Nestle Financial Analysis

Financials

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	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	TTM
Revenue CHF Mil	91,075	98,458	107,552	109,908	107,618	109,722	83,642	92,324	92,373	91,865	91,865
Gross Margin %	58.3	58.6	58.1	56.9	58.0	58.2	47.2	47.6	47.9	48.2	48.2
Operating Income CHF Mil	10,800	13,302	15,024	15,676	14,970	16,194	12,471	13,932	13,068	10,905	10,905
Operating Margin %	11.9	13.5	14.0	14.3	13.9	14.8	14.9	15.1	14.1	11.9	11.9
Net Income CHF Mil	8,518	9,197	10,649	18,039	10,428	34,233	9,487	10,611	10,015	14,456	14,456
Earnings Per Share CHF	2.04	2.36	2.76	4.84	2.91	10.12	2.96	3.32	3.13	4.52	4.52
Dividends CHF	0.80	0.59	0.66	0.78	1.41	1.26	1.80	1.91	2.03	2.14	2.14
Payout Ratio %	37.6	25.3	24.1	16.1	48.5	12.5	60.9	57.5	64.8	47.3	47.3
Shares Mil	3,999	3,931	3,868	3,725	3,584	3,382	3,205	3,195	3,200	3,196	3,196
Book Value Per Share USD	8.95	10.44	12.33	13.12	13.61	20.32	19.04	20.72	22.11	22.38	23.62
Operating Cash Flow CHF Mil	10,205	11,676	13,439	10,763	17,934	13,608	9,763	15,772	14,992	14,700	14,700
Cap Spending CHF Mil	-4,133	-4,889	-5,590	-5,454	-5,041	-4,984	-5,026	-5,711	-5,330	-4,423	-4,423
Free Cash Flow CHF Mil	6,072	6,787	7,849	5,309	12,893	8,624	4,737	10,061	9,662	10,277	10,277
Free Cash Flow Per Share USD	1.15	1.42	1.79	1.33	3.48	2.73	1.57	3.45	3.40	3.25	—
Working Capital CHF Mil	5,947	2,826	-7,556	-175	3,787	8,851	-1,908	-3,548	-2,851	1,066	—

Key Ratios

Profitability Ratios:

MARGINS % OF SALES	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	TTM
Revenue	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
COGS	41.66	41.35	41.87	43.07	42.01	41.79	52.76	52.42	52.08	51.76	51.76
Gross Margin	58.34	58.65	58.13	56.93	57.99	58.21	47.24	47.58	47.92	48.24	48.24
SG&A	43.82	43.38	42.41	40.87	41.53	41.74	29.89	30.17	30.17	30.34	30.34
R&D	1.65	1.76	1.74	1.80	1.88	1.71	1.70	1.67	1.63	1.77	1.77
Other	—	—	—	—	1.15	—	1.09	0.96	2.64	4.42	4.42
Operating Margin	11.86	13.51	13.97	14.26	13.91	14.76	14.91	15.09	14.15	11.87	11.87
Net Int Inc & Other	-0.63	-0.24	-1.40	5.60	-0.57	19.93	-0.50	-0.52	-0.68	-0.69	-0.69
EBT Margin	11.23	13.27	12.57	19.86	13.34	34.69	14.41	14.57	13.46	11.18	11.18

PROFITABILITY	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	TTM
Tax Rate %	25.40	25.20	25.27	17.35	23.42	9.70	25.83	25.66	26.18	32.79	32.79
Net Margin %	9.35	9.34	9.90	16.41	9.69	31.20	11.34	11.49	10.84	15.74	15.74
Asset Turnover (Average)	0.96	0.96	0.99	1.00	0.99	0.99	0.74	0.77	0.75	0.72	0.72
Return on Assets %	8.94	8.96	9.84	16.33	9.61	30.76	8.41	8.83	8.12	11.39	11.39
Financial Leverage (Average)	2.07	2.00	2.20	2.09	2.27	1.80	2.01	2.07	1.92	1.90	1.90
Return on Equity %	19.13	18.24	20.66	35.08	20.92	61.80	15.99	18.02	16.22	21.79	21.79
Return on Invested Capital %	13.29	13.46	15.06	24.41	15.24	45.37	12.27	12.66	11.59	16.46	16.46
Interest Coverage	9.67	11.73	10.06	20.81	19.08	45.94	23.48	—	—	—	—

Growth Ratios:

2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	LATEST QTR
Revenue %
Year over Year	4.96	8.11	9.24	2.19	-2.08	1.96	-23.77	10.38	0.05	-0.55	—
3-Year Average	0.71	3.82	7.42	6.47	3.01	0.67	-8.70	-4.98	-5.58	3.18	—
5-Year Average	2.27	3.06	3.82	4.55	4.40	3.80	-3.21	-3.01	-3.42	-3.12	—
10-Year Average	—	—	—	4.36	3.72	3.03	-0.13	0.35	0.49	0.57	—
Operating Income %
Year over Year	24.54	23.17	12.95	4.34	-4.50	8.18	-22.99	11.72	-6.20	-16.55	—
3-Year Average	7.63	14.33	20.10	13.22	4.02	2.53	-7.34	-2.37	-6.90	-4.37	—
5-Year Average	3.29	7.61	11.64	11.98	11.54	8.44	-1.28	-1.50	-3.57	-6.14	—
10-Year Average	—	—	—	8.24	6.58	5.83	3.07	4.87	3.91	2.32	—
Net Income %
Year over Year	26.81	7.97	15.79	69.40	-42.19	228.28	-72.29	11.85	-5.62	44.34	—
3-Year Average	4.04	13.97	16.60	28.42	4.28	47.59	-19.28	0.58	-33.62	15.07	—
5-Year Average	8.13	6.60	7.08	23.76	9.20	32.08	0.62	-0.07	-11.10	6.75	—
10-Year Average	—	—	—	15.44	8.24	19.50	3.57	3.44	4.89	7.97	—
EPS %
Year over Year	20.22	15.55	17.19	75.30	-39.88	247.77	-70.75	12.16	-5.72	44.41	—
3-Year Average	1.85	13.96	17.64	33.40	7.29	54.18	-15.12	4.49	-32.37	15.15	—
5-Year Average	-22.70	6.57	7.42	24.91	11.40	37.77	4.67	3.76	-8.35	9.21	—
10-Year Average	—	—	—	-1.10	-7.03	3.19	5.62	5.57	6.99	10.30	—

