Term Report on Nestle

Topic

Portfolio is an Effective Business Model

Course instructor: Sir Ahmad Submitted by: Ahsaan Sumbal

Muhammad Qammar

Rabia Ali Khan

Wajeeha Khalid

Izaz SajaadHassan Mauvia

AcknowledgmentIn the name of Allah who is the most Magnificent and the Merciful. He is one who grant us with the knowledge and courage doing things that we are not worthy of doing. The completion of this report was a daunting task which was eventually made easy with the grace of Allah.

We would like to express our profound gratitude and deep regards to our Course instructor Ahmad Khan who gave us the golden opportunity to do this wonderful report. The blessing, help, constant encouragement and guidance given by him time to time shall carry us a long way in the journey of life on which we are about to embark.

We are grateful to our parents for their non dwindling support as they stood by us in every need of hour by making this report. Thank you for giving us strength to reach for the stars and chase our dreams.

We dedicate this report to our parents for their endless love, support and encrougment.Contents:

Introduction

Historical glimpses

Nestle in Pakistan

Vision statement

Mission statement

Goals and objective

Values and Principles

Nestle Portfolio and its Competitors Designing of business portfolio SWOT Analysis

Cooperate Social Responsibility

Financial Analysis

Nestle introduction: Nestl is the world's leading nutrition, health and wellness company based in Switzerland. It was founded in 1866 by Henri Nestl. It has employed around 3,28,000 people and has factories or operations in almost every country in the world. Nestle was listed no.1 in fortune global 500 as the Worlds most profitable organization. It has 522 factories in 86 countries. Mainly deals in chocolates, milk products, maggi, soup, sauce, coffee, tea, milkmaid, and mineral water. Nestl is based on theprinciple of decentralization, which means each country is responsible for the efficient running of its business - including the recruitment of its staff.Historical Glimpses:The history of Nestl began in Vevey, Switzerland, in 1867 when founder Henri Nestl created one of the first infant foods in response to the need for a healthy and affordable product to serve as an alternative for mothers who could not breastfeed their babies.He called his product Farine Lacte Henri Nestl. Henri used his sur name, which means little nest, in both the company name and the logotype. The nest, which symbolizes security, family and nourishment, still plays a central role in Nestlsprofile.

Since it began over 146 years ago, Nestls success with product innovations andbusiness acquisitions has turned it into the largest Food Company in the world.

Nestle in Pakistan:

Nestle has been serving Pakistani consumers since 1988, when their parent company ,the Switzerland-based Nestl SA, first acquired a share in Milkman Ltd. It is listed on the Karachi and Lahore stock exchanges. Headquartered in Lahore, the Company operates five production facilities. Two of its factories in Sheihupura and Kabirwala are multi product factories, while another one at Karachi is already for production. One factory in Islamabad and two in Karachi produce bottled water. Nestle has 10 Regional Sales Offices in allover the Pakistan. Through its effective marketing and a vast sales and distribution network throughout the country, it ensures that its products are made available to consumers whenever, wherever and however. Convenience is at the heart of the Nestl philosophy, and their aim is to bring products to people's doorstepsMission Statement:

Nestle is the world's leading nutrition, health and wellness company. Our mission of "Good Food, Good Life" is to provide consumers with the best tasting, most nutritious choices in a wide range of food and beverage categories and eating occasions, from morning to night

Vision Statement:To be a leading, competitive, Nutrition, Health and Wellness Company delivering improved shareholder value by being a preferred corporate citizen preferred employer preferred supplier selling preferred products

Nestl subscribes fully to this vision of being the number one Nutrition, Health, and Wellness Company.Objectives & Goals:

Marketing objectives are compatible with the overall corporate objectives of nestle. Companys objective is to be the worlds largest and best branded food manufacturer while insuring that nestle name is synonymous with the products of the highest quality.Its chief objectives are: To achieve compatibility with international voluntary standards on environmental management systems. To build mutual trust with consumers, governmental authorities and business partners. To ensure continuous improvement of nestles environmental performance. Conservation of natural resources and minimization of waste. To establish the benchmark for good business practice. Employing new technologies and processing. Measuring the cost and benefits to business of its activities. Monitor progress. Audit results.Values & Principles:Nestl is not like other companies. They have a unique set of values and guiding principles that have been built up over time. Their motto is:

"Teamwork with responsible leadership"Nestls Corporate Business, Management & Leadership Principles describe the way that people throughout the Nestl Group interact with one another day by day.

We believe in people rather than systems They are committed to creating value for our shareholders but they wont favour quick-wins at the expense of long-term business development

They are committed to continuous improvement They are pragmatic

Nestl mindset is based on these principles and is reflected constantly through their business dealings and the commitment they attach in developing our employees.

Designing of Business Portfolio Plan:

Business portfolio plan involves 2 steps

1. Analyze the current business portfolio

2. Shape the future portfolio by developing strategies for growth and downsizing

Analyze the current business portfolio:

The process by which management evaluates the products and business that makes up the company is called portfolio analysis The company will want to put strong resources into its more profitable product line and phase down or drop down its weaker one. The best known portfolio planning methods was developed by the Boston Consulting Group. Using BCG approach companies classify its SBUs according to growth-share matrix.

Shape the future portfolio by developing strategies for growth and downsizing:

Beyond evaluating current business portfolio, designing the business portfolio involves finding business and product the company should consider in the future. Companies need growth if they are to compete more effectively, satisfy their stakeholder and attract top talent. Growth is pure oxygen states one executive. A firm must careful not to make growth itself an objective. The companys objective must be to manage portfolio growth companies use product/market expansion grid for his purpose, which identify company growth opportunities through market penetration, market development, product development and diversification.

Analysis of current portfolio of Nestle with the help of BCG Growth-Share matrix:

Based on recent news sources andNestls 2013 Annual Report, here is Nestls current BCG Matrix for a selection of their brands:

Question Marks: Question marks are low share business unit with high growth market.Magi 2-minute Noodles currently require lots of investment in order to capitalize on the growing culinary segment, which may not offer the highest return on investment in Nestles brand portfolio.Stars: Stars are high growth and high share business unit. Nestls wide range of mineral water has benefited from the combination of healthier lifestyle trends and emerging markets. These products require large amounts of investments in order to differentiate the bottled water brands from competitors in mature markets and grow brand awareness in emerging markets.Dogs: Dogs are business unit which have low market share in a low growth market.Sales of Jenny Craig and Lean Cuisine (weight loss management brands) and Power Bar (nutrition brand) have failed to expand outside of the USA these two brands are tipped to be divested in the future. SBUs in this classification may generate enough profit to be self-sufficient, be are considered to never be major sources of revenue.Cash Cows: Cash Cows have a high share of a low growth market.Nestle drinks and cereals (nesquik) are at cash cow with high market share and low growth rate. They require very little investment to generate revenue. They produced a lot of cash that the company uses to pay its bills and support other SBUs that need investment.Planning to develop the future portfolio of Nestle for growth and downsizing:

One useful device for identifying growth opportunities is the product/market expansion grid. This technique identifies the company growth opportunities. It creates a vital, enthusiastic corporation where people see genuine opportunities

Market penetration:

A strategy for company growth by increasing sale of current products to current market segment without changing the productsNestle do Market penetration by:

Promotion campaigns

Advertising strategies

New product innovation

Availability of in different pack sizes

Product development:

A strategy for company growth by offering modified or new products to current marketNestle do product development by acquiring the Kraft Foods' frozen pizza business

Market development:

A strategy for company growth by identifying and developing new market for its current productsNestle do market developing by serving its products all around the world:

Europe, Americas and Asia zone, Oceania and Africa Now, China is an emerging market for neslteArticle

China ------ The Emerging Market

Chief Executive Officer Paul Bulcke said:

The expansion of our manufacturing facilities in China is a clear demonstration of our continued confidence in the Chinese market, and our commitment to the country and its consumers,Nestl leads dairy development in China with new training institute:This new training institute is a continuation of our long-term investment in the future of Shuangcheng to ensure it remains one of Chinas leading dairy districts said Roland Decorvet, Chairman and Chief Executive Officer of Nestl China.

Nestle is stepping up its efforts to expand in Chinas fast growing dairy market with a construction of new dairy farming institute in the north eastern city of Shuangcheng. This institute will include a series of training farms, which nestle hopes, will became the country leading dairy training centers within next five years. Dairy farm owners and workers from Shuangcheng and other Chinese regions will be able to improve their farm management skills and learn how to use the latest agricultural technology. Dairy farm owners and workers from Shuangcheng and other Chinese regions will be able to improve their farm management skills and learn how to use the latest agricultural technology. They will gain practical experience in expanding their farm businesses, improving productivity and sourcing high quality milk sustainablyNestl is building Nescafe Coffee Centre in ChinaThis new centre is a continuation of our long-term investment in the future of coffee production and consumption in China, said Heiko Schipper, Managing Director of Nestls Food and Beverage Division in China region.

Nestl is helping to accelerate the development of Chinas coffee industry with the construction of new facilities that will provide farmers with training in improved growing techniques, at the same time as promoting the beverage to more consumers. The company has signed a memorandum of understanding with the local government in Puer, Yunnan province, agreeing to invest in a Nescaf Coffee Centre in the region that will include a coffee farming institute and a consumer experience centre. The institute, which will be the largest of its kind in China, will provide training to 5,000 farmers, agronomists, and coffee business professionals every year. The experience centre will be used to raise the profile of coffee grown in Yunnan province among consumers from China and the rest of the world. The site will also provide much-needed infrastructure to support rapidly expanding coffee production in the region. It will offer modern warehousing facilities and a quality testing laboratory that will help to set local benchmarks against international standards.

Diversification:

A strategy for company growth through starting up or acquiring business outside the current products and marketsNestle do diversification by investing in heath careArticle:

Nestle and Diversification Investing inHealthcareNestle is rumored to have paid around 500m (the deal value was not formally disclosed) to acquire Prometheus Laboratories Inc., a maker of treatments for cancer and gastrointestinal illnesses. This is not Nestle first acquisition into consumer healthcare. The Swiss company has said it aims to become the world leader in health-science nutrition in 10 years, extending its dominance beyond coffee, powdered milk and baby food.

Why the change in strategic direction? The answer, simply stated, is growth. Healthcare markets are expected to grow significantly faster than mature food product markets in the medium and long-term. Developing economies have to handle ageing populations, with consumers increasingly prepared to spend on healthcare and nutrition.

Another reason is profit margins. Net profit margins in pharmaceuticals are generally much higher than those earned in food products, though there is often a long lead time between new product development and product profitability.DownsizingReducing the business portfolio by eliminating products of business units that are not profitable or that no longer fit the companys overall strategyNestle do diversification by investing in heath careArticle

Nestle Draws Up Divestment ShortlistNestle SA, (NESN) the worlds biggest food company, has a shortlist of businesses it is looking to sell after identifying laggards that it cannot fix, Chief Executive Officer Paul Bulcke told investors today.

We are going to have some divestitures, Bulcke said, without disclosing any further details or timing. We have allowed underperformers to underperform for too long. That is not the case anymore. We will go after them. We want to be in business, not agony.

Analysts have cited Jenny Craig diet centers, PowerBar energy snacks and Lean Cuisine frozen meals as possible candidates to be jettisoned. In a presentation yesterday in Vevey, Luis Cantarell, head of Nestles 10.7 billion-Swiss franc ($11.8 billion) nutrition and healthcare businesses, said that both Jenny Craig and PowerBar were in suffering categories. Over the last three or four years we have increased our capex quite extensively, Bulcke said, in order to expand in emerging markets. We now want to sweat those assets.

SWOT Analysis:Strengths: The business offers one of the widest portfolios of food and brewery products in its sector. It also operates 29 brands that earn more than $1 billion in annual revenues. With more than 8,000 products it is hard for any other corporate to compete against Nestl.

Nestl has been forming successful partnerships and acquiring other companies in order to grow and maintain its leadership in the market. Nestle focus on collectivism and performance orientation attitude, which encourages employees to work harder.

Another thing is high level of market share and that people all over the world trust and recognizes Nestle as a big brand name.

Nestl is known almost everywhere and has a reputable brand for its products that are used by millions every day. Nestl invested more than $2 billion in R&D in 2011. Its introducing new and redesigned products every year, strengthening firms competitive advantage

Nestl runs in more than 100 countries and has extensive distribution channel all over the world, which supports its operations globally. They are low cost operators which allow them to not only beat competition but also edging ahead operating excellence, innovation, renovation, product availability and communication are major strengths.

Weaknesses: One major weakness of Nestle is that it is entering into markets that are already mature and can give a tough competition to new entrants, e.g. In the late 1980s, Dannon entered the market with a health-based yogurt, and become the top selling brand of yogurt; Nestls 1994 launch was behind the product life cycle curve in an already mature market and could not compete against a strong, established brand.

Nestle Plain Yogurt has proved to be a Nestle weakness because it has been unable to make its market place in USA

The company has complex supply chain management

The company has announced and is involved in many programs that aim to make company more eco-friendly and improving the working conditions of its suppliers. Nestle receives a lot of criticism Because of weak implementation of its program.

