Investor Presentaiton
Nestlé 2023 Half-Year Results
Thursday 27th July 2023
Turning to advertising and marketing expenses.
We value consumer-facing marketing investment as a key growth driver supporting our brands
and innovation. In the spirit of greater transparency, we are now disclosing the Group
advertising and marketing expenses.
In 2022, we temporarily reduced our investment levels as we limited advertising and marketing
activities in the context of supply chain constraints. We look at marketing and trade spend
jointly because we often arbitrate between these two lines of the P&L. In the second half of
2022, we increased our trade spend in Swiss francs versus the first half, as we focused on
increasing accessibility and affordability of our products in the context of unprecedented pricing
to compensate for significant inflation. In the first half of 2023, our advertising and marketing
spend increased by 7.5% in constant currency versus the same period of the prior year. As a
percentage of sales, it was 7.1%, representing a 50-basis point increase over the second half
of 2022. In the second half of 2023, we expect to further increase our marketing investments.
Slide: Net profit
Moving on to the P&L items from underlying trading operating profit down to net profit.
Restructuring expenses increased to CHF 262 million in the first half of 2023 from CHF 87
million in the prior year. Impairment of assets decreased by 130 basis points, year-on-year.
Trading operating profit margin was 15.9%, an increase of 120 basis points on a reported
basis. Net financial expenses increased to CHF 697 million. The average cost of net debt was
2.6% compared to 1.9% in the first half of 2022. As a result of these movements, the net profit
margin increased by 70 basis points to 12.2%.
Slide: Increasing free cash flow generation
In Swiss franc terms, free cash flow increased from 1.5 billion to 3.4 billion, and as a percentage
of sales from 3.2% to 7.4%. The increase was due to working capital movements and the sale
of our stake in Prometheus Biosciences. These two elements more than offset temporarily
higher capital expenditure for the period. Even after stripping out the positive inflow of CHF
643 million linked to the Prometheus disposal, the free cash flow increase of CHF 1.3 billion
was significant.
Slide: Inventory levels starting to normalize
A key driver of our working capital improvement was the lower level of inventories. At a time
of significant inflation, it is relevant to look at the evolution of inventories as a percentage of
sales rather than in absolute value terms. Inventory levels are starting to normalize following a
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