Nestlé S.A. (NSRGY, OTC)
Annual report, fiscal year 2023


Annual Review 2023



Nestlé.

We unlock the power of food to enhance quality of life for everyone, today and for generations to come.



## Our purpose

Nestlé. Unlocking the power of food to enhance quality of life for everyone, today and for generations to come.



## Front cover

Milo
As the world’s leading chocolate malt beverage, Milo delivers nutritious energy and encourages kids to stay active and grow with sports, engaging over 30 million kids annually through grassroots sports programs.

## Contents

2 Letter to our shareholders
4 Our people on the ground
8 Implementing our growth strategy
12 Creating Shared Value
16 Connecting through our brands
32 Financial review
56 Corporate Governance and Compliance
63 Shareholder information



## Accompanying reports

Corporate Governance Report 2023
Compensation Report 2023
Financial Statements 2023



## Online

You can find more information about the Nestlé Group at www.nestle.com

Find out more about Creating Shared Value at www.nestle.com/csv



# Our financial performance

Our Nutrition, Health and Wellness strategy is fundamental to how we create value.

A summary of the 2023 full-year results is shown here. For full results, please consult the 'Financial review' section.

<table><tr><td>Group sales (in CHF)</td><td>Organic growth *</td><td>Real internal growth *</td></tr><tr><td>93.0 billion</td><td>+7.2%</td><td>-0.3%</td></tr><tr><td>Underlying trading operating profit* (in CHF)</td><td>Underlying trading operating profit margin *</td><td>Underlying trading operating profit margin *</td></tr><tr><td>16.1 billion</td><td>17.3%</td><td>+40 Basis points Constant currency</td></tr><tr><td>Trading operating profit* (in CHF)</td><td>Trading operating profit margin *</td><td>Trading operating profit margin *</td></tr><tr><td>14.5 billion</td><td>15.6%</td><td>+190 Basis points Constant currency</td></tr><tr><td>Earnings per share (in CHF)</td><td>Earnings per share</td><td>Underlying earnings per share *</td></tr><tr><td>4.24</td><td>+23.7%</td><td>+8.4% Constant currency</td></tr><tr><td>Operating cash flow (in CHF)</td><td>Free cash flow * (in CHF)</td><td></td></tr><tr><td>15.9 billion</td><td>10.4 billion</td><td></td></tr><tr><td>32.1% of net financial debt</td><td></td><td></td></tr><tr><td>Proposed dividend (in CHF)</td><td>Proposed dividend increase</td><td></td></tr><tr><td>3.00</td><td>+1.7%</td><td></td></tr></table>



## Our business

We apply our expertise in nutrition, health and wellness to help people and pets live happier, healthier lives. We do this alongside ambitious sustainability goals to generate significant value for our shareholders and other stakeholders alike.

What we sell (in CHF billion)

Powdered and Liquid Beverages

PetCare

Nutrition and Health Science

Prepared dishes and cooking aids

24.8

18.8

15.3

11.7

Milk products and Ice cream

Confectionery

Water

11.0

8.1

3.3

Where we sell (in CHF billion)

NA
32.5

LATAM
12.8

EUR
22.3

AOA
19.9

Number of employees

270 000

Number of countries we sell in

188

Total group salaries and social welfare expenses (in CHF)

14 billion

Corporate taxes paid in 2023 (in CHF)

2.8 billion



# Our key non-financial performance

We create shared value through our social and environmental commitments and supporting actions.
To measure our progress,
we use a comprehensive set
of indicators that support
our business performance
and generate value for our
shareholders and other
stakeholders. Some key
performance indicators are
included here – the full set is
in our Creating Shared Value
and Sustainability Report.

## Climate

We aim to reduce our greenhouse gas (GHG) emissions by 20% by 2025 and 50% by 2030 from 2018 levels, on the road to net zero by 2050 at the latest

## Nature

We aim to achieve and maintain 100% assessed deforestation-free primary supply chains (for meat, palm oil, pulp and paper, soy and sugar) by 2022 and 2025 for cocoa and coffee

## Packaging

By 2025, we aim to reduce virgin plastics by one third versus our 2018 baseline

## Diversity, equity and inclusion

## Youth

By 2030, our ambition is to help 10 million young people around the world have access to economic opportunities

## Health and Nutrition

## Our KPI \( ^{*} \) 

## 13.58%

net reduction of GHG emissions versus 2018 baseline \( ^{(a)} \) 

(a) Covers emissions related to our net zero commitment.
Net reductions (%) includes removals from both insetting and landscape projects.

## Our KPI \( ^{*} \) 

## 93.4%

assessed deforestation-free for stated primary supply chains

## Our KPI \( ^{*} \) 

## 14.9%

virgin plastic reduction versus 2018 baseline

## Our KPI \( ^{*} \) 

## 46.4%

management positions held by women

## Our KPI \( ^{*} \) 

## 7.74 million

young people around the world with access to economic opportunities since 2017

## Our KPI \( ^{*} \) 

## 127.6 billion

servings of affordable nutrition with micronutrient fortification provided in 2023



# Pursuing significant
global opportunities

Dear fellow shareholders,

As the Good food, Good life company, Nestlé is proud to provide consumers with products they love and rely on. Even in the face of ongoing global challenges this past year, we stay true to our long-term ambitions and see a bright future with emerging opportunities.

Nutrition, Health and Wellness is our past, present and future, and within that frame we continue to set new priorities. Our innovation capabilities enable us to consistently meet the rising expectations of a growing population. Portfolio optimization over the past years allows us to focus our efforts on our proven brands. Our operational excellence enables us to dependably deliver sustainable, profitable growth. And we continue to do business in a way that creates shared value for both our shareholders and society.

## Encouraging balanced diets

Foods and beverages are major drivers of long-term health, and consumers increasingly recognize this. We will continue to develop nutritious products that support people’s well-being, and we believe that such products will see increased demand in the years to come.

In fact, in 2023, we reconfirmed our ambition to prioritize the development of our more nutritious products. This entails launching new products and renovating existing ones. It involves expanding micronutrient fortification, growing our affordable offerings, reducing sugar and salt content, and increasing our use of plant-based ingredients in our recipes.
Additionally, we are actively guiding people towards a more balanced diet by making the nutritional value of our portfolio more transparent. We are strengthening our responsible marketing of indulgent products, providing clear front-of-pack portion guidance, and engaging with and informing consumers through our various online communities around the world.

## Supporting healthy aging

Nestlé’s food and beverage portfolio caters to people at each stage of their life. It starts with the first 1000 days and continues into adulthood and old age. With a rapidly aging global population, we see an opportunity to provide products that can support the nutrition, health and wellness of older people. We can help boost their energy levels, enhance their cognitive health, support their mobility, and improve their general physical and mental health.

We already offer several Nestlé Health Science and dairy products that are specifically targeted to seniors. Take, for example, successful brands like Boost, Pure Encapsulations or Molico. With our capabilities, we believe that we can leverage this trend across all of our categories to further grow.

## Investing in innovation

We are investing in our future through innovation and entrepreneurship. Through our main research center in Switzerland and 23 sites globally, and with an industry-leading R&D budget, we develop products tailored to the diverse needs of people and pets while reducing our environmental footprint. Experts at our newly inaugurated Institute of Agricultural Sciences, for example, develop solutions in the areas of plant science, agricultural systems and dairy livestock. This is in addition to our four other research institutes looking at health sciences, food sciences, food safety and packaging.

Digital technologies, including artificial intelligence (AI), are supporting sharper decision-making and increased speed across the entire company. From procurement to e-commerce, digital analytics facilitate efficiency and




U. Mark Schneider, Chief Executive Officer (left), and Paul Bulcke, Chairman (right)

effectiveness. Data science and AI increasingly support us with innovation by revealing and predicting consumer demands, while also helping us bring new products to market faster.

## Creating Shared Value

Creating Shared Value is how we do business at Nestlé, generating value not only for our shareholders but also for society. Nestlé’s long-term success is supported by this approach.

An example of this is Nestlé’s efforts to advance regenerative food production by helping protect, renew and restore natural resources. To that end, we are supporting farmers and strengthening their communities. We are delivering on our commitments in a way that appeals to consumers’ increased expectations.

## Remaining dedicated and dependable

Every year, our people show us how much can be achieved when we steadfastly pursue opportunities. We know that we do not have all the answers, but with our global mindset combined with our expert knowledge of local consumers and markets, we are confident we can deliver on our ambition and our commitments.

People all over the world rely on Nestlé for good food and beverages. Our proven value creation model allows us to invest, innovate and grow even in challenging times, and makes us dependable for our shareholders and other stakeholders. We are grateful for the support of our employees, business partners, consumers and communities. And we thank you, our shareholders, for your continued trust.



Paul Bulcke
Chairman



U. Mark Schneider
Chief Executive Officer



# Our people
on the ground

We engage with our fellow employees, business partners and community members. From meeting with farmers to visiting retailers, touring our factories and doing volunteer work, our culture encourages and supports connecting with internal and external stakeholders.












































































# Implementing
our growth strategy



Garden Gourmet Marine-Style Crispy Filet
Our Garden Gourmet Marine-Style Crispy
Filet launched in several European countries
in 2023, expanding the range of plant-based
fish alternatives, which includes the popular
Garden Gourmet Vuna.



Our purpose is unlocking the power of food to enhance quality of life for everyone, today and for generations to come. To achieve this, we pursue growth through rapid innovation, operational efficiency, and disciplined resource and capital allocation.

Our portfolio is diversified, both in terms of geography and category. We have products for people at all life stages that can be consumed as part of a balanced diet. We want to contribute to people’s health through nutrition and aim to help people of all ages live better. Our innovation capabilities ensure we deliver products that meet consumer needs and preferences, and are good for the planet. Through digital technologies, we are able to be more agile and make better and faster decisions.

## Driving organic sales growth

Organic sales growth is key to our growth ambition. Our portfolio is geared to deliver sustained mid single-digit organic sales growth based on investment in attractive categories and regions, impactful innovation and execution discipline. Our knowledge of local consumers coupled with our scientific and technological expertise help us deliver innovations that support business growth, while meeting consumer needs. We also see many opportunities for growth through cross-fertilization between categories and geographies.

In addition to core innovation activities focused on food safety, taste, nutrition and sustainability, we have intensified research in high-growth categories, such as early-life and therapeutic nutrition, alternative proteins, and coffee and systems technology. Ecosystem building and business model innovation are also increasingly a focus of our categories.

Alongside innovation, we continue to optimize our portfolio to focus on stronger brands and products.

## Innovating across life stages and health needs

The foods and beverages people consume play a pivotal role in their overall health. From pre-conception to early life, through to childhood, adulthood and old age, we aim to meet people’s nutritional and health needs throughout their lives.

Nestlé has deep roots in infant nutrition. For years, we have researched the composition of nutrients and bioactives present in breastmilk as well as the role of probiotics in nutrition and health. Exploring the interaction between these different components, Nestlé experts discovered a proprietary probiotic strain, B. infantis, that unlocks beneficial aspects of six human milk oligosaccharides (HMOs). This led to the launch in 2023 of our proprietary blend, Sinergity, for use in infant formulas to support immunity and gut health.

As we continue our tradition of supporting children’s health, we also need to consider an aging population that is living longer. Under our R+D Accelerator initiative, we developed the Nestlé Goodnes range of products in 2023 to support healthy aging. It helps optimize people’s energy levels, restore their sleep quality and improve their focus through patented nutritional blends. The products were piloted in France, Singapore and the UK. Additionally, we launched the Nestlé N3 range in China that helps people maintain their overall health and well-being as they age.

## Expanding alternative proteins

In 2023, we added to our plant-based portfolio by launching a range of vegan alternatives to fish fillets, nuggets and fingers that stand out for their strong nutrition credentials, as well as their great taste and texture that is close to white fish. Garden Gourmet launched Marine-Style Crispy Filet and Marine-Style Crispy Nuggets in Europe, and Harvest Gourmet launched Crispy Fish-Free Fingers in Asia.

We also continued to explore new concepts for dairy alternatives. Made with a blend of oat and fava, the new natural bliss beverages are a good source of high-quality protein. Our teams chose fava beans because of their many health benefits and good taste.

In addition, we combined the goodness of milk with plant-based ingredients in our new Nido Milk & Soya instant powder launched in Central and West Africa and



Nestlé is exploring emerging technologies like animal-free dairy beverages made with precision fermentation, which led to a pilot for Cowabunga in the United States.




in our Bear Brand Doble Protein powdered beverage piloted in the Philippines. Both products are highly nutritious and affordable.

