{ "docId": "019dd923-622b-71dc-a6db-329c982da726", "docSlug": "3849d9ee5ca3", "documentTitle": "Nestlé S.A. (NESN)", "authorId": "05_Third_Point", "authorName": "Third Point", "documentKindSlug": "shareholder-letter", "documentKindLabel": "Shareholder letter", "sourceTypeSlug": "activist_investor", "sourceTypeLabel": "Activist investor", "presentationDate": "2017-06-25 00:00:00", "orientation": "portrait", "aspectRatio": 0.77272725, "pageNumber": 2, "pageCount": 8, "prevPage": 1, "nextPage": 3, "slideType": "peer_benchmark", "function": "compare_peers", "density": "overcrowded", "nDataPoints": 28, "notes": "The slide uses red bars to highlight Nestlé's performance relative to peers in a series of bar charts.", "elementsJson": [ "headline_text", "bar_chart_vertical", "paragraph", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622b-71dc-a6db-329c982da726/2", "deckHref": "/decks/019dd923-622b-71dc-a6db-329c982da726", "deckJsonHref": "/decks/019dd923-622b-71dc-a6db-329c982da726.json", "deckAnchorHref": "/decks/019dd923-622b-71dc-a6db-329c982da726#slide-2", "components": [ { "bbox": { "h": 0.15, "w": 0.38, "x": 0.118, "y": 0.14 }, "kind": "chart", "text": "10YR TSR", "attrs": null, "subkind": "bar-vertical", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "06b96b26-7505-4f4e-ba52-79966b654929", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.38, "x": 0.51, "y": 0.31 }, "kind": "chart", "text": "1YR TSR", "attrs": null, "subkind": "bar-vertical", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "314fcf82-03a0-4ce9-8551-106da611d332", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.38, "x": 0.51, "y": 0.14 }, "kind": "chart", "text": "5YR TSR", "attrs": null, "subkind": "bar-vertical", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "971d75c4-cdf8-43fc-9238-1dda9d8c9964", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.38, "x": 0.118, "y": 0.31 }, "kind": "chart", "text": "3YR TSR", "attrs": null, "subkind": "bar-vertical", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "d8ffb579-516c-422b-b5a1-9282e06f3955", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "metric", "text": "TSR", "attrs": null, "subkind": "primary", "toolName": "Quantification", "toolSlug": "quantification", "confidence": null, "componentId": "019dd952-fb8f-761b-afcb-b00e629626d6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.04, "w": 0.77, "x": 0.118, "y": 0.86 }, "kind": "paragraph", "text": "Third Point invested in Nestlé because we recognized a familiar set of conditions that make it ripe for improvement and change: a conglomerate with unrealized potential for margin", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "17535a91-3ee5-49d2-b6d0-71b815e0bb96", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.77, "x": 0.118, "y": 0.76 }, "kind": "paragraph", "text": "Without addressing the company's stalled earnings, further dividend increases will be unsustainable at historical rates. While Nestlé has stood still, its peers have pursued productivity increases aggressively and made other changes in order to deliver earnings growth and create shareholder value in a slower sales growth world.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "26fb4f6f-7d7e-4a54-85cb-afa7d77eae55", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.77, "x": 0.118, "y": 0.52 }, "kind": "paragraph", "text": "Nestlé has fallen behind over the past decade in an environment where growth has slowed due to changes in consumer tastes and shopping habits, as well as an influx of new competition from smaller, local brands.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "28d6b112-d095-4ca8-a4a6-c29814b0fa34", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.77, "x": 0.118, "y": 0.6 }, "kind": "paragraph", "text": "While its peers have adapted to this lower growth world, Nestlé has remained stuck in its old ways, making it impossible to deliver on the once reliable \"Nestlé model\" that called for 5-6% organic sales growth annually and continuous margin improvement.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "b9284af8-35bc-45b2-bf07-a05a1e0a3ccc", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.77, "x": 0.118, "y": 0.68 }, "kind": "paragraph", "text": "As a result, earnings per share have not grown in five years. This has had a knock-on effect on dividend growth, which has slowed to low single digits in recent years, and Nestlé's payout ratio now stands at the upper end of the peer group range at 66%.", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "f7f4c33e-7631-493c-99c2-253b38ece2f3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.35, "x": 0.118, "y": 0.47 }, "kind": "source-note", "text": "Note: Data through 6/23/2017; US Staples represented by XLP Consumer Staples Index", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "7a156ed5-01c0-4ec8-b4eb-efcca9e13d7c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.53, "x": 0.118, "y": 0.101 }, "kind": "title", "text": "Exhibit A: One, Three, Five and Ten Year Consumer Industry TSR's", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "3dd4ebae-a269-44f8-8d82-4a99bf71cefb", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "comparison_frame", "slug": null, "matchId": "dbdd2d32-944c-47b9-898c-dd77537f7086", "evidence": "Comparing Nestlé's TSR performance against a peer group to justify investment thesis.", "confidence": 0.9 } ], "arcBeats": [ { "to": 5, "from": 2, "beatId": "3732b8a4-3556-4b98-9975-03b555e92dc1", "arcName": "The Sparkline", "arcSlug": "sparkline", "beatName": "Evidence", "beatSlug": "evidence", "evidence": "The document provides exhibits and data to support its claims, such as peer benchmark and operating margin estimates.", "position": 1, "confidence": 0.8, "parentBeatName": null, "parentBeatSlug": null } ], "loops": [ { "to": 5, "from": 2, "name": "Benchmark Gap", "slug": "39-benchmark-gap", "bestFor": "Performance improvement, competitive analysis, target setting", "matchId": "02398299-e73a-4ce4-8c44-3fc0010e47c1", "evidence": "The exhibits provided compare Third Point's performance to industry benchmarks.", "position": 0, "objective": "To demonstrate the performance gap between Third Point's investments and industry benchmarks.", "structure": "Our Performance -> Industry Average -> Best-in-Class -> The Gap = The Opportunity", "confidence": 0.6, "description": "Compare performance against best-in-class to quantify the opportunity" } ], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }