Nestlé USA
Financial Pillars for Success
Achieve Organic Growth of 4 – 6%
Sustainable Improvement in OP1 Margin
Improve Trade Net Working Capital
Increase Market Share of Strategic Brands
ORGANIC GROWTH
ROIC = Return on Invested Capital
Measures Year over Year Net Net Sales Growth of base business
Net Net Sales = Net Proceeds of Sales
MINUS
Biggest
Impactor
on NNS:
Reduction
in TRADE
Also called:
Adjusted
Trade Net
Working
Capital
(ATNWC)
CUSTOMER ALLOWANCES:
Trade Allowances
Cash Discounts
Distribution Allowances
Bad Goods
Trade = 79% of
Total Customer
Allowances
Organic Growth = Current Year NNS – Prior Year NNS
Prior Year NNS
Working Capital = Cash Available
RIG = Nestlé Metric
Represents change in revenue based on changes in volume
and mix. Excludes price change impacts and new business
acquisitions. RIG = Real Internal Growth.
OP 1 = Trade Operating Profit
Net Net Sales
COGS
Broker
Commission
License Fees
Variable Expenses
MINUS
Fixed Expenses (including overhead)
PFME
=
OP 1
Overhead
Depreciation
OP 1
Trade OP 1 Margin =
NIMA
MOGE
NNS
MINUS
How well a company generates cash flow relative to the
money it has invested in its business
Cash is managed through good inventory management:
•
Good Forecasting
•
Appropriate balance between Customer Service Levels and
Reduced Product Availability
•
Lower Complexity (SKU reduction)
•
Optimal Supply Chain set up
Cash is managed through smart planning for receivables and payables
Basis Points
A basis point is equal to 1/100 of a percentage point (0.01%)
An increase from 5% to 5.5% = 50 basis point (bps) increase
Market Share
Focus on growth of dollars sold through Nielsen
Nestlé Goal: Market Leadership or Strong #2 Position
To Win:
•
•
•
•
Deliver Division NPS Volume Goals IMPACT ON: OG; OP1
Deliver Division Trade Rate Goals IMPACT ON: OG; OP1
Improve Efficiency / Effectiveness of Trade Promotions
IMPACT ON: OG; OP1; Market Share
Eliminate / Reduce Non-Performance Trade
IMPACT ON: OG; OP1
•
•
•
Improve Inventory Levels via Better Forecasting
IMPACT ON: ATNWC / ROIC
Continue to Clear Deductions in Timely Manner
IMPACT ON; ATNWC / ROIC
Eliminate / Obtain Repayment on Unauthorized
Deductions IMPACT ON: ATNWC / ROIC