## Making innovation faster and more efficient

We are using AI and data science to complement our R&D capabilities and manage complexities during innovation. Our new recipe optimization tool uses advanced algorithms to help product developers better manage tradeoffs between ingredients, nutrition, cost and sustainability, while still meeting consumer expectations.

In the development of the new Nescafé Dolce Gusto Neo coffee system, our experts optimized the manufacturing process through virtual simulations before applying technical settings on the physical machine. This helped them make quick and efficient decisions to manage the complex interaction between coffee, paper packaging material and the machine to ensure the perfect coffee cup for consumers.

## Improving efficiency with digital technologies

Digitalization is enabling better and faster decision-making, in addition to improving cost efficiencies. We are harmonizing our data framework to be able to take advantage of different technologies, like AI.

The Nestlé Supplier Portal, a global digital collaboration platform, supports quality document management, sustainability data collection and supplier performance management. With over 7000 active suppliers in over 40 markets, it covers almost three-quarters of our direct material spend.

## Leveraging always-on analytics

We are responding to fast-changing consumer needs in real time, using data to streamline our business processes. Our strategic procurement decisions are more informed, as we increasingly leverage advanced statistical modeling with machine learning and automated price-trend analytics. And by deploying new marketing analytics capabilities at scale, we are building data foundation pipelines that automatically refresh our marketing effectiveness models for faster and smarter investment decisions.

In 2023, we spent 68% of our media budget digitally and acquired 308 million first-party data records. We are on track to meet our 2025 goals of 70% and 400 million respectively. Using AI, this data helps our brands reach target audiences more efficiently and deliver more relevant, personalized messages online.

## Accelerating e-commerce

Our ambition for 2025 is that a quarter of our sales come from e-commerce. This will have a significant impact on all markets, brands and roles. To support this, we launched an e-commerce academy that offers personalized learning paths. Over 1500 employees were trained and certified in 2023.

We have also launched our own eB2B platforms in key markets such as Brazil, India, Mexico and Vietnam, and have partnered with other leading platforms, such as the eB2B platform BEES.



# Delivering
novel
technologies



Thanks to our strong global capabilities, we continue to develop exciting innovations that can be applied across different products, brands and categories.

One of our latest unique science-based innovations is Nestlé N3 milk, which offers new nutritional benefits. Made from cow's milk, it has all the essential nutrients found in milk, including proteins, vitamins and minerals. In addition, it also contains beneficial prebiotic fibers and has



The N3 milk products are the result of development work done by experts at R&D Nutrition, R&D Singapore, R&D Beijing and Nestlé Research.

a low lactose content and over 15% fewer calories.

Using a proprietary technology, we use specialized enzymes to break down lactose, a sugar found in cow's milk, while generating prebiotic fibers. Clinical studies showed that the fibers promote the growth of multiple types of bifidobacteria, delivering gut microbiome benefits in healthy adults.

N3 milk was first introduced in 2023, in a range of powdered dairy products in China, tailored to meet the dietary needs of local consumers. The N3 range includes a full cream and a skimmed milk product, both high in protein and perfect for the whole family. To support specific needs for healthy aging, the range includes two products with vitamins, minerals and probiotics to support bone health, muscle growth and strength, and immunity.

N3 milk will be introduced in other product categories later, enabling us to support health and well-being across life stages.
IN FIGURES

## up to 3x
beneficial bifidobacteria growth



OUR VOICES

“N3 milk will serve as a basis for nutritious solutions for people with lactose sensitivity or who want to improve their gastrointestinal health.”



Isabelle
Bureau-Franz
Head of Nestlé's
R&D for Nutrition
Switzerland



# Creating
Shared Value



Nescafé Plan 2030
In Vietnam and other Nescafé coffee-sourcing countries, the Nescafé Plan 2030 supports farmers to use regenerative agriculture practices to reduce GHG emissions, enhance farmer income and improve social and environmental conditions.



Drawing on our purpose – to unlock the power of food to enhance quality of life for everyone, today and for generations to come – we focus our energy and resources on making a positive impact at scale.

We regularly conduct a materiality assessment to identify where Nestlé has the greatest impact on society and the environment, and the topics most important to our business success. In this section, we provide a summary of the top-rated themes from our latest assessment. Our Creating Shared Value and Sustainability Report provides more details, including how we are aligning with the Task Force on Climate-related Financial Disclosures recommendations.

## Supporting tasty and balanced diets

As a company that stands for Good food, Good life, Nestlé is stepping up its measures to help people enjoy a balanced diet.

We are providing complete transparency on the nutritional value of our portfolio. Products with a Health Star Rating (HSR) of 3.5 stars or more – together with specialized nutrition products, such as baby foods, vitamin and mineral supplements, and medical nutrition – are considered nutritious. Together, these products accounted for close to 59% of our food and beverage sales in 2023. Our pet care portfolio is excluded from this assessment.

Looking at people’s diets holistically, we know that people consume food and beverages not only for nutrition but also for enjoyment. Nestlé aims to offer the right products for all these occasions, while also guiding people towards a more balanced diet. We are strengthening our responsible marketing practices, with new rules restricting the marketing to children under the age of 16 years in effect as of July 2023. We are ensuring that all children’s confectionery and ice cream portions will be 110 kilocalories or less and that all multi-serve products from these two categories have clear front-of-pack portion guidance. And to help people enjoy our products as part of a balanced diet, we will provide more guidance, including recipes, menu planning, healthy lifestyle tips and recommendations for nutritious choices.



## Delivering food safety and quality

High standards of food safety and quality are non-negotiable at Nestlé and are fundamental in our engagement with consumers. Quality is integral to our Corporate Business Principles and embedded in our purpose and values. The end-to-end approach we take to food safety and quality applies to design, delivery and consumption. We apply international standards and help raise the bar in our industry using rigorous processes and leading scientific techniques.

We update our food safety and quality systems to respond to considerations, such as tightening regulations, changes to suppliers or ingredients, introduction of regenerative agriculture practices, new packaging and geopolitical developments. In 2023, our Quality Assurance Centers performed more than 4.1 million analytical tests for quality and food safety risk assessment and management.

## Progressing to net zero

We are more than halfway to our 2025 goal to reduce absolute GHG emissions included in our Net Zero Roadmap and are progressing well. Most of the reductions are due to changes in the way we source raw materials, such as investments in deforestation prevention and regenerative agriculture in our agricultural supply chains.

We have identified more than 80% of the supply chain initiatives needed to hit the 2025 target and are seeking further reductions to reach our planned 50% cut by 2030. For example, through the newly inaugurated Nestlé Institute of Agricultural Sciences, our experts are exploring novel approaches in dairy farming that have the potential to reduce GHG emissions in the areas of cow feed and manure management.

Helping prevent deforestation plays a major role. By the end of 2023, 93.4% of our primary supply chains for cocoa, coffee, meat, palm oil, pulp and paper, soy and sugar were assessed as deforestation-free. The decrease from 99.1% in 2022 is due to the inclusion of coffee and cocoa in this indicator for the first time, where deforestation risk has not been assessed for as long.




As of 2023, Nestlé has approved near- and long-term science-based emissions reduction targets with the Science Based Targets initiative (SBTi). The SBTi has validated Nestlé’s net-zero science-based target by 2050.

## Promoting regenerative agriculture practices

We continue making progress in responsible sourcing, which ensures our raw materials are traceable to point of origin and are farmed using methods aligned to our Responsible Sourcing Standard, while progressively delivering benefits to people, nature and climate. We have set requirements for 14 priority raw materials: cereals and grains; cocoa; coconut; coffee; dairy; fish and seafood; hazelnuts; meat, poultry and eggs; palm oil; pulp and paper; soy; spices; sugar; and vegetables. Our aim is for 100% of these materials to be responsibly sourced by end of 2030. In 2023, this figure reached 36.2%.

Reforestation within or near our sourcing locations is an essential part of decarbonizing our operations and supply chain. Nestlé became the first food and beverage company to pilot Airbus’s new Pléiades Neo satellites. We are using high-resolution images to monitor trees planted in our sourcing regions to ensure they thrive in the long term.

We continue to expand our regenerative agriculture program across a wider range of raw materials and regions, supporting farmers with training. Our farmer relationship management system collects data for over 250 000 farms, helping us track progress on GHG emission reductions and regenerative agriculture practices.
Regeneration is important for water resources as well. Over 40 water regeneration projects are now underway around our water bottling sites. Each one is tailored to local challenges and based on a mix of natural and technical solutions for improving the quality and quantity of water available.

Implementing our vision for packaging and circularity
Our vision remains that none of Nestlé’s packaging ends up in landfill or as litter. Our strategy addresses both product design and infrastructure systems for reuse and recycling. By reducing unnecessary packaging, designing better packaging, modeling fair collection systems and supporting good regulation, we aim to support the transition to a waste-free future.

Packaging innovations in 2023 support this transition. Redesigned jars for Mahler Bouillon are saving 156 tonnes of plastic annually, with a format that is easy to recycle in local systems in Guatemala. In Latin America, Nescafé reduced single-serve sticks packaging, saving 44 tonnes of plastic annually.

Innovations to reach this goal go beyond packaging redesign. In Indonesia, we collaborated with a team of start-ups and retail partners to pilot a reusable and refillable dispenser, and single-serve reusable packaging, for Milo and Koko Krunch brands. Shipping innovations also help. Reusable shipping boxes and reusable pallet bands that replace plastic shrink wrap are cutting plastic use by 100 tonnes annually in China.



# Looking
at the whole
landscape



The farms in our supply chains are not isolated – they are part of broader landscapes and economies. Only by joining forces with other stakeholders can we address complex issues, such as deforestation, while advancing regenerative agriculture practices.

Nestlé has been partnering with others through landscape initiatives that address these issues. Since 2020, a partnership with the Ministry of Water and Forests in Côte d'Ivoire and the



In the UK, Purina Go-Cat cat food and Nestlé Original Shredded Wheat cereal contain ingredients sourced from farmers involved with the LENs program.

Earthworm Foundation has led to a significant reduction in deforestation, as well as the reforestation of almost 1500 hectares in the Cavally Forest Reserve. In 2023, the Cavally project entered a new phase with additional partners to achieve greater impact.

To help scale landscape initiatives, Nestlé supports Landscape Enterprise Networks (LENs) in the UK and Europe. LENs brings together organizations that need nature-based solutions with the farmers who can provide them. In the East of England, Purina and Nestlé Cereal Partners UK are working with water companies and local authorities to fund the introduction of nature-based solutions. Over 60 farmers and land managers will implement these solutions across more than 10 000 hectares of land.

In 2023, we also supported sustainable landscape initiatives in Brazil, Chile and Malaysia. We are also active in numerous landscape initiatives developed by our palm oil suppliers and partners in different parts of Indonesia.
IN FIGURES



15
landscape initiatives supported in 2023

OUR VOICES

“Working at a landscape level can offer various benefits for biodiversity, water stewardship, climate change, human rights and resilient livelihoods.”



Michele Zollinger
Climate Forest Lead,
Global Reforestation
Program
United States



# Connecting
through
our brands

Our broad portfolio of trusted and loved brands are enjoyed by people around the world.

Powdered and Liquid Beverages
Page 18





















PetCare
Page 20

























Nutrition and Health Science
Page 22






























































































































































































































































POWDERED AND LIQUID BEVERAGES

# Perfecting the world's
favorite beverages

Our Powdered and Liquid Beverages category includes our coffee, cocoa and malt beverage businesses. This category features iconic coffee brands Nescafé, Nespresso and Starbucks, plus the world’s most popular chocolate malt beverage, Milo.

Nespresso
A pioneer of high-quality,
sustainable coffee,
Nespresso launched
its first paper-based
home and industrial
compostable capsule in
France and Switzerland,
compatible with Nespresso
Original machines.



## Milo

Milo has strong growth momentum in Malaysia, thanks to a reignited grassroots sports program and the implementation of Nestlé's sugar-reduction technology that reduces sugar while preserving taste.

At a glance
24.8
Sales (in CHF billion)
20.7%
UTOP margin
26.7%
Percentage of Nestlé's sales

Nescafé Dolce Gusto Neo
Piloted in Brazil and
now launched in France
and Switzerland, Neo
is the next generation
of Nescafé Dolce
Gusto coffee systems,
combining unique brewing
technologies, connectivity
and sustainability.





