management of health. Inline with this broadened strategy, in 2014 the Board approved2the sale of 48.5 million L’Oréal shares to L’Oréal for cancellation. Part of the proceeds were used for the acquisition of the50% stake in our joint venture Galderma from L’Oréal, bringing our ownership of Galderma to 100%. Galderma formedthe foundation of a new Nestlé subsidiary, Nestlé Skin Health.Its goal is to be recognised as the leading company in skinhealth, offering science-based solutions to protect, nourishand enhance skin, and where needed to treat, correct andrestore damaged skin over the course of people’s lives. NestléSkin Health provides prescription drugs, self-medication,therapeutic skin care and aesthetic and corrective medicine, allowing us to compete in the growing and promisingmulti-billion global skincare market. Nestlé Skin Health wasfurther strengthened by the acquisition of the full rights tocommercialise several key aesthetic dermatology products inthe United States and Canada.These developments ensure that, building on the strongfoundations of our food and beverages business and guidedincreasingly by science, we can further expand our portfolioto provide promising platforms for future growth in line withour strategy of Nutrition, Health and Wellness. At the sametime, we continue the drive to ensure our company is organised efficiently and effectively to deliver continuous profitablegrowth over the long term. With this objective in mind wemade some key decisions, adapting our organisational structure to better prepare ourselves today to meet the challengesof tomorrow.While our company continues to benefit from its decentralised structure, allowing key decisions to be made as closeas possible to consumers, there is still an important opportunity to better leverage our scale. That is why in 2014 weset up Nestlé Business Excellence at Executive Board Level,combining GLOBE (Nestlé’s Global Business Excellencefunction) with Nestlé Business Services (our shared operationfor transactional services around the world) and Nestlé Con tinuous Excellence (our continuous improvement and LEANprogramme). Through a focus on three areas: Simplifying,Standardising and Sharing, Nestlé Business Excellence willallow us to decrease structural costs and operational expenses, freeing up resources to support growth. This will also allow our markets to keep a sharp focus on generating demand.We have integrated the Maghreb, the Middle East, theNorth East Africa region, Turkey and Israel into Zone Europeto form Zone EMENA (Europe, Middle East and North Africa).This balances the different consumer dynamics and opportunities in each geography. Additionally it allows a sharperfocus in Zone Asia, Oceania and Africa, a fast-growing partNestlé Annual Report 2014
Paul Bulcke, Chief Executive Officer (left), and Peter Brabeck-Letmathe, Chairman (right).Nestlé Annual Report 20143
LETTER TO OUR SHAREHOLDERSof the world where three quarters of the global populationlive, enabling us to dedicate more attention to countries andregions which are highly complex but have huge potential.The new Nestlé Business Excellence function is led by ChrisJohnson, the former head of Zone Americas. Zone Americasis now led by Laurent Freixe, the former head of Zone Europe,and the new Zone EMENA by Luis Cantarell, who previouslywas in charge of Nestlé Nutrition and Nestlé Health Science.The new head of Nestlé Nutrition is Heiko Schipper, who wasformerly responsible for our Global Infant Nutrition division.Nestlé Health Science is led by Greg Behar, who joined thecompany from Boehringer Ingelheim in July. The newly established Nestlé Skin Health is led by Humberto Antunes, formerly the Chief Executive Officer of our joint venture Galderma.We further reinforced our business through continuedactive portfolio management, reviewing the performanceof different products in different markets to assess strategic fit, the extent to which they were accretive against ourfinancial targets, and what investments were necessary todeliver growth. We made choices about where we wanted toinvest, where we wanted to improve, and what we wanted todivest. Making such choices enables us to align our resources behind our best ideas, products and categories, to deliversustained financial performance and help us on our journeyto recognised Nutrition, Health and Wellness leadership overthe short term and the long term.We also announced new investments and researchcollaborations, which will enhance our ability to deliver science-based solutions to improve the quality of people’s lives.A newly-announced research partnership with the EpiGenconsortium will help us to better develop our understandingof the influence of nutrition and genetics at the beginning oflife and continue to build our knowledge in this importantarea. The Nestlé Institute of Health Sciences began a collab oration on a groundbreaking project, which could one daylead to the development of made-to-measure vitamin combinations tailored to individual needs. Our company wasfounded almost 150 years ago on the product Henri Nestléinvented, farine