CASH FLOW RATIOS	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	TTM
Operating Cash Flow Growth % YOY	-1.99	14.41	15.10	-19.91	66.63	-24.12	-28.26	61.55	-4.95	-1.95	—
Free Cash Flow Growth % YOY	-4.84	11.78	15.65	-32.36	142.85	-33.11	-45.07	112.39	-3.97	6.37	—
Cap Ex as a % of Sales	4.54	4.97	5.20	4.96	4.68	4.54	6.01	6.19	5.77	4.81	4.81
Free Cash Flow/Sales %	6.67	6.89	7.30	4.83	11.98	7.86	5.66	10.90	10.46	11.19	11.19
Free Cash Flow/Net Income	0.71	0.74	0.74	0.29	1.24	0.25	0.50	0.95	0.96	0.71	0.71

BALANCE SHEET ITEMS (IN %)	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	LATEST QTR
Cash & Short-Term Investments	5.13	11.82	8.94	8.23	6.30	15.46	7.64	7.93	6.05	6.95	6.95
Accounts Receivable	13.82	14.32	13.45	13.49	12.04	11.68	12.65	10.62	—	—	—
Inventory	7.89	7.89	8.09	8.80	6.97	7.10	8.11	7.23	6.96	6.87	6.87
Other Current Assets	13.55	0.66	0.72	0.60	10.63	0.70	0.80	2.11	11.96	11.62	11.62
Total Current Assets	40.39	34.68	31.20	31.11	35.95	34.93	29.21	27.89	24.96	25.45	25.45
Net PP&E	18.22	19.87	19.24	19.86	19.47	19.20	21.01	21.31	22.33	21.30	21.30
Intangibles	28.86	31.71	35.44	35.31	30.80	31.13	33.63	36.65	36.29	40.73	40.73
Other Long-Term Assets	12.53	13.74	14.11	13.71	13.78	14.73	16.16	14.15	16.41	12.52	12.52
Total Assets	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00
Accounts Payable	10.75	12.35	12.37	11.87	11.75	11.28	11.91	11.45	—	—	—
Short-Term Debt	18.19	15.22	21.40	14.48	13.02	11.30	14.11	14.71	9.45	6.60	6.60
Taxes Payable	0.68	0.87	0.75	0.78	1.06	0.97	1.24	1.29	1.06	0.95	0.95
Accrued Liabilities	—	—	—	—	—	—	—	—	—	—	—
Other Short-Term Liabilities	5.02	3.47	3.27	4.15	6.71	3.46	3.62	3.25	16.82	17.10	17.10
Total Current Liabilities	34.64	31.90	37.79	31.28	32.53	27.00	30.88	30.70	27.33	24.65	24.65
Long-Term Debt	—	—	—	—	8.08	6.70	5.44	7.14	8.60	9.29	9.29
Other Long-Term Liabilities	17.15	18.01	16.79	20.92	15.28	10.88	13.90	13.88	12.11	13.51	13.51
Total Liabilities	51.79	49.91	54.57	52.20	55.90	44.58	50.22	51.72	48.05	47.45	47.45
Total Stockholders’ Equity	48.21	50.09	45.43	47.80	44.10	55.42	49.78	48.28	51.95	52.55	52.55
Total Liabilities & Equity	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00	100.00

LIQUIDITY/FINANCIAL HEALTH	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	LATEST QTR
Current Ratio	1.17	1.09	0.83	0.99	1.11	1.29	0.95	0.91	0.91	1.03	1.03
Quick Ratio	0.55	0.82	0.59	0.69	0.56	1.01	0.66	0.60	0.59	0.69	0.69
Financial Leverage	2.07	2.00	2.20	2.09	2.27	1.80	2.01	2.07	1.92	1.90	1.90
Debt/Equity	0.16	0.14	0.12	0.12	0.18	0.12	0.11	0.15	0.17	0.18	0.18

EFFICIENCY	2005-12	2006-12	2007-12	2008-12	2009-12	2010-12	2011-12	2012-12	2013-12	2014-12	TTM
Days Sales Outstanding	52.30	53.51	50.90	47.93	43.67	40.57	55.47	52.87	50.60	50.99	50.99
Days Inventory	73.04	72.58	70.11	71.76	68.93	62.33	71.05	69.31	66.41	67.37	67.37
Payables Period	97.27	106.19	108.40	103.27	103.51	102.00	108.26	105.73	115.80	128.60	128.60
Cash Conversion Cycle	28.08	19.90	12.61	16.42	9.09	0.90	18.27	16.44	1.21	-10.25	-10.25
Receivables Turnover	6.98	6.82	7.17	7.62	8.36	9.00	6.58	6.90	7.21	7.16	7.16
Inventory Turnover	5.00	5.03	5.21	5.09	5.29	5.86	5.14	5.27	5.50	5.42	5.42
Fixed Assets Turnover	5.08	5.04	5.09	5.09	5.04	5.10	3.68	3.63	3.43	3.32	3.32
Asset Turnover	0.96	0.96	0.99	1.00	0.99	0.99	0.74	0.77	0.75	0.72	0.72