Nescafé Ice Roast
Launched in Mexico and
China, Nescafé Ice Roast is
Nescafé’s first soluble coffee
specially crafted to enjoy
with cold water or milk over
ice, catering to the growing
number of cold-coffee lovers.



# Building
India's
coffee culture



Nescafé has been introducing the globally loved coffee experience to Indian consumers. It is playing a lead role in developing at-home consumption of coffee in a country known for its traditional preference for tea.

Nescafé is leading both the creation of the coffee category and the market in India. The brand has introduced its coffee to more than 30 million Indian households in the past seven years.



The Nescafé Plan 2030 is helping communities transition to regenerative agriculture and improve livelihoods, positively impacting 4900 Indian coffee farmers.

Nescafé is particularly focused on growing the coffee culture among Indian youth, establishing the role of coffee in their lives.

Manufactured at the state-of-the-art Nanjangud roastery, Nescafé roasts Indian green coffee beans, tailoring the final product to cater to local taste preferences. Thanks to strategic positioning, Nescafé is increasingly available and easily accessible across the country in three million retail outlets.

By investing in product quality and consistently communicating the relevance of coffee, Nescafé has captured the attention and loyalty of its target audience, recruiting non-coffee drinkers to choose coffee as their beverage of choice. Alongside these efforts to bring coffee culture to India, Nescafé is backing its Nescafé Plan 2030 with actions on the ground. It is helping ensure that the entire value chain of coffee is sustainable as well as socially and economically inclusive.
IN FIGURES

## 10 million

Indian households
introduced to coffee
in 2023





## OUR VOICES

“Nescafé is on an exciting journey in India, poised to further strengthen its position as a leader, driving both consumer delight and sustainable impact.”



Sunayan Mitra
Coffee & Beverages
Director
India



PETCARE

# Caring for pets
and people

Our PetCare business delivers life-changing nutrition for pets that helps them thrive. Purina is guided by science and driven by passion to enrich the lives of pets, the people who love them and the planet we all share.

Purina One DualNature
Purina One DualNature,
Purina’s first carbon-
reduced range, has cut
the carbon footprint of its
products by 15.7% since
2019 by optimizing recipes,
manufacturing methods,
packaging and logistics.

Purina Dog Chow
The new product line boasts exciting protein combinations and innovative kibble textures, all fortified with Purina’s proprietary EXTRAlife, providing dogs with excellent nutrition and delicious taste.





Purina Pro Plan
Vital Systems
Purina Pro Plan Vital Systems
4-in-1 cat food formulas
proactively support major
systems of health – such as
kidneys, brain, digestion and
immunity – with meat or fish
always the first ingredient.



Purina Pro Plan
Veterinary Diets
The new OM Metabolic
Response + Joint Mobility
is specially formulated to
help dogs lose fat while
maintaining muscle, with
long-chain omega-3 fatty
acids plus glucosamine to
help support joint health.



# Leading the way
with pet
supplements

Pet owners are increasingly choosing to customize their pet’s nutrition with supplements, toppers and snacks that cater to their pet’s individual needs. Purina is responding to this shift in consumer habits with additional health-focused nutrition options.

Purina Pro Plan Veterinary Supplements are specialized supplements for dogs and cats, designed to support their health and address specific conditions.

Digestive disorders are common health issues for pets, varying from

IN FIGURES

22.6%

organic growth for Purina Pro Plan Veterinary Supplements in 2023



2023

minor upset stomachs to more severe gastrointestinal problems or food allergies. Purina Pro Plan Veterinary Supplements FortiFlora is the #1 U.S. recommended probiotic by veterinarians. It is a proprietary probiotic supplement that supports digestive health and helps improve stool quality in dogs and cats.

Water is crucial for cats, just like it is for humans. Many cats dislike drinking water – especially still or stagnant water – which can lead to dehydration. Purina Pro Plan Hydra Care addresses this, offering nutrient-enriched water for cats. It contains osmolytes that help cats absorb water at a cellular level, ensuring they stay hydrated.

Like humans, dogs can experience anxiety, which varies across breeds and individuals. Purina Pro Plan Veterinary Supplements Calming Care includes a proprietary probiotic strain shown to help dogs and cats manage stress and maintain calm behavior.
Purina innovates supplements scientifically designed to support various needs, including digestion, immunity, hydration, joint health and calmer behavior.



OUR VOICES

“Science and nutrition are the foundation of long-term health and the starting point to an amazing life for pets and their owners.”



Brittany Vester Bøler
Global Nutrition Director,
Nestlé Purina R&D
United States



NUTRITION AND HEALTH SCIENCE

# Optimizing health
through nutrition

Our nutrition business provides science-based products and solutions for mothers, babies and children. Our Nestlé Health Science business supports healthier lives by offering an extensive portfolio of science-based consumer care and medical nutrition.

Gerber Popped Crisps
Leveraging the goodness
of grains and plant protein,
this new healthy snack in the
China market was created
with taste, texture and
nutrition ideal for children
three years and up.
Vitaflo PKU sphere
Vitaflo PKU sphere helps
people with phenylketonuria
(PKU) manage their diets
with the most advanced
nutrition system alongside
superior taste, now in
a ready-to-drink format and
two new flavors.



NAN Supreme Pro
The new NAN Supreme Pro
is now made with Sinergity,
a proprietary blend of
six age-adapted HMOs
and precision probiotic
B. infantis, to synergistically
support infant immunity
and gut health.





BOOST Glucose Control
Now available at Costco
in the United States, BOOST
Glucose Control is clinically
shown to produce a lower
blood sugar response versus
a standard nutritional drink
in people with type 2 diabetes.



# Addressing
childhood
nutrition
deficiency

A collaboration between Nestlé and the Bangladesh Council of Scientific and Industrial Research (BCSIR) has resulted in a groundbreaking product to help combat malnutrition in young children in Bangladesh.

A significant percentage of Bangladeshi children under the age of 5 years suffer from various micronutrient deficiencies. In collaboration with BCSIR, Nestlé Bangladesh developed a cereal-based fortifier, Cerelac Pushtimix (pushtimix means mix of nutrients in Bangla) to address these deficiencies. Specifically designed to cater to the nutritional needs of Bangladeshi children aged



The single-dose sachets of micronutrient powder can easily be sprinkled on homemade food – like rice, semolina or khichuri – to combat malnutrition.

6 to 60 months, Cerelac Pushtimix is fortified with 11 vitamins, 5 minerals and probiotic B. lactis.

Cerealac Pushtimix was designed to give parents a simple, accessible format to help combat malnutrition in their young children. Developed as a convenient powder, consumers can easily sprinkle it on homemade foods. The aim is to make it accessible to all children, including those in rural areas, thanks to its affordable price point of BDT 5 (less than 5 Swiss centimes) per 5g sachet.

In 2023, Nestlé Bangladesh was honored with the prestigious SDG Brand Champion Award in Sustainable Partnerships & Institutions. The Bangladesh Brand Forum, in collaboration with the Global Compact Network Bangladesh, bestowed this award in recognition for this successful collaboration’s support for the UN Sustainable Development Goals (SDGs).
IN FIGURES



>4.4 million
Cerealac Pushtimix sachets sold in 2023

OUR VOICES

“This innovation will help empower the nation to eliminate malnutrition while increasing the Nestlé footprint across Bangladeshi households.”



Hafizul Islam
BEO Nutrition
Bangladesh



PREPARED DISHES AND COOKING AIDS

# Advancing delicious
and nutritious food

Our prepared dishes and cooking aids category provides daily essentials, including bouillons, chilled culinary products, and frozen food and pizzas. Iconic brands such as Maggi, Stouffer’s and DiGiorno cater to regional and local tastes.

The new Maggi Veg line in Chile and Germany gives consumers shelf-stable options for wholesome and tasty plant-based solutions that are a good source of protein and fiber.



Lean Cuisine Balance Bowls
New tasty and nutritious
Lean Cuisine Balance Bowls
are the first meals to meet
the American Diabetes
Association frozen entrée
nutrition guidelines,
helping people manage
blood sugar levels.



At a glance
11.7
Sales (in CHF billion)
18.3%
UTOP margin
12.5%
Percentage of Nestlé's sales

Totole Recipe Solutions
The expanded Totole
Recipe Solutions range
in China added four new
single-portion options
that specifically cater to
one-person households and
independent mealtimes.



Maggi Air Fryer
The new Maggi Air Fryer
seasoned coating range in
Australia enables consumers
to make easy, delicious,
home-cooked meals in their
air fryer, a cooking appliance
that is gaining in popularity.



# Increasing
access to
quality meals



Consumers worldwide want food that tastes great while providing the nutrition they need, all within their budgets. To address this challenge, Nestlé is constantly developing products that are delicious, affordable and nutritious.

Plant-based meals can offer quality nutrition, including protein, and many consumers are interested in trying these. In Italy, Garden Gourmet is enabling more families to access plant-based products at an attractive price point. The tasty Garden Gourmet 99kcal Miniburger, for example,



Building on MyMenu IQ, available in over 30 countries to give consumers nutritional scores of meals, Poland added an extra tool for assessing meal affordability.

is made with quinoa, bulgur, carrots and broccoli.

Nestlé uses its innovation expertise to give consumers affordable and nutritious products they can use in their favorite recipes. In 2023, Nestlé launched Maggi Soya Chunks, which offers Nigerian consumers a tasty meat alternative for rice, stews and pasta. Not only does this provide a convenient and affordable way to deliver the flavor of meat at a fraction of the cost, Maggi Soya Chunks also provides a nutritious source of protein, iron and zinc.

Nestlé continues to create new options that provide quality protein through grains. As part of the International Year of Millets 2023, we launched Maggi Nutri-licious Masala Oats Noodles with Millet Magic. This product leverages the power of these ancient grains to bring protein and fiber to Indian consumers in one of their favorite meals.
OUR VOICES

“We innovate to support consumers in creating affordable, delicious and nutritious meals every day.”



Shivani Hegde
Global Category Leader,
Affordable Nutrition
Switzerland

IN FIGURES



12.6%
organic growth for affordable nutrition food products in 2023



MILK PRODUCTS AND ICE CREAM

# Responding to
evolving preferences

Our milk products business delivers nutritional products for all stages of life, ambient dairy, plant-based alternatives and coffee creamers. Our ice cream business offers a variety of special treats.

KitKat Pink
Launched in Malaysia with plans for global rollout, the new KitKat Pink strawberry cheesecake-flavored ice cream bar is successfully addressing rising demand for unique cross-category brand extension.



Nido Milk & Soya
Nido Milk & Soya offers
an affordable nutrition
solution to consumers in
Nigeria thanks to a new
milk powder fortified with
iron that is made from both
dairy and soy, providing high
quality protein.

At a glance
11.0
Sales (in CHF billion)
24.5%
UTOP margin
11.8%
Percentage of
Nestlé's sales

Yiyang JiaHeng
The new Yiyang JiaHeng
milk powder supports
healthy aging in China
by delivering comprehensive
nutrition for seniors in each
serving, helping to maintain
immunity, mobility and
cardiovascular health.



Starbucks Vanilla Creamer
Inspired by the popular
Starbucks Vanilla Latte
served at Starbucks stores,
this highly anticipated
launch continues to support
the growing demand for
Starbucks coffee enhancers
in the U.S. market.



# Bringing
regeneration
to the table



Ninho, together with thousands of milk-producing families, delivers nutrition that supports a better future for over 38 million Brazilian children. In support of a bright tomorrow, Nestlé is incentivizing Brazilian dairy farmers to protect and restore natural resources by adopting sustainable farming measures.

The Nature por Ninho program trains and incentivizes farmers to adopt regenerative agriculture practices that result in lower carbon emissions and increased carbon sequestration.



Visits from Nestlé’s Regenera technicians, a WhatsApp farmer community and monthly YouTube sessions empower farmers to improve sustainability.
By adopting practices, such as water conservation, manure and waste management, minimum cultivation and soil cover, crop rotation and better animal welfare practices, dairy farmers can enable sustainable farming for generations to come.

Farmers in the program can engage in three levels of regenerative agriculture practices: bronze, silver and gold. For each level, the farmer receives an extra bonus in pay per liter of milk. At the end of 2023, 179 Nature por Ninho farms were in the gold category, supplying 17 million liters of milk per month.

In 2023, the Ninho team embarked on a mission to communicate these best farming practices to consumers, sharing progress on three pillars: animal welfare, soil and water. Through nationwide communication, including Ninho Forti+ commemorative packs, millions of Brazilian consumers are learning about the difference that comes from the farm.
IN FIGURES



## 11400 acres

of dairy farms now utilizing regenerative agriculture practices in Brazil

OUR VOICES

“By 2025, our aim is to have 30% of the Brazilian milk in our supply chain coming from gold-category dairy farms.”