lactée. It saved the life of a child. Today wecontinue to invest in science-based innovation to ensure wecan answer current and future needs.It is our fundamental belief that to be successful over timewe need to create value for our shareholders while at thesame time creating value for society. We call this CreatingShared Value. To prosper we have to take a long-term view,framed in a robust set of principles and values that are basedon respect: respect for people, respect for the environment,4and respect for the world we live in. What we do and theeffects of what we do are highly visible. It is our responsibilityto connect with different stakeholders, to show transparencyand build trust. We have therefore again in 2014 reported onour social performance and our compliance in our Nestlé insociety report, and our progress towards meeting the toughtargets we set ourselves.In 2014 we held another successful Creating Shared Valueforum, this time at the Nestlé Research Center in Lausanne,co-organised for the first time with a United Nations body,the UN Conference on Trade and Development (UNCTAD).The President of the Swiss Confederation used his address tothe event to plead for water to become a self-standing goalof the future global development agenda. At the event werenewed our long-standing partnership with the InternationalFederation of Red Cross and Red Crescent Societies. Since2006 this collaboration has focused on the improvement ofrural communities’ access to clean water and sanitation.Currently, at the United Nations there are intense discussions about the global development goals for the period after2015. At the same time, governments and international organisations are increasingly reliant on the expertise, experienceand resources of the private sector to help address some ofthe world’s most pressing problems. This offers an opportunity for global companies such as Nestlé to make a valuable contribution, in partnership with governments and civilsociety. We are participating actively in the policy dialogue inareas which will deeply influence our future business, such asfood security, nutrition and health, water, sustainability, andhuman rights.The Board of Directors has actively supported the decisionswe have taken to further strengthen our Nutrition, Health andWellness strategy in 2014. It carried out a review of the Wyethacquisition, received an update on Nestlé Professional, andvisited our operations in France, where the discussions included a focus on Nestlé Waters. The Board discussed our globalstrategy in November, and reviewed our business in the UnitedStates, as well as Nestlé Nutrition, Nestlé Health Science andNestlé Skin Health. It also examined our past capital investments and future needs, as well as our continuing active portfolio management. The Board exercised its responsibilities forfinancial planning and oversight, risk and compliance management, and setting the right tone at the top of the company.At our 2014 shareholders’ meeting, the Board proposedsignificant changes to our corporate governance in responseto changes in Swiss legislation. The changes to our Articlesof Association were approved by a large majority. For the firstNestlé Annual Report 2014
time in 2014, shareholders had to elect all members of the Boardfor annual terms and to directly elect the Chairman of the Boardand the Members of the Compensation Committee. The newgovernance framework had a significant impact on our AnnualGeneral Meeting (AGM) and put compliance at the forefront ofthe meeting. The role of the Board has changed and the AGMhas been given increased responsibilities. We therefore leadan active dialogue with our shareholders and proxy advisors toexplain these changes and new responsibilities.At our next AGM in April, we will for the first time submit ourproposals for the compensation of the Board of Directors andthe Executive Board for approval by our shareholders as requiredby the new legislation. We have implemented these measuresin a manner designed to preserve legal certainty, while ensuringthat compensation remains competitive. We continue our activedialogue with investors and encourage all shareholders tovote and to help preserve our long-term focus as set out in ourArticles of Association.Our success has always been based upon our determin ationto stay the course and look ahead, to understand the environment in which we operate, to organise ourselves to seize opportunities to deliver profitable growth, now and in the future.Although we are operating in a challenging and turbulent economic environment, we see these as fascinating times, full ofopportunities. We continue to commit ourselves to ambitious financial targets. We aim to achieve organic growth of around 5%to 6%, improvements in margins and underlying earnings pershare in constant currencies, as well as capital efficiency. Therewill be years when we exceed our ambition and years where wecome close, but this is the line we want to walk over time.We would like to thank our 339 000 employees, whose commitment to Nestlé, hard work and disciplined alignment behindour strategy ensured that we achieved our common goals. Theirtalent, their creativity, their discipline and entre preneurship arekey to delivering our results. We would also like to thank you, ourshareholders, for your investment and your confidence, whichhave enabled us to deliver good returns for investors over thelong term.Peter Brabeck-LetmatheChairmanNestlé Annual Report 2014Paul BulckeChief Executive Officer5