They were affected by pet food recall in 2007, in which 95 different brands of dog and cat food was recalled due to contamination with rat poison. Breakfast cereal industry has been under fire from the FDA and the American Medical Association, both of which say that false claims of heart healthy and lower cholesterol need to be removed from packing and advertising. They have also been forced to reduce the amount of sugar in their products, as parents advocates groups claimed they were contributing to the diabetes epidemic among American childrenOpportunities:

Nestle is already involved in many successful Ventures with major world companies like The coca-cola Company, Colgate-Palmolive, and recently Chi-Med. Joint ventures are a great opportunity for businesses to accelerate growth, to gain skill, capabilities, market access etc. (Bloomberg, 2012) In todays health conscious societies, they can introduce more health-based products, and because they are a market leader, they would likely be more successful. Provide allergen free food items, such as gluten free and peanut free.

There is a large amount of startups that are forming and introducing new products for well-being or revolutionizing the ways those products are made. Startups are cheap and easy to acquire. This is a great opportunity to expand their portfolio since Nestle is focusing on providing more well-being products. (The Wall Street Journal, 2011)

Nestle in Pakistan has a great opportunity for expanding its markets because in Pakistan there is a large ready market of food and beverages due to trends of eating and the increasing .I t also has opportunities largely in China and India as well. Through proper marketing research Nestle can cash on to these opportunities.

Threats:

Even though Nestls recent focus is towards healthier products, the company is a major supplier of chocolate and chocolate drinks that have high level of calories and due to changing customer habits this could cause a decline in consumer demand. Although it is Nestls responsibility to run thorough quality checks of its products, the company had been reportedly providing contaminated food or other products to the market. Such actions hurt the companys reputation and result in losses. Supermarkets and other retailers are introducing their own label products that cost less and can easily compete with Nestls product portfolio. With an overall growth of world economy and population, the demand for raw food will rise. This increase will result in high material costs and lower margin for Nestle.

They have major competitors, like Hersheys, Cadbury-Schweppes (owned by Pepsi), Starbucks, Beech-Nut, Quaker, Kraft Foods, Del-Monte, Frito-Lay. Another threat is due to the increasing popularity of its competitor OLPERS in local and international markets.

Nestle is facing the threats by worldwide community due to its violation of international marketing standards. Many conferences and campaigns have been held against Nestle in this regard which can damage the name and trust of its customers.

Corporate Social Responsibility:In 2012 Nestle Provide 89% nutritionally sounds products.

In 2012 Nestle achieve Nutritional Foundation on its 75.7% of the entire portfolio

The Nestl Nutritional Profling System (NNPS) is a rigorous system used to bench-mark their products against set criteria based on recommended values from the World Health Organization and other independent authorities. It assesses a products nutritional contribution, considering its role in a balanced diet, its ingredients (including fat, added sugar, calcium and whole grain) and the serving size usually consumed, either by adults or children

Nestl continues to further expand its portfolio of health and wellness products into areas such as chronic diseases - traditionally addressed by pharmaceutical products.

Nestle renovate its portfolio by adding the relevant nutrients, focusing on popular foods.

Nestle monitor all developments that may have applications in the food and beverage industry, and this includes nano-technology Nestle is able to deliver all our innovations in our foods and beverage portfolio without using nanotechnology or nano materials.

Nestl promoting vegetable consumption via teaching home cooking and healthy meal structure, Help increase consumption of whole grains and vegetables, including via healthier home cooking, Maggi Cooking Lesson Programme on-going in 8 countries in 2012 and in 2015 Maggi Cooking Lesso Programme on-going in 30 countries. In 2012, 65% of Maggi product portfolio worldwide promoting home cooking and meals with vegetables and in 2015 90% of Maggi product portfolio worldwide promoting home cooking and meals with vegetables

Nestl Policy on Salt (2005, updated 2012) Reduce salt in our products 90% of childrens products (sales value) meet the Nestl Nutritional Foundation sodium criterion. Nestl Policy on Sugars (2007 Reduce sugars in our products 90% of childrens products (sales value) meeting the Nestl Nutritional Foundation sodium criterion.