Barbara Sollero
Sustainable Agriculture
Manager
Brazil



CONFECTIONERY

# Delighting consumers
with tasty snacks

Our confectionery business includes the iconic KitKat brand and a portfolio of much-loved regional and local brands. The business innovates to create great tasting chocolate products and nutritious snacks.

KitKat Milo
Following on the heels
of the rollout of the most
successful cross-brand
collaboration in Australia
that brings together two
popular and distinctive
brands, KitKat Milo has now
also been launched in Japan.

Aero Truffle
As the leading aerated tablet brand in Canada, Aero is now expanding its offering with a new range of Aero Truffle indulgent dessert-inspired flavors like Black Forest, Salted Caramel and Tiramisu.



Aero Truffle
As the leading aerated tablet brand in Canada, Aero is now expanding its offering with a new range of Aero Truffle indulgent dessert-inspired flavors like Black Forest, Salted Caramel and Tiramisu.

Nestlé Damak
Nestlé Damak, a leading heritage brand in Türkiye, has invested over a decade in a sustainable pistachio program in Gaziantep that promotes responsible farming practices and benefits communities.

At a glance
8.1
Sales (in CHF billion)
16.8%
UTOP margin
8.7%
Percentage of
Nestlé's sales

Nestlé Choco Trio
Our leading chocolate
heartland brand in Latin
America is now expanding
to capture the Chocobakery
opportunity, bringing
together chocolate tablets
and biscuits, with a winning,
value-up innovation.



# Supporting
breaks
for good



Our income accelerator program aims to improve the livelihoods of cocoa-farming families and tackle child labor risks in cocoa production, while advancing sustainable farming practices. Now, cocoa from the program has found its way to KitKat.

The program incentivizes and encourages change in cocoa-farming families through a cash incentive paid directly to them through mobile money. It supports four areas: child education,

IN FIGURES

160 000
cocoa-farming families planned to be supported by the program by 2030



good agricultural practices (GAP), agroforestry and diversified incomes.

Since the launch in 2022, the program has benefited 10 000 cocoa-farming families in Côte d'Ivoire. It will expand to include Ghana in 2024. Initial results from a report by third-party KIT Royal Tropical Institute are promising, while also informing program improvements. Pruning has increased cocoa farm productivity by more than 20%, on average. School enrollment rates have risen by 8%, reaching 83%. Women are more involved in decision-making, which has improved the allocation of family resources. Cash incentives are primarily used where it matters most, first and foremost for schooling.

We are also putting into practice our ambition to fully segregate our cocoa ingredients. In late 2023, KitKat factories in Hamburg, Germany, and Sofia, Bulgaria, started using 100% segregated chocolate mass from the income accelerator program. We will expand segregation in KitKat factories to most of Europe by early 2024.
The KitKat “Breaks for Good” packs include a QR code so consumers can discover more about the school enrollment pillar of our income accelerator program.



OUR VOICES

“We are confident that as the program scales, we will see a measurable impact on cocoa farmers’ incomes and an improvement in the lives of children.”



Darrell High
Head Nestlé Cocoa Plan
Switzerland



WATER

# Offering more
than hydration

Our water business is dedicated to providing healthy hydration and enhancing quality of life while contributing to a sustainable future. The strategic focus is on international premium mineral water brands as well as healthy beverages.

Following the successful launch of Vittel+ Immunity with zinc in 2022, the brand expanded this functional range with two new benefits: Active with B vitamins and Recharge with magnesium.

## Vittel+





## PERRIER + STARCK

As Perrier celebrates its 160th anniversary, the brand continues to captivate with the launch of a new limited edition of the iconic glass bottle redesigned by visionary creator Philippe Starck.

At a glance
3.3
Sales (in CHF billion)
10.6%
UTOP margin
3.6%
Percentage of
Nestlé's sales

Nestlé Pure Life
Nestlé Pure Life unveiled
a new portfolio architecture
design, inspired by the ripples
effect, to help consumers
navigate across the range while
enhancing brand uniqueness
and impact on shelf.





S.Pellegrino Essenza
S.Pellegrino Essenza successfully rolled out its vibrant Mediterranean blends range in France, seizing the momentum of the fast-growing flavored sparkling waters market.



# Nurturing
the art of
tasteful living

Sanpellegrino aims to nurture the art of tasteful living, today and for generations to come. This purpose is embodied by our initiatives to support future gastronomic talent, responsible fine dining and fine drinking, and protection of nature.

To nurture the future of gastronomy, the S.Pellegrino Young Chef Academy connects talented young chefs across the globe with influential members of the gastronomic world for education, mentoring, networking and career opportunities. Every other year, it hosts



Sanpellegrino's editorial digital platform, Fine Dining Lovers, inspires with interviews, stories, recipes and videos about responsible gastronomy.
the S.Pellegrino Young Chef Academy competition to discover new talents and inspire the next generation of culinary game changers.

We are partnering with Food for Soul to inspire a culture of responsible dining. Founded by renowned chef Massimo Bottura and Lara Gilmore, Food for Soul aims to prevent food waste while encouraging a healthy and equitable food system. Together, we launched the Why Waste? initiative to foster awareness and inspire consumers and chefs through our Fine Dining Lovers platform as well as through courses offered to S. Pellegrino Young Chef Academy members.

We are also dedicated to protecting the source of taste by managing water resources sustainably and respecting the environment. Our Acqua Panna and S.Pellegrino plants are already certified to the Alliance for Water Stewardship (AWS) Standard. By 2025, we aim to create a positive water impact everywhere we operate.
IN FIGURES





>2000

chefs representing 50 nationalities belong to the S.Pellegrino Young Chef Academy community

OUR VOICES

“We are pleased with the popularity of the S.Pellegrino Young Chef Academy, helping us build a strong global network of next generation culinary talent.”



Stefano Bolognese
Sanpellegrino
International Business
Unit Director
Italy



## Financial review



## Key figures (consolidated)

<table><tr><td colspan="3">In millions of CHF (except for data per share and employees)</td></tr><tr><td></td><td>2022</td><td>2023</td></tr><tr><td>Results</td><td></td><td></td></tr><tr><td>Sales</td><td>94 424</td><td>92 998</td></tr><tr><td>Underlying trading operating profit (a)</td><td>16 103</td><td>16 053</td></tr><tr><td>as % of sales</td><td>17.1%</td><td>17.3%</td></tr><tr><td>Trading operating profit (a)</td><td>13 195</td><td>14 520</td></tr><tr><td>as % of sales</td><td>14.0%</td><td>15.6%</td></tr><tr><td>Profit for the year attributable to shareholders of the parent (Net profit)</td><td>9 270</td><td>11 209</td></tr><tr><td>as % of sales</td><td>9.8%</td><td>12.1%</td></tr><tr><td>Balance sheet and Cash flow statement</td><td></td><td></td></tr><tr><td>Total Equity</td><td>42 792</td><td>36 387</td></tr><tr><td>Net financial debt (a)</td><td>48 159</td><td>49 638</td></tr><tr><td>Ratio of net financial debt to total equity (gearing)</td><td>112.5%</td><td>136.4%</td></tr><tr><td>Operating cash flow</td><td>11 907</td><td>15 941</td></tr><tr><td>as % of net financial debt</td><td>24.7%</td><td>32.1%</td></tr><tr><td>Free cash flow (a)</td><td>6 570</td><td>10 403</td></tr><tr><td>Capital additions</td><td>8 264</td><td>7 159</td></tr><tr><td>as % of sales</td><td>8.8%</td><td>7.7%</td></tr><tr><td>Data per share</td><td></td><td></td></tr><tr><td>Weighted average number of shares outstanding (in millions of units)</td><td>2 707</td><td>2 646</td></tr><tr><td>Basic earnings per share</td><td>CHF</td><td>3.42</td></tr><tr><td>Underlying earnings per share (a)</td><td>CHF</td><td>4.80</td></tr><tr><td>Dividend as proposed by the Board of Directors of Nestlé S.A.</td><td>CHF</td><td>2.95</td></tr><tr><td>Market capitalization, end December</td><td>285 865</td><td>255 604</td></tr><tr><td>Number of employees (in thousands)</td><td>275</td><td>270</td></tr><tr><td>Principal key figures (b) (illustrative) in CHF, USD, EUR</td><td></td><td></td></tr><tr><td>In millions (except for data per share)</td><td>Total CHF 2022</td><td>Total CHF 2023</td><td>Total USD 2022</td><td>Total USD 2023</td><td>Total EUR 2022</td><td>Total EUR 2023</td></tr><tr><td>Sales</td><td>94 424</td><td>92 998</td><td>98 772</td><td>103 584</td><td>94 010</td><td>95 730</td></tr><tr><td>Underlying trading operating profit (a)</td><td>16 103</td><td>16 053</td><td>16 845</td><td>17 880</td><td>16 033</td><td>16 525</td></tr><tr><td>Trading operating profit (a)</td><td>13 195</td><td>14 520</td><td>13 802</td><td>16 173</td><td>13 137</td><td>14 947</td></tr><tr><td>Profit for the year attributable to shareholders of the parent (Net profit)</td><td>9 270</td><td>11 209</td><td>9 697</td><td>12 485</td><td>9 230</td><td>11 539</td></tr><tr><td>Total Equity</td><td>42 792</td><td>36 387</td><td>46 281</td><td>43 245</td><td>43 444</td><td>39 081</td></tr><tr><td>Market capitalization, end December</td><td>285 865</td><td>255 604</td><td>309 177</td><td>303 784</td><td>290 225</td><td>274 532</td></tr><tr><td>Data per share</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Basic earnings per share</td><td>3.42</td><td>4.24</td><td>3.58</td><td>4.72</td><td>3.41</td><td>4.36</td></tr></table>

(a) Certain financial performance measures are not defined by IFRS Accounting Standards. For further details, see Foreword on page 34.
(b) Income statement figures translated at weighted average annual rate; Balance sheet figures at year-end rate.



## Group overview

## Foreword

The Financial review contains certain financial performance measures, that are not defined by IFRS Accounting Standards (thereafter “IFRS”), that are used by management to assess the financial and operational performance of the Group. They include among others:

– Organic growth, Real internal growth and Pricing;

– Underlying trading operating profit margin and Trading operating profit margin;

– Net financial debt;

– Free cash flow; and

– Underlying earnings per share (EPS) and EPS in constant currency.

Management believes that these non-IFRS financial performance measures provide useful information regarding the Group’s financial and operating performance.

The Alternative Performance Measures document published under www.nestle.com/investors/publications defines these non-IFRS financial performance measures.

## Group sales

Organic growth was 7.2%. Pricing was 7.5%, reflecting cost inflation over the last two years. RIG was -0.3%, impacted by soft consumer demand, capacity constraints and a temporary supply disruption for vitamins, minerals and supplements in the second half. As expected, RIG turned positive in both the fourth quarter and the second half, supported by the benefits from portfolio optimization, improving customer service levels and increased brand support.

Growth was broad-based across most geographies and categories. In developed markets, organic growth was 6.4%, led by pricing with negative RIG. In emerging markets, organic growth was 8.4%, driven by pricing and positive RIG.

By product category, Purina PetCare was the largest contributor to organic growth, with strong momentum across all channels. Purina ONE, Purina Pro Plan and Friskies all recorded double-digit growth. Sales of Purina Pro Plan reached almost CHF 3 billion. Coffee saw high single-digit growth, with positive sales developments across brands, supported by strong demand in out-of-home channels. Infant Nutrition posted high single-digit growth, based on continued momentum for premium infant formula, including human milk oligosaccharides (HMOs) products as well as specialty formulas. Dairy reported mid single-digit growth, led by fortified milks, coffee creamers and home-baking products. Confectionery recorded high single-digit growth, fueled by continued double-digit growth for KitKat. Prepared dishes and cooking aids posted mid single-digit growth, with robust demand for Maggi across geographies and segments. Water posted mid single-digit growth, led by S.Pellegrino and Acqua Panna. Nestlé Health Science recorded low single-digit growth, as continued strong momentum for Medical Nutrition was partly offset by temporary supply constraints in vitamins, minerals and supplements.



By channel, organic growth in retail sales remained robust at 6.5%. E-commerce sales grew by 13.4%, reaching 17.1% of total Group sales. Organic growth of out-of-home channels was 15.9%.

