Nestle S.A

Good morning and welcome to Nestlé's half-year 2026 results. I'm David Hancock, Head of Investor Relations, and I'm joined today by Philip Navratil, CEO, and Anna Manz, CFO. Before we get started, please take a moment to review the disclaimer on slide two. Let me quickly take you through our agenda. We'll start with an overview of the key messages and updates from Philip before Anna reviews the numbers in more detail. We will then open up the lines for Q&A. And with that, I'll hand over to Philip.

Thanks, David. Good morning, everyone, and thank you for joining us. Let me start with some key messages. First, our execution is improving and this is driving growth. For the last four quarters, we have delivered GERT OG and RIG. Now we need to keep delivering consistently and accelerate RIG to at least 2%. Second, we are sharpening our portfolio. The partnership for waters is an important step here. This is about focusing to win. Third, efficiency and cash. We are becoming a more efficient company and we are delivering cost savings slightly ahead of plan. This creates additional resources to reinvest in growth. Free cash flow was strong. Finally, we are on track to deliver our 2026 guidance. Our strategy is clear. Now it is all about consistent execution. Quarter after quarter, half after half. The first half showed encouraging financial progress. Growth was broad-based and risk strengthened from Q1 to Q2. Profitability improved from the low point in H2 last year. Free cash flow was much stronger than at this time last year and net debt is lower. The actions we are taking are gaining traction and we see plenty of opportunities ahead of us to further improve execution. By now, this should be a familiar slide. I have shared these priorities before. The most important is rig-led growth. Today, I will spend most of my time on growth and I will also touch on some of the other areas. Let me start with the winning portfolio. For us, this is not about large disruptive change. We don't need that. It is about focusing resources on our strong positions in the most attractive categories. The partnership for Nestlé waters and premium beverages announced today is a part of this. For Nestlé, it allows us to concentrate fully on our four large categories. Coffee, pet care, nutrition and food and snacks. For Waters, it will create a dedicated global leader with the right structure to develop the business further. In H1, we also moved ahead with our mainstream VMS and ice cream divestments. And we acquired the remainder of YFood and divested Blue Bottle Coffee. My goal on portfolio is very simple. A sharper Nestlé focused on the businesses and brands where we can create most value. Turning to growth. We target sustained organic growth of 4% plus led by RIG of at least 2%. This slide summarizes how we think about our growth model. The model has two parts. Both are important, but we have different expectations on each. First, in the core of our business, deliver 3-4% organic growth. This means executing consistently to hold market share. Second, in our growth platforms, deliver high single-digit growth. This means accelerating our categories by stepping up investment in areas with the highest structural growth potential. Underpinning both are our leading brands. Take Nescafe. In Europe, Nescafe Gold has solid growth potential and is truly a core business. Elsewhere, the brand has higher structural opportunities, like within our cold coffee and out-of-home growth platforms. So two parts of the growth model, different expectations on each, both underpinned by our leading brands. The key to driving growth across the business is being deliberate about where and how we invest, and then relentlessly executing. Investment in growth is much broader than marketing. Growth does not come from one lever alone. It comes from better products, stronger brands, the right value proposition, increased visibility in-store and online, and clearer communications with consumers. We are rigorously monitoring execution KPIs across all of these areas, like taste preference, price competitiveness, shelf space, and marketing ROI. In all cases where execution scorecards are green across metrics, we are consistently gaining market share. Felix in Europe is a great illustration of this, but the same principles apply across every brand. Coming to marketing, which is an important focus area for me. As you know, we have been increasing investment in marketing up from 8.1% two years ago to 8.9% today. But it is not just the amount, it's how we spend and where we spend on how we are increasing effectiveness. On the left, you can see some color on this. Paid media spend was up double digit in constant currency, with strong increases in retail digital media and influencer marketing. Non-working media is now below 20%, coming from a number closer to 25%. So overall, investing more and better. On the right, we show where we are deploying the marketing spend. It is critical that we invest in both the core business and the growth platforms to ensure we at least hold share in the core and to help accelerate our categories in the growth platforms. As we polarize spend, we are not taking away from the core. You see that on the chart. and you see that we are over investing in the growth platforms. The additional funds from our cost savings programs are being invested here because we see the strongest opportunity to accelerate. As well as increasing investment in marketing, we are also strengthening innovation. Working from consumer insight back rather than technology insight forwards. And we are seeing the impact of increased speed and scale of deployments. and in all of this increasingly leveraging AI across marketing and innovation. The good news is that it is working. In the core, growth accelerated meaningfully year on year, but we still have more work to do to deliver 3-4% and do it consistently. In the growth platforms, first half OG reached 7% and we still have further opportunities. So moving in the right direction and more to come. Finally, I want to share an example that brings to life the changes underway at Nestlé. Let's watch this two-minute video.

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