Nestle also Improves resource efficiency. Nestle 39 factories generating zero waste for disposal.Financial Performance:-

2013, proved to be a challenging year for the Company. Deteriorating law & order situation and the political scenario of the country played a major role in causing regular disruptions in business throughout the year, resulting in slowing down of business growth. The constantly higher inflation and significant depreciation of the Pakistani rupee has further aggravated the weak economic conditions of the country and has also adversely impacted the purchasing power of the consumer. Despite all these challenges, the Company reported a top line growth of 9% way ahead of the countrys GDP. The Company also improved its Gross Margins by 80 bps. The growth was fuelled by effective product mix management, optimization of our value chain through Nestl Continuous Excellence initiatives and processes enabling us to invest increased marketing support behind our brands. Nestl Pakistan remains committed to enhancing its product base by diversifying into new functionalities. Innovation & renovation remain an integral part of the Companys vision to positively enhance the quality of life. The major new product launches during 2013 included: NESTL CRUNCH, NESTL FRUITA VITALS Valencia Orange, MILKPAK Yogurt Pouch, MAGGI Noodles Chatpata, NAN3, and CERELAC - Stage 4 and NESTL MOM & me.

Total sales grew by 9% to PKR 86.2 billion, with growth coming from both the increased volumes and selling prices. The Gross Profit (GP) margin has improved by 80 bps as compared to last year due to lower increase in commodity prices, optimal product mix and strict control on total delivered cost through the NCE mindset. However, this was partially offset by increasing fuel prices, depreciation of Pakistani rupee and increased depreciation. During the current year the Company has invested heavily behind its brands. Furthermore, due to the increased average borrowing as well as depreciation of the Pakistani rupee, the Companys Net Profit margin has decreased by 60 bps.

Dividends:- Keeping in view the good financial performance of the Company, the Board of Directors has recommended to pay final cash dividend of PKR 75 per share.

Sales of nestle are continuously increasing, and earnings per share jump in 6 years from 34.24 rupess to 129.37 rupees.

Ratio Analysis:-LIQUIDITY RATIOS

20032004200520062007200820092010

Quick Ratio 0.180.180.410.460.470.450.260.28

Current Ratio 0.891.030.810.890.941.070.850.85

Quick Ratio for Nestle Pakistan from 0.26 in FY09 to 0.28 in FY10. This is because although current assets of the company showed an increase in FY10 (22.02% YoY), the increase was mostly attributed to stores and spares and stock in trade, which reduced liquidity of the current assets. The trade debts of the company decreased significantly by 48%. Furthermore, current liabilities rose from Rs 8.083 billion in FY09 to Rs 9.806 billion (YoY increase of 21.32%). The current ratio remained the same 0.85 in FY10 as in FY09 as the increase in current assets was more than offset by the increase in current liabilities.

PROFITABILITY RATIOS20032004200520062007200820092010

Profit Margin 7.25%,7.73%6.73%6.19%6.39%4.54%7.30%7.99%

G/P margin

28.82%27.80%27.93%28.38%28.14%26.19%28.91%26.96%

Return on Assets 19.76%17.64%12.97%10.55%11.39%9.31%16.17%17.92%

Return on Equity 63.02%63.45%61.87%53.86%43.90%35.38%67.88%73.68%

Gross Profit for Nestle Pakistan rose 16.64% (YoY) in FY10 from Rs 11.898 billion to Rs 13.9 billion owing to the significant increase of almost 25% in net sales. Net operating expenses came from Rs 7.270 billion to Rs 7.89 billion increasing the EBIT to Rs 6.2 billion from Rs 4.628 billion, an increase of 34.16% YoY. This significant rise can be contributed to tightly-controlled operations of the company and a rise in other operating income generated by Nestle Pakistan.Nestle Pakistans PAT in FY10 was Rs 4.11 billion as compared to FY09 when it was Rs 3.005 billion, an increase of almost 37% (YoY) as a result of the higher EBIT.An assessment of Nestle Pakistans profitability, as demonstrated by the diagram below, shows an upward trend in all profitability ratios:

The profit margin rose from 7.30% in FY09 to almost 8% in FY10. This was higher than the industry average of 7.67%. The gross profit margin decreased from 28.91% in FY09 to 27% in FY10 but again this was less than the industrys GPM, which stood at 30%. An overview of the Return on Assets (ROA) and Return on Equity (ROE) forged a similar upward trend thereby sustaining the profitability of Nestle Pakistan. ROA increased to 17% in FY10 from 16.17% in FY09 attributed to a 37% increase in PAT accompanied by 23.5% rise in total assets between FY09 and FY10. The industry average ROA stood at 21%. ROE statistics indicate an increase from 67.88% in FY09 to 73.68 in FY10 as the total equity increased by 26.1% in FY10. ROE for the industry was 82.65%. Overall, Nestle Pakistans profitability ratios, gross profit and net profit margin remained almost equal to the industry average whereas the ROA and ROE remained below the industry average showing high competition from the competitorsASSET MANAGEMENT RATIOS