Net divestitures decreased sales by 0.9%, largely related to the divestment of a majority stake in Freshly as well as the disposal of the Gerber Good Start infant formula brand in 2022. The impact on sales from foreign exchange was negative at 7.8%, following significant and broad-based appreciation of the Swiss franc. Total reported sales decreased by 1.5% to CHF 93.0 billion.

Sales by geographic areas

<table><tr><td rowspan="2"></td><td colspan="3">Differences 2023/2022 (in %)</td></tr><tr><td>in CHF</td><td>in local currency</td><td>in CHF millions</td></tr><tr><td>By principal markets</td><td></td><td></td><td>2023</td></tr><tr><td>North America</td><td>-1.4%</td><td>(a)</td><td>32 553</td></tr><tr><td>United States</td><td>-0.9%</td><td>+5.5%</td><td>30 034</td></tr><tr><td>Canada</td><td>-6.2%</td><td>+3.5%</td><td>2 519</td></tr><tr><td>Europe</td><td>0.0%</td><td>(a)</td><td>22 291</td></tr><tr><td>France</td><td>-0.3%</td><td>+3.0%</td><td>3 546</td></tr><tr><td>United Kingdom</td><td>+3.5%</td><td>+9.0%</td><td>3 529</td></tr><tr><td>Germany</td><td>-4.5%</td><td>-1.3%</td><td>2 212</td></tr><tr><td>Other markets of geographic area of which Switzerland</td><td>0.0%</td><td>(a)</td><td>13 004</td></tr><tr><td></td><td>-0.8%</td><td>-0.8%</td><td>1 101</td></tr><tr><td>Asia, Oceania and Africa</td><td>-5.2%</td><td>(a)</td><td>19 870</td></tr><tr><td>Philippines</td><td>+0.4%</td><td>+9.0%</td><td>2 677</td></tr><tr><td>India</td><td>+1.7%</td><td>+13.6%</td><td>1 993</td></tr><tr><td>Australia</td><td>-4.0%</td><td>+6.7%</td><td>1 450</td></tr><tr><td>Other markets of geographic area</td><td>-7.3%</td><td>(a)</td><td>13 750</td></tr><tr><td>Latin America</td><td>+3.5%</td><td>(a)</td><td>12 760</td></tr><tr><td>Brazil</td><td>+10.0%</td><td>+13.4%</td><td>4 131</td></tr><tr><td>Mexico</td><td>+13.9%</td><td>+6.8%</td><td>3 937</td></tr><tr><td>Chile</td><td>+0.7%</td><td>+3.1%</td><td>1 312</td></tr><tr><td>Other markets of geographic area</td><td>-11.2%</td><td>(a)</td><td>3 380</td></tr><tr><td>Greater China</td><td>-5.5%</td><td>(a)</td><td>5 524</td></tr><tr><td>Greater China</td><td>-5.5%</td><td>+5.2%</td><td>5 524</td></tr><tr><td>Total</td><td>-1.5%</td><td>(a)</td><td>92 998</td></tr></table>

(a) Not applicable.



## Underlying trading operating profit

The underlying trading operating profit margin increased by 20 basis points to 17.3% on a reported basis and by 40 basis points in constant currency. Underlying trading operating profit decreased by 0.3% to CHF 16.1 billion, due to currency appreciation.

Gross profit margin increased by 70 basis points to 45.9%. Pricing, cost efficiencies and portfolio optimization more than offset significant cost inflation.

Distribution costs as a percentage of sales decreased by 60 basis points to 8.3% of sales, mainly as a result of lower freight and energy costs.

Marketing and administration expenses as a percentage of sales were 18.9%. Within this line item, advertising and marketing expenses were 7.7% of sales, an increase of 80 basis points compared to the prior year.

Restructuring and net other trading items decreased from CHF 2.9 billion to CHF 1.5 billion, reflecting one-off items in the prior year, particularly asset impairments. As a result, trading operating profit increased by 10.0% to CHF 14.5 billion. The trading operating profit margin reached 15.6%, an increase of 160 basis points on a reported basis and 190 basis points in constant currency.

Underlying trading operating profit and Trading operating profit
In millions of CHF
In % of sales



☑ Underlying trading operating profit
☐ Trading operating profit

Underlying trading operating profit by operating segment
In % of sales



Trading operating profit by operating segment
In % of sales



Zone NA
Zone EUR
Zone AOA
Zone LATAM
Zone GC
Nestlé Health Science
Nespresso



## Net financial expenses and Income tax

Net financial expenses increased to CHF 1.4 billion, reflecting an increase in interest rates and a higher level of average net debt. The average cost of net debt was 2.5% compared to 2.2% in 2022.

The Group reported tax rate decreased by 600 basis points to 18.2% as a result of one-off items. The underlying tax rate increased by 30 basis points to 21.2%, mainly due to the geographic and business mix.

## Net profit and Earnings per share

Net profit increased by 20.9% to CHF 11.2 billion. Net profit margin increased by 230 basis points to 12.1% on a reported basis and by 240 basis points in constant currency. The increase was mainly due to lower asset impairments, a decrease in reported taxes and higher income from associates. As a result, earnings per share increased by 23.7% to CHF 4.24 on a reported basis.

Underlying earnings per share increased by 8.4% in constant currency and by 0.1% on a reported basis to CHF 4.80. The increase was mainly the result of strong organic growth and improved underlying trading operating profit margin. Nestlé’s share buyback program contributed 1.2% to the underlying earnings per share increase, net of finance costs.

## Cash flow

Free cash flow increased to CHF 10.4 billion from CHF 6.6 billion, mainly due to lower inventory levels.

Evolution of the Nestlé S.A. share in 2023
In CHF



Nestlé S.A. share

Nestlé relative to Swiss Market Index



Share capital by investor type, long-term evolution (a)



(a) Percentage derived from total number of registered shares. Registered shares represent 45.2% of the total share capital. Statistics are rounded, as at 12/31/2023.



## Dividend

At the Annual General Meeting on April 18, 2024, the Board of Directors will propose a dividend of CHF 3.00 per share, an increase of 5 centimes. If approved, this will be the company’s 29th consecutive annual dividend increase. The company has maintained or increased its dividend in Swiss francs over the last 64 years. Nestlé is committed to maintaining this long-held practice of increasing the dividend in Swiss francs every year.

The last trading day with entitlement to receive the dividend will be April 19, 2024. The net dividend will be payable as from April 24, 2024.

Shareholders entered in the share register with voting rights on April 11, 2024, at 12:00 noon (CEST), will be entitled to exercise their voting rights.

## Share buyback program

In 2023, the Group repurchased CHF 5.0 billion of Nestlé shares as part of the three-year CHF 20 billion share buyback program, which began in January 2022. At the upcoming Annual General Meeting, the Board of Directors will propose a reduction of the share capital of 50 million shares from CHF 267 million to CHF 262 million, through the cancellation of shares purchased as part of the share buyback program.

## Net debt

Net debt was CHF 49.6 billion as at December 31, 2023, compared to CHF 48.2 billion at December 31, 2022. The increase largely reflected the dividend payment of CHF 7.8 billion and share buybacks of CHF 5.1 billion.

## Return on invested capital (ROIC)

The Group’s ROIC was 13.9%, up by 170 basis points.



## Portfolio management

Effective September 1, 2023, Nestlé and private equity firm PAI Partners completed the transaction to create a joint venture for Nestlé’s frozen pizza business in Europe. Nestlé retains a non-controlling stake with equal voting rights alongside PAI Partners, remaining invested in this business and participating in future growth and value creation in the category.

On September 4, 2023, Nestlé divested Palforzia, its peanut allergy treatment business, to Stallergenes Greer, a biopharmaceutical company that specializes in the diagnosis and treatment of allergies. The transaction was closed upon signing.

On September 7, 2023, Nestlé announced an agreement with Advent International to acquire a majority stake in Grupo CRM, a premium chocolate player in Brazil. The transaction is expected to close in 2024, subject to customary regulatory approvals.



## Nestlé Waters Operations

Following a transformation plan in France, Nestlé is reviewing operating practices in its natural mineral water operations in several countries. With food safety as a primary goal, practices at some of its production sites may not be in line with the applicable regulatory framework. Nestlé regrets the situation and is currently engaging with the relevant authorities to ensure that its operating practices are fully compliant. The company emphasizes that its water products have always been, and remain, safe to drink. In addition, the unique mineral composition of its natural mineral water brands has always been consistent with the label.

## Outlook

2024 outlook: we expect organic sales growth around 4% and a moderate increase in the underlying trading operating profit margin. Underlying earnings per share in constant currency is expected to increase between 6% and 10%.

2025 mid-term targets fully confirmed: mid single-digit organic sales growth and an underlying trading operating profit margin range of 17.5% to 18.5% by 2025. Underlying earnings per share in constant currency to increase between 6% and 10%.

## Sales, employees and factories by geographic area

<table><tr><td></td><td>Sales</td><td colspan="3">Employees</td><td colspan="3">Factories</td></tr><tr><td></td><td>2022</td><td>2023</td><td>2022</td><td>2023</td><td>2022</td><td>2023</td><td></td></tr><tr><td>NA</td><td>34.9%</td><td>35.0%</td><td>14.3%</td><td>14.5%</td><td>57</td><td>56</td><td></td></tr><tr><td>EUR (a)</td><td>23.6%</td><td>24.0%</td><td>28.7%</td><td>28.6%</td><td>99</td><td>96</td><td></td></tr><tr><td>AOA</td><td>22.2%</td><td>21.4%</td><td>26.2%</td><td>26.0%</td><td>100</td><td>100</td><td></td></tr><tr><td>LATAM</td><td>13.1%</td><td>13.7%</td><td>21.9%</td><td>22.1%</td><td>65</td><td>65</td><td></td></tr><tr><td>GC</td><td>6.2%</td><td>5.9%</td><td>8.9%</td><td>8.8%</td><td>23</td><td>23</td><td></td></tr></table>

(a) 8304 employees in Switzerland in 2023.

<table><tr><td colspan="4">Employees by activity</td></tr><tr><td colspan="4">In thousands</td></tr><tr><td></td><td>2022</td><td>2023</td><td></td></tr><tr><td>Factories</td><td>140</td><td>134</td><td></td></tr><tr><td>Administration and sales</td><td>135</td><td>136</td><td></td></tr><tr><td>Total</td><td>275</td><td>270</td><td></td></tr></table>



## Product category and operating segment review

<table><tr><td>In millions of CHF</td><td>2022</td><td>2023</td><td>Proportion of total sales (%)</td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>Powdered and Liquid Beverages</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Soluble coffee/coffee systems</td><td>16 891</td><td>16 648</td><td>67.2%</td><td></td><td></td></tr><tr><td>Other</td><td>8 327</td><td>8 138</td><td>32.8%</td><td></td><td></td></tr><tr><td>Total sales</td><td>25 218</td><td>24 786</td><td></td><td>0.0%</td><td>+6.4%</td></tr><tr><td>Underlying trading operating profit</td><td>5 593</td><td>5 130</td><td>20.7%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>5 358</td><td>4 945</td><td>20.0%</td><td></td><td></td></tr><tr><td>Water</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total sales</td><td>3 536</td><td>3 320</td><td></td><td>-5.1%</td><td>+4.9%</td></tr><tr><td>Underlying trading operating profit</td><td>277</td><td>351</td><td>10.6%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>241</td><td>161</td><td>4.8%</td><td></td><td></td></tr><tr><td>Milk products and Ice cream</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Milk products</td><td>10 359</td><td>10 092</td><td>91.9%</td><td></td><td></td></tr><tr><td>Ice cream</td><td>930</td><td>889</td><td>8.1%</td><td></td><td></td></tr><tr><td>Total sales</td><td>11 289</td><td>10 981</td><td></td><td>-1.6%</td><td>+6.1%</td></tr><tr><td>Underlying trading operating profit</td><td>2 568</td><td>2 688</td><td>24.5%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>2 508</td><td>2 601</td><td>23.7%</td><td></td><td></td></tr><tr><td>Nutrition and Health Science</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total sales</td><td>15 678</td><td>15 278</td><td></td><td>-1.6%</td><td>+5.4%</td></tr><tr><td>Underlying trading operating profit</td><td>2 990</td><td>2 831</td><td>18.5%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>1 323</td><td>2 291</td><td>15.0%</td><td></td><td></td></tr><tr><td>Prepared dishes and cooking aids</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Frozen and chilled</td><td>5 859</td><td>5 095</td><td>43.7%</td><td></td><td></td></tr><tr><td>Culinary and other</td><td>6 625</td><td>6 571</td><td>56.3%</td><td></td><td></td></tr><tr><td>Total sales</td><td>12 484</td><td>11 666</td><td></td><td>-2.5%</td><td>+4.9%</td></tr><tr><td>Underlying trading operating profit</td><td>2 038</td><td>2 136</td><td>18.3%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>1 508</td><td>1 849</td><td>15.8%</td><td></td><td></td></tr><tr><td>Confectionery</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Chocolate</td><td>6 139</td><td>6 208</td><td>76.6%</td><td></td><td></td></tr><tr><td>Sugar confectionery</td><td>661</td><td>676</td><td>8.3%</td><td></td><td></td></tr><tr><td>Snacking and biscuits</td><td>1 318</td><td>1 223</td><td>15.1%</td><td></td><td></td></tr><tr><td>Total sales</td><td>8 118</td><td>8 107</td><td></td><td>+1.5%</td><td>+8.5%</td></tr><tr><td>Underlying trading operating profit</td><td>1 364</td><td>1 364</td><td>16.8%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>1 259</td><td>1 231</td><td>15.2%</td><td></td><td></td></tr><tr><td>PetCare</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Total sales</td><td>18 101</td><td>18 860</td><td></td><td>+2.8%</td><td>+12.1%</td></tr><tr><td>Underlying trading operating profit</td><td>3 706</td><td>3 912</td><td>20.7%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>3 494</td><td>3 862</td><td>20.5%</td><td></td><td></td></tr></table>



