NestléS.A. · Milk Products & Ice Cream Ambient Dairy EBIT 11.0%-20bp % RIG % OG 0.0-1.3 Dairy products including ice cream ... Algeria Q2-09 CaribbeanReg Q4-08 Roll-out of affordable

2009 first half roadshow – 13 August 2009 Name of chairman1

2009 First Half Results

Jim Singh, CFO

Nestlé S.A.


Disclaimer

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.


2009 First Half Highlights

• Successful delivery of profitable growthOrganic Growth of 3.5% EBIT margin +30bp reported & constant currencies

• Resilient performance by Food & Beverages OG 3.4%; EBIT margin +20bp CC; +10bp reported;5 out of 6 operating segments achieve positive organic growth, and hold/improve EBIT margin

• Efficiencies drive investment in brands & R&DSavings in COGS, distribution... Increase in R&D and consumer facing marketing expenses

• Key brands grow & improve competitive positions• Strong working capital & cashflow performance


►Divestment of businesses

►SKU rationalisation

►Factories

►Legal Entities

Total Performance Framework

DRIVING PERFORMANCE ACHIEVING SIMPLICITY

INVESTMENT FOR GROWTHSCALE BENEFITS

►Profitable growth

►Operational Efficiency

►High quality Working Capital

►Sales to Top 10

►GLOBE

►GNBS

►Nestlé Continuous Excellence

►Capital expenditure

► Invest in R&D

► Invest in consumer marketing

►Bolt-on acquisitions

TotalPerformanceFramework


The Essence of Nestlé's performanceDrivers of profitable growth

• R&D spend +20bps, new R&D centres

• F&B Consumer marketing spend +10bp

• Billionaire brands 6% OG

• Emerging markets 7% OG

• PPP 11% OG

• Top 10 customers 6% OG

• Premium – Nespresso 28% OG


The Essence of Nestlé's performance

Drivers of EBIT margin...• Profitable growth

• Operating efficiencies

...and of financial discipline• CHF1.8bn improvement

in operating working capital

• Re-gating of major Capex: down 12% in H1'09

• SKU rationalisation: 9% reduction

• Divestitures & exits


Zone Europe

% RIG% Organic Growth

EBIT 11.8%

-1.5

0.2

• Positive RIG in three of the top four markets/businesses

• GB Region particularly strong

• Strong performance in Eastern Europe

• Soluble coffee & PetCare the stronger categories


Zone Europe

• Unchanged EBIT margin despite currency and pension cost impacts

• Marketing spend maintained despite av.15% decline in rates

• Increased competitive pressure but about 60% of categories gain share

• RIG expected to accelerate in H2, but pricing to trend down


Zone Americas

• Strong performances in North America, Brazil and Mexico

• Weaker performances in smaller Latin American markets and Caribbean

• NA: Frozen Food, PetCare, Ambient Dairy & Chocolate have a good H1

• The Zone: 2/3rds of key brands increase market share

% RIG% OG

EBIT 15.2%+ 20 bp

1.9

6.6


Zone Americas

• LA: Key category, Ambient dairy's OG is low due mainly to pricing

• Chocolate's growth recovered in Q2

• Soluble, Culinary, PetCare double digit OG

• Smaller LA countries impacted by economic turmoil (oil, tourism, remittance, etc)

• New factories' fixed costs impact margins (Anderson, Mexico)

• Efficiencies reduce COGS

• Brand investment increases


Zone AOA

• Emerging markets recovering; developed/export-driven markets slower

• RIG accelerating during the period

• Some markets have negative price: corrections after '08, not deflation

% RIG% OG

EBIT 16.7%+ 60 bp

2.2

5.9

• India and China double-digit RIG

• Africa & Middle East strong

• Japan market weak, but share gains


Zone AOA

• Ambient dairy gaining RIG momentum

• PPP a key driver of profitable growth & a key focus or innovation

• Continuing to extend distribution networks

• Accelerating RIG by investing COGS savings in brands & price reductions

• FY'09 OG weighted to RIG


Nestlé Waters

• Water market stabilising

• Europe below Waters' growth rate, US above

• Share gains in USA: good performance in supermarkets and mass (including in Walmart despite "Great Value" initiative)

% RIG% OG

EBIT 8.3%+110bp

-3.7-2.9

• European market is weak generally, but Nestlé Waters' shares increase in some markets


Nestlé Waters

• Emerging markets & NestléPure Life achieve double digit organic growth

• EBIT margin impacted by negative sales development...

• ... but benefits from raw materials, NCE efficiency programmes & disposals

• Efficiencies in distribution, particularly in US, & from improved HOD routing

• Near 50% reduction in capital expenditure '07-'09


Nestlé Nutrition

• All four divisions accelerate during the second quarter

• All three Zones gain share in Infant Nutrition

• EBIT margin impacted by timing of costs, particularly increased marketing spend

EBIT 17.4%-110bp

% RIG% OG

-2.4

1.5

• H2 acceleration expected in RIG & improvement in EBIT margin


Nestlé Nutrition

• Infant formula gaining share in Europe; good growth in US, but WIC impact

• Baby food very strong in the US; also gaining in Europe

• Healthcare & Performance accelerated growth & EBIT margins in H1

• Jenny Craig growth improving. EBIT margin protected by good cost management & benefit of efficiencies in media


Other F&B

• Mainly Nestlé Professional, Nespresso

• Nestlé Professional has flat organic growth – challenged by OOH consumption trends

