Nestlé - Catalyst on the horizon: Investor Seminar
Nestlé Investor Seminar: 24-25 May
We highlight the upcoming Investor Seminar at the Vevey HQ as a potential positive catalyst for Nestlé.
We believe Nestlé will use the seminar as an opportunity to outline its strategy on how to return to the
Nestlé growth model of 5-6%, as well as a clearer articulation of ongoing cost-savings initiatives. While
several peers, such as Danone, Unilever and P&G, have provided detailed cost-saving strategies over the
past 12 months, Nestlé has remained relatively vague, and the FY15 margin performance was
underwhelming, in our view. As such, we believe any announcement of tangible cost-saving measures or
bottom-line guidance could materially boost sentiment.
Impending management re-shuffle could lead to a highly energised event
FY16 marks the final full year with Chairman Peter Brabeck at the helm. In our view, the most likely
successor to the role of Chairman is current CEO Paul Bulcke given the Nestlé history of Chairmen
succession. The company has indicated that it will announce the leadership changes around September,
so whilst we are not expecting any updates on this front, we would expect the spotlight at the seminar
to be on the front-runners. In our view there are three main possibilities for the CEO role: (1) Laurent
Freixe, Head of Zone Americas (2) Wan Ling Martello, Head of Zone AOA (3) Chris Johnson, Head of
Nestlé Business Excellence. Whilst we would not rule out a Nestlé outsider filling the role – the current
and prior CFO (Francois-Xavier Roger and Wan Ling Martello) were both Nestlé outsiders – we note that
the CEO role has not been filled by an outsider since 1922.
Valuation:
We value Nestlé using a forward EV/EBITDA multiple of 14x – a small premium to the EU Food sector
(13x), given its best-in-class returns and LT growth profile.