## Review of Zones, Nestlé Health Science and Nespresso

Zone North America (NA)

<table><tr><td>Sales</td><td>CHF 26.0 billion</td></tr><tr><td>Organic growth</td><td>+7.3%</td></tr><tr><td>Real internal growth</td><td>-0.3%</td></tr><tr><td>Underlying trading operating profit margin</td><td>22.2%</td></tr><tr><td>Underlying trading operating profit margin</td><td>+120 basis points</td></tr><tr><td>Trading operating profit margin</td><td>21.3%</td></tr><tr><td>Trading operating profit margin</td><td>+270 basis points</td></tr></table>

– 7.3% organic growth: -0.3% RIG; 7.6% pricing.

– The Zone’s underlying trading operating profit margin increased by 120 basis points to 22.2%.

Organic growth was 7.3%, with pricing of 7.6%. RIG was -0.3%, reflecting soft consumer demand, capacity constraints and the winding down of the frozen meals and pizza business in Canada. RIG turned positive in the fourth quarter. Net divestitures reduced sales by 1.7%, as a result of the divestment of a majority stake in Freshly as well as the disposal of the Gerber Good Start infant formula brand in 2022. Foreign exchange had a negative impact of 6.8%. Reported sales in Zone North America decreased by 1.3% to CHF 26.0 billion. Growth in Zone North America was broad-based, driven by pricing as well as continued strong momentum for e-commerce and out-of-home channels. The Zone saw market share gains in pet food, coffee and frozen meals.

By product category, Purina PetCare was the largest growth contributor, with broad-based demand across segments, channels and brands, particularly Purina ONE, Purina Pro Plan and Friskies. Sales for Nestlé Professional and Starbucks out-of-home continued to grow at a double-digit rate, led by new customer acquisition. The beverages category, including Starbucks products, Coffee mate and Nescafé, posted mid single-digit growth. Nido growing-up milks posted strong double-digit growth. Confectionery in Canada recorded high single-digit growth, driven by KitKat and Aero. Water saw low single-digit growth, based on a strong sales development in the fourth quarter. S.Pellegrino and Acqua Panna posted double-digit growth, which more than offset the impact of capacity constraints for Perrier. Growth in frozen food was negative, impacted by soft consumer demand and

<table><tr><td colspan="7">Zone NA</td></tr><tr><td colspan="7">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td colspan="2">Proportion of total sales (%)</td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>United States and Canada</td><td>26 328</td><td>25 995</td><td colspan="2"></td><td></td><td></td></tr><tr><td>Powdered and Liquid Beverages</td><td>3 891</td><td>3 892</td><td colspan="2"></td><td>15.0%</td><td></td></tr><tr><td>Water</td><td>1 042</td><td>990</td><td colspan="2"></td><td>3.8%</td><td></td></tr><tr><td>Milk products and Ice cream</td><td>3 143</td><td>3 065</td><td colspan="2"></td><td>11.8%</td><td></td></tr><tr><td>Prepared dishes and cooking aids</td><td>5 328</td><td>4 790</td><td colspan="2"></td><td>18.4%</td><td></td></tr><tr><td>Confectionery</td><td>696</td><td>682</td><td colspan="2"></td><td>2.6%</td><td></td></tr><tr><td>PetCare</td><td>10 926</td><td>11 504</td><td colspan="2"></td><td>44.3%</td><td></td></tr><tr><td>Nutrition and Health Science</td><td>1 302</td><td>1 072</td><td colspan="2"></td><td>4.1%</td><td></td></tr><tr><td>Total sales</td><td>26 328</td><td>25 995</td><td colspan="2"></td><td></td><td>-0.3%</td></tr><tr><td>Underlying trading operating profit</td><td>5 528</td><td>5 768</td><td colspan="2"></td><td>22.2%</td><td></td></tr><tr><td>Trading operating profit</td><td>4 904</td><td>5 546</td><td colspan="2"></td><td>21.3%</td><td></td></tr><tr><td>Capital additions</td><td>2 272</td><td>2 401</td><td colspan="2"></td><td>9.2%</td><td></td></tr></table>



the winding down of the frozen meals and pizza business in Canada. In the U.S., growth in frozen food was close to flat, supported by Stouffer’s, Jack’s and Tombstone.

The Zone’s underlying trading operating profit margin increased by 120 basis points, mainly as a result of the divestment of a majority stake in Freshly and portfolio optimization actions. Pricing and mix also helped to offset cost inflation and a significant increase in advertising and marketing expenses.

## Zone Europe (EUR)

<table><tr><td>Sales</td><td>CHF 19.1 billion</td></tr><tr><td>Organic growth</td><td>+8.2%</td></tr><tr><td>Real internal growth</td><td>-2.4%</td></tr><tr><td>Underlying trading operating profit margin</td><td>16.4%</td></tr><tr><td>Underlying trading operating profit margin</td><td>0 basis point</td></tr><tr><td>Trading operating profit margin</td><td>14.1%</td></tr><tr><td>Trading operating profit margin</td><td>-10 basis points</td></tr></table>

- 8.2% organic growth: -2.4% RIG; 10.6% pricing.

- The Zone’s underlying trading operating profit margin was unchanged at 16.4%.

Organic growth was 8.2%, with pricing of 10.6%. RIG was -2.4%, reflecting demand elasticity and capacity constraints. Foreign exchange negatively impacted sales by 4.9%. Net divestitures reduced sales by 3.4%. Reported sales in Zone Europe decreased by 0.2% to CHF 19.1 billion.

Growth in Zone Europe was supported by pricing, strong sales development for e-commerce and continued momentum for out-of-home channels. The Zone saw market share gains in pet food and Infant Nutrition.

By product category, the key contributor to growth was Purina PetCare, driven by differentiated offerings across premium brands Felix, Gourmet and Purina ONE. Coffee saw mid single-digit growth, led by Nescafé soluble and ready-to-drink products. Confectionery reported high single-digit growth, with continued market share gains for KitKat. Nestlé Professional posted double-digit growth, led by beverages. Infant Nutrition recorded high single-digit growth, based on continued momentum for premium infant formula, particularly NAN. Culinary posted mid single-digit growth, with robust sales developments for Maggi and Thomy. Water saw low single-digit growth, as strong momentum for S. Pellegrino and Acqua Panna was largely offset by the impact of temporary capacity constraints for Perrier.



The Zone’s underlying trading operating profit margin was unchanged versus the prior year. Significant cost inflation and higher advertising and marketing expenses offset pricing and portfolio optimization actions.

<table><tr><td colspan="6">Zone EUR</td></tr><tr><td colspan="6">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td>Proportion of total sales (%)</td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>Western Europe</td><td>13 334</td><td>13 488</td><td>70.6%</td><td></td><td></td></tr><tr><td>Eastern Europe</td><td>4 272</td><td>4 022</td><td>21.1%</td><td></td><td></td></tr><tr><td>Türkiye and Israel</td><td>1 522</td><td>1 588</td><td>8.3%</td><td></td><td></td></tr><tr><td>Powdered and Liquid Beverages</td><td>5 140</td><td>5 066</td><td>26.5%</td><td></td><td></td></tr><tr><td>Water</td><td>1 626</td><td>1 573</td><td>8.2%</td><td></td><td></td></tr><tr><td>Milk products and Ice cream</td><td>345</td><td>381</td><td>2.0%</td><td></td><td></td></tr><tr><td>Prepared dishes and cooking aids</td><td>2 820</td><td>2 610</td><td>13.7%</td><td></td><td></td></tr><tr><td>Confectionery</td><td>3 091</td><td>3 027</td><td>15.8%</td><td></td><td></td></tr><tr><td>PetCare</td><td>4 732</td><td>5 056</td><td>26.5%</td><td></td><td></td></tr><tr><td>Nutrition and Health Science</td><td>1 374</td><td>1 385</td><td>7.3%</td><td></td><td></td></tr><tr><td>Total sales</td><td>19 128</td><td>19 098</td><td></td><td>-2.4%</td><td>+8.2%</td></tr><tr><td>Underlying trading operating profit</td><td>3 138</td><td>3 127</td><td>16.4%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>2 719</td><td>2 698</td><td>14.1%</td><td></td><td></td></tr><tr><td>Capital additions</td><td>1 489</td><td>1 680</td><td>8.8%</td><td></td><td></td></tr></table>



Zone Asia, Oceania and Africa (AOA)

<table><tr><td>Sales</td><td>CHF 17.5 billion</td></tr><tr><td>Organic growth</td><td>+8.3%</td></tr><tr><td>Real internal growth</td><td>+0.3%</td></tr><tr><td>Underlying trading operating profit margin</td><td>23.5%</td></tr><tr><td>Underlying trading operating profit margin</td><td>+60 basis points</td></tr><tr><td>Trading operating profit margin</td><td>22.5%</td></tr><tr><td>Trading operating profit margin</td><td>+10 basis points</td></tr></table>

– 8.3% organic growth: 0.3% RIG; 8.0% pricing.

– The Zone’s underlying trading operating profit margin increased by 60 basis points to 23.5%.

Organic growth was 8.3%, with 0.3% RIG. Pricing increased to 8.0%, with broad-based contributions from all geographies and categories. Foreign exchange reduced sales by 13.5%, impacted by significant currency depreciation. Reported sales in Zone AOA decreased by 5.2% to CHF 17.5 billion.

Growth in Zone AOA was supported by pricing as well as continued momentum of e-commerce and out-of-home channels. The Zone saw market share gains in confectionery and coffee.
South-East Asia posted mid single-digit growth, led by the Philippines, with strong sales developments for Nescafé and Maggi. South Asia recorded strong double-digit growth across most categories. Growth in India was based on continued distribution expansion and new product launches, with strong momentum for Maggi, KitKat and Nescafé. Middle East and Africa saw double-digit growth, with particular strength for affordable offerings in Maggi, NAN and Milo. Japan reported mid single-digit growth, led by Purina PetCare, KitKat and ready-to-drink Nescafé. South Korea posted high single-digit growth, fueled by Starbucks products. The new Starbucks soluble coffee offering resonated strongly with consumers. Oceania recorded high single-digit growth, supported by innovation for KitKat, Purina PetCare and Nescafé.