% RIG% OG

EBIT 16.1%+ 20 bp

6.1

2.4

• Nespresso continues to achieve above 25% organic growth

• CPW achieves mid-single digit OG


Product SegmentsPowdered & Liquid Beverages

• Soluble achieves strong RIG in all zones, as well as pricing

• Powdered volumes strong in AOA & accelerating in Latin America, pricing softer

• RTD growing double digit, with particular momentum in the Americas

EBIT 21.8%- 110 bp

% RIG% OG

4.7

9.7

• EBIT margin impacted by raw materials, currency, Dolce Gusto roll-out, Anderson upfront costs


Powdered & Liquid Beverages

• New Dolce Gusto machine & flavours

• Roll-out of Nescafé Green in Europe

• Relaunch of the premium Nescaférange in Australia (11% RIG)

• PPPs & local flavour launches in Africa, Peru, Philippines....

• Milo nutritional framework relaunched in Australia (+300bps to 63% share)

• Nestea Litro extended to new flavours & countries

• Launch of www.nescafe.com/sustainability


Previous Continental Europe UK

NEW Total Europe

Renovation / SKU Rationalisation

Improved flavour, new packaging, fewer skus,


• A strong acceleration in RIG over the period...

• ...whilst pricing eases at almost the same rate

• Major Latin American markets are strong, but smaller ones see sharp declines – consumer demand, economies

Milk Products & Ice CreamAmbient Dairy

EBIT 11.0%-20bp

% RIG% OG

0.0

-1.3

Dairy products including ice cream

• AOA markets accelerate as consumers respond to lower prices & successful PPPs


MexicoQ3-07

ArgentinaQ4 09

CWARQ2-08

NMEQ1-08

MoroccoQ3-09

PakistanQ2-09

MalaysiaQ1-08

BangladeshQ1-09

EARQ3-09

PhilippinesNew Recipe:

Q2-08

Indonesia: New Recipe:

Q3-07

ColombiaQ1-09

NEARQ3-08

Central AmQ2-08

SrilankaQ4-08

ChileNew recipe:

Q1 09

Ecuador

Brazil

AlgeriaQ2-09Caribbean Reg

Q4-08

Roll-out of affordable milks: 9% RIG

China

ZARQ2-09

Pacific IslandsH1-09

MyanmarQ3 09

CambodiaQ3 09

Vietnam & Thailand

40 countries by end '0810 countries by end '06

67 countries by end '09


• European growth challenged by OOH consumption, private labels & exit from value-destroying markets

• North America sees share gains versus branded competitors: small portion premium, "better for you" & impulse going well

• PPPs rolled-out in AOA and Latin America

Milk Products & Ice creamIce Cream

Milk & Ice cream EBIT• Dairy under pressure in H1 due

to longer term supply contracts

• Ice cream improves, with efficiencies in most areas, and due to exit of value-destroying markets


• Emerging markets continue to achieve double digit growth

• The European business is weak: economic environment particularly in Italy & Spain; competitor "volume chasing" in Germany

Prepared Dishes and Cooking Aids

% RIG% OG

EBIT 12.2%+90bp

1.00.0

• North America performs well

• EBIT margin ahead due to efficiencies and exit from two value destroyers (dried pasta & mayonnaise)


• Maggi is growing double digit in emerging markets, but overall growth held back by Europe

• Buitoni struggles in Europe, but goes well in the US

• Herta continues to achieve good volume growth

Prepared Dishes and Cooking Aids

• Stouffer's takes share in multi-serve segment

• Hot Pockets continues to perform well

• Lean Cuisine had positive OG & gained share in a weak segment


• Good performance continues, with KitKat at forefront

• The UK continues to perform at a high level

• North America has a strong start

• Latin America accelerates during the half, due to Brazil

Confectionery

% RIG% OG

EBIT 11.3%+60bp

4.3

-1.3

• Emerging markets generally weaker than in '08

• EBIT margin improvement driven mainly by reorganisations in the US & Australia


PetCare

• All three zones achieved positive OG and market share gains

• North America driven by Premium Dry Dog and Cat (Beneful, Dog Chow, Cat Chow, Friskies...)

• Europe driven by Dry cat & Single serve wet cat (ONE; Friskies, Gourmet, Felix...)

% RIG% OG

EBIT 15.7%+120bp

9.1

2.7

• EBIT performance reflects pricing actions after negative impact on H108 of raw material costs, plus SKU rationalisation


Outlook

• More stability in general economic environment

• Growing impact of state incentives

• Global trade & credit markets improving

• Comparatives easier in H2, specially Q4

Nestlé in H2 2009

• Accelerated efficiencies reinvested for profitable growth and roll-out of innovations (NaturNes, Dolce Gusto, PPP...)

• Retailer price negotiations over – working together to drive profitable growth

2009 first half roadshow – 13 August 2009 Name of chairman29October 23, 2008 Press conference, CEO Presentation29

The Roadmap to Value Creation


Summary

First Half 2009:

• A strong financial performance, combining:- Organic growth robust in current environment- EBIT margin improvement, with increased brand investment- Underlying EPS up 8.5% constant currency- Good cash flow and working capital performances

Full year 2009:

• EBIT margin improvement in constant currencies and organic growth ahead of current level


Documents

NestléS.A. · Milk Products & Ice Cream Ambient Dairy EBIT 11.0%-20bp % RIG % OG 0.0-1.3 Dairy products including ice cream ... Algeria Q2-09 CaribbeanReg Q4-08 Roll-out of affordable