ENHANCING LIVES AND WELL-BEING6Nestlé Annual Report 2014
Supporting parents in raisinghealthier children12Developing innovative productsto safeguard skin health16Helping ageing dogs maintain brain health20Continuing to deliver the highest qualityespresso coffee through Nespresso24Extending new job opportunitiesto European youth30Nestlé Annual Report 20147
THE STRATEGYFor almost 150 years we have enhanced people’s lives by offering tastier and healthier food and beverages choices at all stagesof life and at any time of day, helping them care for themselvesand their families. We have built our success by anti cipating thefuture and continuously adapting ourselves to seize the oppor tunities it presents.Through the continuous innovation and renovation of our pro ducts we are helping people enjoy healthier diets. In 2014 wecontinued to invest behind the ideas, the products and the cat egories that help us on our journey towards recognised Nutrition,Health and Wellness leadership, and deliver sustained financialperformance.The Nestlé Strategic Roadmap (facing page) is our compass,driving internal alignment behind our goals. The roadmap showsthe strengths we leverage to drive performance and deliver competitive advantage. Our strong culture, values and principles, allbased on respect, unite us worldwide.Our ambition is not just to be the leader but the industry reference for Nutrition, Health and Wellness. In recent years we havebuilt on the strong foundations of our unrivalled food and beverage portfolio, exploring the benefits of nutrition’s therapeuticrole with Nestlé Health Science. In 2014 we again expanded theboundaries of Nutrition, Health and Wellness with the creationof Nestlé Skin Health, offering scientifically-proven products andsolutions for people’s skin health needs throughout their lives.In the following pages we highlight some of our efforts to contribute to society, driven by our determination to offer Nutrition,Health and Wellness for all.8Nestlé Annual Report 2014
OperationalpillarsGrowthdriversNutrition,Health andWellnessEmergingmarkets andPopularlyPositionedProductsInnovationand tionSustaiCompliance–lued V
Nestlé Annual Report 2014 1 NESTLÉ IN NUMBERS Group sales (in CHF) 91.6 billion Trading operating profit (in CHF) 14.0 billion Employees 339 000 Countries we operate in 197 Where we sell (in CHF billion) Our top 10 Markets plus Switzerland (in CHF billion) 39.4AMERICAS ASIA, OCEANIA AND AFRICA 26.3 EUROPE 25.9 23.5 5.5 3.3 3.0 6.6 5.1 3.0 2.5 .
THE LEGO GROUP - ANNUAL REPORT 2014 1 THE LEGO GROUP ANNUAL REPORT 2014 The LEGO Group CVR: 54 56 25 19. THE LEGO GROUP - ANNUAL REPORT 2014 2 FINANCIAL HIGHLIGHTS THE LEGO GROUP (mDKK) 2014 2013 2012 2011 2010 Consolidated Income Statement: Revenue 28,578 25,294 23,095 18,731 16,014
September: 2013 33,391.18 9/24/2013 October: 2013 33,391.18 10/24/2013 December: 2013 65,031.50 12/20/2013 January: 2014 33,099.37 1/23/2014 February: 2014 33,099.37 2/24/2014 March: 2014 33,099.37 3/24/2014 April: 2014 31,662.23 4/25/2014 May: 2014 31,662.23 5/22/2014 June: 2014 31,662.24 6/26/2014 392,881.03
Annual Report 2013-2014 Annual Report 2013–2014 1 Manitoba Health, Healthy Living and Seniors His Honour the Honourable Philip S. Lee, C.M., O.M. Lieutenant Governor of Manitoba Room 235, Legislative Building
National Institute of Food and Agriculture: 2014 Annual Report A message from Sonny Ramaswamy, Director, on the 2014 Report I am pleased to introduce our 2014 NIFA Annual Report. This report provides a broad look at NIFA’s science portfolios and initiatives, and describes how this agency is advancing agricultural science to solve
Annual Report 2020 compared to our 2019 Annual Report. The total carbon footprint for printing CIMB Annual Report 2020 was 11,588kgCO2e, compared to 14,987kgCO2e for our 2019 annual report. The carbon footprint for the 3 books of CIMB Annual Report 2020 is 14.485kgCO2e. We are committed to reducing the environmental impact of our annual report .
and Meeting Schedules: 6: Annual Report Workgroup Next Steps: Next steps for FY18 report development: 1. HITAC full committee reviews report . FY18 Annual Report Draft discussed: March 1, 2019. FY18 Annual Report Draft discussed: Winter/Spring 2019. FY18 Annual Report completed as needed:
Annual Security Report for 2014 Published in the Year 2015 . UMass Amherst Page 1 of 72 2014 Annual Security Report . Message from the Chief . We are pleased to present the University of Massachusetts Amherst Annual Security Report. . Amherst police officers attend the municipal police training academies located throughout the Commonwealth .
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