By product category, Infant Nutrition was the largest growth contributor, led by NAN, Lactogen and Cerelac. Culinary recorded double-digit growth, with continued strength for Maggi. Coffee saw high single-digit growth, with robust demand for Nescafé and Starbucks products, particularly

<table><tr><td colspan="6">Zone AOA</td></tr><tr><td colspan="6">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td>Proportion of total sales (%)</td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>ASEAN</td><td>7 112</td><td>6 880</td><td>39.3%</td><td></td><td></td></tr><tr><td>Oceania and Japan</td><td>2 964</td><td>2 802</td><td>15.9%</td><td></td><td></td></tr><tr><td>South Asian Subcontinent</td><td>3 156</td><td>3 042</td><td>17.4%</td><td></td><td></td></tr><tr><td>Middle-East and Africa</td><td>5 252</td><td>4 795</td><td>27.4%</td><td></td><td></td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Powdered and Liquid Beverages</td><td>6 108</td><td>5 767</td><td>32.9%</td><td></td><td></td></tr><tr><td>Water</td><td>641</td><td>582</td><td>3.3%</td><td></td><td></td></tr><tr><td>Milk products and Ice cream</td><td>3 636</td><td>3 310</td><td>18.9%</td><td></td><td></td></tr><tr><td>Prepared dishes and cooking aids</td><td>2 560</td><td>2 476</td><td>14.1%</td><td></td><td></td></tr><tr><td>Confectionery</td><td>1 372</td><td>1 332</td><td>7.6%</td><td></td><td></td></tr><tr><td>PetCare</td><td>702</td><td>662</td><td>3.8%</td><td></td><td></td></tr><tr><td>Nutrition and Health Science</td><td>3 465</td><td>3 390</td><td>19.4%</td><td></td><td></td></tr><tr><td>Total sales</td><td>18 484</td><td>17 519</td><td></td><td>+0.3%</td><td>+8.3%</td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Underlying trading operating profit</td><td>4 237</td><td>4 109</td><td>23.5%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>4 133</td><td>3 944</td><td>22.5%</td><td></td><td></td></tr><tr><td>Capital additions</td><td>930</td><td>928</td><td>5.3%</td><td></td><td></td></tr></table>



for ready-to-drink offerings. Ambient dairy posted mid single-digit growth, based on increased focus on products with functional benefits. Sales for Nestlé Professional grew at a strong double-digit rate across most geographies and categories, supported by channel penetration and customer acquisition. Confectionery reported high single-digit growth, fueled by strong momentum for KitKat. Purina PetCare saw mid single-digit growth, led by Purina ONE, Supercoat and Felix.

The Zone’s underlying trading operating profit margin increased by 60 basis points. Pricing, disciplined cost control and portfolio optimization more than offset the impact of input cost inflation and higher advertising and marketing expenses.

Zone Latin America (LATAM)

<table><tr><td>Sales</td><td>CHF 12.2 billion</td></tr><tr><td>Organic growth</td><td>+9.2%</td></tr><tr><td>Real internal growth</td><td>+0.3%</td></tr><tr><td>Underlying trading operating profit margin</td><td>20.7%</td></tr><tr><td>Underlying trading operating profit margin</td><td>-50 basis points</td></tr><tr><td>Trading operating profit margin</td><td>19.2%</td></tr><tr><td>Trading operating profit margin</td><td>-110 basis points</td></tr></table>

– 9.2% organic growth: 0.3% RIG; 8.9% pricing.

– The Zone’s underlying trading operating profit margin decreased by 50 basis points to 20.7%.

Organic growth was 9.2%, with pricing of 8.9%. RIG was 0.3%, turning positive in the second half. Foreign exchange had a negative impact of 5.8%. Reported sales in Zone Latin America increased by 3.2% to CHF 12.2 billion.

Zone Latin America recorded strong growth across all geographies and product categories. Growth was supported by pricing, strong operational execution and continued momentum

<table><tr><td colspan="7">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td>Proportion of total sales (%)</td><td>RIG (%)</td><td>OG (%)</td><td></td></tr><tr><td>Latin America and Caribbean</td><td>11 819</td><td>12 196</td><td></td><td></td><td></td><td></td></tr><tr><td>Powdered and Liquid Beverages</td><td>2 422</td><td>2 543</td><td></td><td>20.9%</td><td></td><td></td></tr><tr><td>Water</td><td>175</td><td>129</td><td></td><td>1.1%</td><td></td><td></td></tr><tr><td>Milk products and Ice cream</td><td>3 030</td><td>3 126</td><td></td><td>25.6%</td><td></td><td></td></tr><tr><td>Prepared dishes and cooking aids</td><td>845</td><td>888</td><td></td><td>7.3%</td><td></td><td></td></tr><tr><td>Confectionery</td><td>2 067</td><td>2 218</td><td></td><td>18.2%</td><td></td><td></td></tr><tr><td>PetCare</td><td>1 614</td><td>1 510</td><td></td><td>12.4%</td><td></td><td></td></tr><tr><td>Nutrition and Health Science</td><td>1 666</td><td>1 782</td><td></td><td>14.5%</td><td></td><td></td></tr><tr><td>Total sales</td><td>11 819</td><td>12 196</td><td></td><td></td><td>+0.3%</td><td>+9.2%</td></tr><tr><td>Underlying trading operating profit</td><td>2 501</td><td>2 520</td><td></td><td>20.7%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>2 401</td><td>2 346</td><td></td><td>19.2%</td><td></td><td></td></tr><tr><td>Capital additions</td><td>805</td><td>923</td><td></td><td>7.6%</td><td></td><td></td></tr></table>



for out-of-home channels. The Zone saw market share gains in pet food, Infant Nutrition and culinary.

Brazil posted strong double-digit growth, with continued momentum for confectionery, Infant Nutrition and beverages. Within beverages, Nescafé posted strong sales growth driven by portioned coffee. Mexico reported high single-digit growth, with strong sales developments for dairy, coffee and Nestlé Professional.

By product category, confectionery was the largest growth contributor, reflecting strong demand for KitKat and key local brands. In this category, Chocobiscuits saw particularly strong growth. Coffee reported high single-digit growth, led by Nescafé soluble and ready-to-drink coffee. Dairy posted high single-digit growth, supported by dairy culinary solutions and fortified milks. Infant Nutrition saw high single-digit growth, based on solid momentum for NAN infant formula, Mucilon infant cereal and Materna products. Sales for Nestlé Professional grew at a strong double-digit rate, with continued customer expansion for branded coffee solutions. Culinary posted high single-digit growth, based on new product launches and further traction for Recetas Nestlé, the largest online recipe platform in Latin America. Purina PetCare saw mid single-digit growth, following a high base of comparison in 2022.

The Zone’s underlying trading operating profit margin decreased by 50 basis points. One-off items in the prior year more than offset pricing and cost efficiencies.



Zone Greater China (GC)

<table><tr><td>Sales</td><td>CHF 5.0 billion</td></tr><tr><td>Organic growth</td><td>+4.2%</td></tr><tr><td>Real internal growth</td><td>+2.5%</td></tr><tr><td>Underlying trading operating profit margin</td><td>16.5%</td></tr><tr><td>Underlying trading operating profit margin</td><td>+40 basis points</td></tr><tr><td>Trading operating profit margin</td><td>9.3%</td></tr><tr><td>Trading operating profit margin</td><td>-640 basis points</td></tr></table>

– 4.2% organic growth: 2.5% RIG; 1.7% pricing.

– The Zone’s underlying trading operating profit margin increased by 40 basis points to 16.5%.

Organic growth was 4.2%, with RIG of 2.5% and pricing of 1.7%. Foreign exchange had a negative impact of 10.2%. Reported sales in Zone Greater China decreased by 5.9% to CHF 5.0 billion.

Growth in Zone Greater China was supported by strong sales developments for out-of-home businesses and e-commerce momentum. The Zone saw market share gains in soluble coffee, pet food and confectionery.
By product category, Nestlé Professional was the largest growth contributor, supported by innovation and distribution expansion. Culinary posted high single-digit growth, with increased demand for Toto le in out-of-home channels and new product launches. Confectionery recorded mid single-digit growth, led by Shark wafer and Hsu Fu Chi. Infant Nutrition saw positive growth, led by NAN hypoallergenic and specialty offerings. In the fourth quarter, the Zone launched a growing-up milk solution for illum a containing human milk oligosaccharides (HMOs). Sales of healthy aging products grew at a double-digit rate, supported by the launch of N3 milk, a unique science-based innovation that is as nutritious as milk and low in lactose. Coffee reported low single-digit growth, supported by ready-to-drink offerings. Sales for Purina PetCare grew at a double-digit rate, based on new product launches and strong e-commerce momentum.

The Zone’s underlying trading operating profit margin increased by 40 basis points, supported by favorable mix and disciplined cost control.

<table><tr><td colspan="6">Zone GC</td></tr><tr><td colspan="6">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td>Proportion of total sales (%)</td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>Greater China</td><td>5 351</td><td>5 037</td><td></td><td></td><td></td></tr><tr><td>Powdered and Liquid Beverages</td><td>1 018</td><td>936</td><td>18.6%</td><td></td><td></td></tr><tr><td>Water</td><td>52</td><td>46</td><td>0.9%</td><td></td><td></td></tr><tr><td>Milk products and Ice cream</td><td>1 121</td><td>1 080</td><td>21.5%</td><td></td><td></td></tr><tr><td>Prepared dishes and cooking aids</td><td>930</td><td>902</td><td>17.9%</td><td></td><td></td></tr><tr><td>Confectionery</td><td>843</td><td>800</td><td>15.9%</td><td></td><td></td></tr><tr><td>PetCare</td><td>127</td><td>128</td><td>2.5%</td><td></td><td></td></tr><tr><td>Nutrition and Health Science</td><td>1 260</td><td>1 145</td><td>22.7%</td><td></td><td></td></tr><tr><td>Total sales</td><td>5 351</td><td>5 037</td><td></td><td>+2.5%</td><td>+4.2%</td></tr><tr><td>Underlying trading operating profit</td><td>862</td><td>832</td><td>16.5%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>840</td><td>468</td><td>9.3%</td><td></td><td></td></tr><tr><td>Capital additions</td><td>207</td><td>161</td><td>3.2%</td><td></td><td></td></tr></table>



## Nestlé Health Science

<table><tr><td>Sales</td><td>CHF 6.5 billion</td></tr><tr><td>Organic growth</td><td>+1.6%</td></tr><tr><td>Real internal growth</td><td>-3.2%</td></tr><tr><td>Underlying trading operating profit margin</td><td>12.0%</td></tr><tr><td>Underlying trading operating profit margin</td><td>-160 basis points</td></tr><tr><td>Trading operating profit margin</td><td>10.3%</td></tr><tr><td>Trading operating profit margin</td><td>+1930 basis points</td></tr></table>

– 1.6% organic growth: -3.2% RIG; 4.8% pricing.

– The underlying trading operating profit margin decreased by 160 basis points to 12.0%.

Organic growth was 1.6%, with pricing of 4.8%. RIG was -3.2%, impacted by a temporary supply constraint for the vitamins, minerals and supplements business. Net acquisitions increased sales by 3.1%, largely related to the consolidation of Organ from April 2022. Foreign exchange negatively impacted sales by 6.2%. Reported sales in Nestlé Health Science decreased by 1.6% to CHF 6.5 billion.

Vitamins, minerals and supplements saw negative growth. Sales in the second half decreased following an IT integration issue encountered during the consolidation of U.S. packaging sites. The recovery is taking longer than expected as the extent of the issue was deeper and more complex than initially thought. The resulting supply constraints are expected to be fully resolved by the end of the first half of 2024, with an acceleration of growth expected in the second half of the year. Vitamins, minerals and supplements brand Pure Encapsulations was not affected by the supply issue and saw double-digit growth.

Active Nutrition reported mid single-digit growth, with robust sales developments for Organ and Vital Proteins.

Medical Nutrition recorded strong double-digit growth, with market share gains across all segments. Growth was led by adult medical care products, pediatric products and Vitaflo. The gastrointestinal portfolio, including Vowst and Zenpep, saw strong double-digit growth.

By geography, North America saw a sales decrease. Europe reported mid single-digit growth. Other regions combined posted high single-digit growth.

The underlying trading operating profit margin of Nestlé Health Science decreased by 160 basis points, as a result of the impact of temporary supply constraints.

<table><tr><td colspan="6">Nestlé Health Science</td></tr><tr><td colspan="6">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td></td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>Total sales</td><td>6 602</td><td>6 498</td><td></td><td>-3.2%</td><td>+1.6%</td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Underlying trading operating profit</td><td>899</td><td>777</td><td>12.0%</td><td></td><td></td></tr><tr><td>Trading operating profit</td><td>(596)</td><td>670</td><td>10.3%</td><td></td><td></td></tr><tr><td>Capital additions</td><td>1 795</td><td>478</td><td>7.4%</td><td></td><td></td></tr></table>



## Nespresso

<table><tr><td>Sales</td><td>CHF 6.4 billion</td></tr><tr><td>Organic growth</td><td>+5.3%</td></tr><tr><td>Real internal growth</td><td>+2.0%</td></tr><tr><td>Underlying trading operating profit margin</td><td>20.3%</td></tr><tr><td>Underlying trading operating profit margin</td><td>-120 basis points</td></tr><tr><td>Trading operating profit margin</td><td>20.1%</td></tr><tr><td>Trading operating profit margin</td><td>-20 basis points</td></tr></table>

– 5.3% organic growth: 2.0% RIG; 3.3% pricing.