20032004200520062007200820092010

Inventory Turnover(Days) 36.7755.0036.6036.5536.0834.6841.6736.52

Day Sales Outstanding

0.990.870.993.894.394.812.110.88

Operating cycle (Days)

37.7755.8637.6040.4440.4739.4943.7940.41

Total Asset Turnover2.242.722.281.931.701.782.052.21

Sales/Equity8.698.209.208.706.877.799.309.22

The inventory turnover decreased from 42 days in FY09 to 39 days in FY10, which means it took Nestle Pakistan an average of 39 days to convert its inventories into cash ie 2 less days than in the previous year. However, this was below the industry average of 43 days. Day Sales Outstanding more than halved from 2.11 days in FY09 to 0.88 days in FY10, indicating a tighter collection policy from the debtors. This was also lower than the industry average of 2.44 days.

Moving further, the Total Asset Turnover for Nestle Pakistan rose from 2.21 in FY09 to 2.24 in FY10 indicating slightly higher profitability of the asset base employed by Nestle Pakistan. Total Asset Turnover for the industry was 2.62, which is slightly better. Assets of the company Sales to Equity Ratio decreased from 9.30 in FY09 to 9.22 in FY10.

DEBT MANAGEMENT RATIOS 20032004200520062007200820092010

Debt to Asset

0.690.720.790.800.740.740.760.76

Debt to Equity Ratio2.19

2.603.774.112.852.803.203.11

Long Term Debt to Equity

0.951.121.402.041.401.591.371.36

Times Interest Earned19.7124.9810.095.485.365.0010.4712.10

The debt to asset ratio stood at 0.76 in FY10 showing little change since FY07. The debt to equity ratio declined from 3.20 in FY09 to 3.11 in FY10 implying a slight shift from debt financing for assets of the company supported by increased interest rates in the economy and instability of the equity market. On the other hand, the long-term debt to equity ratio also fell slightly from 1.37 in FY09 to 1.36 in FY10, indicating companys preference for equity over long-term borrowing. The company preferred short-term running finance as it witnessed a significant increase of 267%. The Times Interest Earned (TIE) ratio increased from 10.47 in FY09 to 12.10 owing to the high EBIT in FY10.

MARKET RATIOS

20032004200520062007200820092010

Earnings per share

16.7621.8725.4230.0639.8134.2466.2790.96

Price/Earnings Ratio

22.4323.7830.2934.7645.2238.9618.8026.19

Dividend per share

4.005.0015.005.0010.0025.0020.0030.00

Book value per share 26.6034.4641.0955.8190.6796.7897.62123.09

Market ratios for Nestle Pakistan indicate a 37% increase in Earnings per Share from Rs 66.27 in FY09 to Rs 90.69. The industrys EPS was much higher, standing at an average of Rs 168.35.Dividend per Share also increased by 50% rising from Rs 20 in FY09 to Rs 30 in FY10. The reason for this is the high increase in profits of the company. The Book Value per Share for Nestle Pakistan registered an increase from its value of Rs 97.62 in FY09 to Rs 123.09 in FY10. This rise can largely be accounted for by the 23.5% increase in total assets without any change in the number of issued ordinary shares, which stood at 45,349,600 shares at the end of 2010.

Year20032004200520062007200820092010

No. of Share issued ( in thousands

4527345273453494534945349453494534945349

Year20032004200520062007200820092010

Market prices(Year End)

376.00520.00770.001045.001800.001334.001246.002375.00

The price of Nestle Pakistans shares on 31st December 2010 rose from Rs 1246 to Rs 2375, which is a significant increase of 90.61%.Future outlook

Nestle Pakistan has maintained a firm position in the Pakistani foods market with the leading position in several categories and is expected to continue its strong operations on the basis of its current and past performance.

Nestle Pakistans future operations seem promising with several projects and investments already in line. The company plans to approximately Rs 8 billion in 2011 for milk collection field development, upgrading of existing production facilities and increase in production capacity. The company also plans to continue with its Corporate Social Responsibility efforts in the coming year.

Nestle Pakistan has also decided to contribute significantly to the Port Grand Project being initiated in Karachi with a Coffee Shop and Beverages Bar offering at the complex.