– The underlying trading operating profit margin of Nespresso decreased by 120 basis points to 20.3%.

Organic growth was 5.3%, with pricing of 3.3%. RIG was 2.0%. Foreign exchange negatively impacted sales by 6.0%. Reported sales in Nespresso decreased by 1.2% to CHF 6.4 billion.

The key growth contributor was the Vertuo system, which continued to see broad-based momentum. Growth in out-of-home channels was also strong, with further adoption of the Momento system, particularly in the office segment. Innovation continued to resonate with consumers, including the launch of home compostable coffee capsules and the ultra-premium N°20 limited edition, a unique arabica variety. In 2023, Nespresso was recognized as one of the top 100 most valuable brands in the world. \( ^{*} \) 

By geography, North America posted double-digit growth, with continued market share gains. Europe reported low single-digit growth. Other regions combined saw mid single-digit growth. The underlying trading operating profit margin of Nespresso decreased by 120 basis points. Significant cost inflation and the appreciation of the Swiss franc more than offset pricing actions and cost efficiencies. The business continued to invest in the rollout of the Vertuo system as well as in brand marketing.

 \( ^{*} \)  Interbrand annual ranking

<table><tr><td colspan="6">Nespresso</td></tr><tr><td colspan="6">In millions of CHF</td></tr><tr><td></td><td>2022</td><td>2023</td><td></td><td>RIG (%)</td><td>OG (%)</td></tr><tr><td>Total sales</td><td>6 448</td><td>6 372</td><td></td><td>+2.0%</td><td>+5.3%</td></tr><tr><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Underlying trading operating profit</td><td>1 388</td><td>1 291</td><td></td><td>20.3%</td><td></td></tr><tr><td>Trading operating profit</td><td>1 309</td><td>1 283</td><td></td><td>20.1%</td><td></td></tr><tr><td>Capital additions</td><td>520</td><td>282</td><td></td><td>4.4%</td><td></td></tr></table>



# Principal risks and uncertainties

The Group aims to adopt a risk profile aligned to our purpose and business strategy. We strive to create long-term value through a balance of sustainable growth and resource efficiency. Our culture and values – rooted in respect for ourselves, others, diversity and the future – guide our decisions and actions. Our Creating Shared Value approach helps us prioritize those areas that maximize value creation for shareholders and cultivate positive societal and environmental impacts.

The Nestlé Group Enterprise Risk Management (ERM) framework is designed to assess and mitigate risks in order to minimize their potential impact and support the achievement of Nestlé’s long-term purpose and business strategy. A top-down assessment is performed at Group-level once a year. A bottom-up assessment occurs in parallel, resulting in aggregation of the individual market assessments. This creates a good understanding of the company’s key risks in order to allocate ownership to drive specific actions around them and take any relevant steps to address them.

Additionally, Nestlé engages with external stakeholders to better understand the issues that are of most concern to them. The materiality assessment (included in the Creating Shared Value and Sustainability Report) rates the degree of external stakeholder concern and potential business impact. This helps to ensure that wider sustainability issues are incorporated into the risks and opportunities under consideration across the company.

Risk assessments and any mitigating actions are the responsibility of the individual line management. If Group-level intervention is required, responsibility for mitigating actions will generally be determined by the Executive Board. The annual Group risk assessment is reported annually to the Executive Board, Audit Committee and Board of Directors. Under the Group’s governance, the full Board is responsible for risk oversight. Further details of the ERM processes can be found in the Corporate Governance Report.

We are committed to transparency and action on climate-related risks and opportunities. We have aligned our reporting disclosures with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which can be found in our Creating Shared Value and Sustainability Report.
The risks listed below are considered the most relevant for our business and performance. Many of the longer-term mitigation strategies are expanded on in our Creating Shared Value and Sustainability Report.



<table><tr><td>Principal risk*</td><td>Description</td><td>Potential impact</td><td>Key mitigations</td></tr><tr><td>Business transformations</td><td>Failure of strategic transformations such as large-scale change management projects, restructuring, mergers and acquisitions, etc.</td><td>- Failure to realize anticipated benefits- Impairments- Low employee morale and/or engagement</td><td>- Executive sponsorship of transformations with aligned targets and appropriate levels of resources to support successful execution</td></tr><tr><td>Climate change</td><td>Climate-related physical disruption (e.g., extreme weather events, water shortages, land use change, deforestation, biodiversity loss, etc.) and transitional disruption (e.g., policy actions, technological advances, market sentiment, etc.) disrupting our operations and/or consumer demand</td><td>- Volatility in supply of raw materials due to physical climate changes (e.g., water stress, heat stress, etc.)- Policy impacts (e.g., carbon tax, land use restrictions, agricultural subsidy shifts, etc.) on operating costs- Increased consumer and/or stakeholder concern regarding climate change impacting reputation</td><td>- Implementation of Nestlé&#x27;s Net Zero Roadmap- Generation Regeneration activities to support the advancement of regenerative food systems- Progress on mitigations reported in the Creating Shared Value and Sustainability Report, the Climate Risk and Impact Report and Nestlé&#x27;s CDP questionnaires</td></tr><tr><td>Consumer preferences</td><td>Failure to adequately anticipate evolving consumer preferences; innovate relevant, competitive products and brands; and/or execute at speed</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands- Failure to achieve growth targets, loss of market share</td><td>- Strengthened consumer-centricity of innovation processes- Scientific and nutritional know-how applied to enhance nutrition, health and wellness- Improved accessibility of safe and affordable food</td></tr><tr><td>Customer and channel management</td><td>Failure to build and maintain trading relationships across traditional and emerging channels</td><td>- Reduced distribution of our products to consumers- Restricted ability to price impacting margin- Failure to achieve growth targets, loss of market share</td><td>- Strategic customer relationship management- Continued acceleration of digital capabilities and expansion of e-commerce and online communication</td></tr><tr><td>Environmental stewardship</td><td>Failure to comply with legislation or meet expectations concerning the environment (e.g., biodiversity impacts, use of natural resources, air emissions and waste discharges, etc.)</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands- Corporate fines and/or taxation on products/categories- License to operate challenges (e.g., access to water, etc.)- Litigation</td><td>- Caring for Water plan to implement water stewardship initiatives- Commitments to improve operational efficiencies (e.g., transition to renewable energy sources, reduction in air emissions, etc.)- Nestlé membership on the Taskforce on Nature-related Financial Disclosures</td></tr><tr><td>Ethics and compliance</td><td>Failure to act with integrity or in a manner consistent with our purpose and values</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands- Penalties and/or fines- Litigation- Loss of licenses</td><td>- Corporate Business Principles and Code of Business Conduct outlining the Group&#x27;s commitment to integrity- Compliance program and systems, including grievance mechanisms</td></tr><tr><td>Geopolitical, societal factors</td><td>Adverse instability and/or uncertainty (e.g., political instability, conflicts, trade wars, pandemics or disease outbreaks, labor and/or infrastructure-related risks, etc.)</td><td>- Reduction in consumer demand across categories and/or channels- Disruption to Nestlé&#x27;s ability to do business in a country or region- Disruption to supply chain</td><td>- Monitoring and ad-hoc continuity plans to mitigate against events- Group-wide geographical and product category spreads- Decentralized management structure- Procurement strategy</td></tr><tr><td>Health and safety</td><td>Failure to comply with local health and safety regulations and/or nurture safe, healthy workplaces in all countries where Nestlé operates</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands- Penalties and/or fines- Litigation- Injuris or fatalities- Occupational illness or accidents</td><td>- Long-term initiatives to promote safe and healthy behaviors- Health and safety policies and procedures- Procedures to comply with local health and safety legislation- Employee Health Strategy (e.g., #HealthyLives to build personal health, safety and well-being awareness among employees, etc.)</td></tr></table>



<table><tr><td>Principal risk*</td><td>Description</td><td>Potential impact</td><td>Key mitigations</td></tr><tr><td>Human rights</td><td>Failure to identify and/or prevent human rights violations in direct operations and extended supply chain (e.g., forced labor, child labor, living income and living wage, freedom of association, etc.)</td><td>- Negative impact on individuals- Negative effect on Nestlé&#x27;s reputation and/or brands- Penalties and/or fines- License to operate challenges- Litigation</td><td>- Human Rights Framework and Roadmap- Salient issue action plans- Sustainable sourcing programs (e.g., Nescafé Plan, Nestlé Cocoa Plan, etc.)- Policies, processes and controls to respect and promote human rights- Grievance mechanisms and consequence management</td></tr><tr><td>Macro-financial factors</td><td>Volatility and/or sudden shocks impacting macro factors (e.g., forex, interest rates, cost of capital, credit ratings, pension liabilities, etc.)</td><td>- Government intervention (e.g., capital controls, price controls, etc.) impacting operations and financial performance- Impeded access to capital markets</td><td>- Appropriate governance and risk mitigation measures to actively manage exposures and long-term asset and liability outlook</td></tr><tr><td>Non-financial corporate governance</td><td>Failure to comply and/or meet stakeholders&#x27; expectations with regards to non-financial performance and reporting</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands- Penalties and/or fines- Litigation</td><td>- Board oversight supported by the Sustainability Committee- Leadership provided by the ESG &amp; Sustainability Council- Dedicated ESG Strategy &amp; Deployment Unit- Alignment with relevant non-financial reporting frameworks</td></tr><tr><td>People retention</td><td>Failure to attract and retain skilled, talented employees in a competitive, dynamic marketplace</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands- Workforce ill-equipped with the skills for the digital age- Failure to achieve growth and profit targets</td><td>- Initiatives to improve gender balance and cultural diversity- Development strategies to cope with the demands of a changing work force</td></tr><tr><td>Product and plastic packaging</td><td>Failure to comply with current or future regulation, source relevant replacement packaging and/or develop new innovative solutions</td><td>- Specific packaging (e.g., single-use plastic, etc.) and/or elements (e.g., straws, etc.) taxed, banned and/or delisted- Stigmatization and/or obsolescence of products, brands and/or categories- Failure to achieve growth targets, loss of market share</td><td>- Transformation of packaging systems, including recyclable or reusable packaging, new packaging materials and collaborations to drive recycling penetration- Nestlé Institute of Packaging Sciences innovation of packaging solutions</td></tr><tr><td>Product quality and safety</td><td>Major event triggered by a serious food safety, product quality or other product-related non-compliance issue</td><td>- Serious harm or death- Negative effect on Nestlé&#x27;s reputation and/or brands- Failure to meet evolving regulatory requirements- Loss of trust- Penalties and/or fines- Litigation</td><td>- Policies, processes and controls to ensure high-quality, safe products and prevention of health risks- Quality and food safety culture</td></tr><tr><td>Regulation</td><td>Prolonged negative perceptions concerning health implications of processed food and beverage categories</td><td>- Increase in regulation on industry and/or specific categories- Erosion of consumer confidence in industry- Limitations on marketing and distribution</td><td>- Scientific and nutritional know-how focused to enhance nutrition, health and wellness- Policies, including Nestlé Marketing Communication to Children and Nestlé Policy for Implementing the WHO Code</td></tr><tr><td>Strategic investment choices</td><td>Investment choices evolve over time to include emerging technologies; new business models; creation of, or entry into, new categories; and/or geographic expansion</td><td>- Broader exposures for the Group- Acceptance of higher risk and return metrics</td><td>- Group&#x27;s investment choices aligned with strategy and prioritized based on the potential to create value over the long term</td></tr></table>



<table><tr><td>Principal risk *</td><td>Description</td><td>Potential impact</td><td>Key mitigations</td></tr><tr><td>Supply chain disruption</td><td>Major event impacting raw material sourcing, transport, and/or internal or external manufacturing facilities (e.g., commodity shortages, strikes, sanctions, natural disasters, pandemics or disease outbreaks, conflict, etc.)</td><td>- Imposed ability to ensure supply of key products, ingredients and packaging, including sourcing, transporting to operational facilities and distribution to customers
- Increase in input prices and/or production and distribution costs</td><td>- Business continuity and disaster recovery plans for key sites
- Active price risk management on key commodities
- Multiple supply options, including localized sourcing where relevant</td></tr><tr><td>Supply chain stewardship</td><td>Failure to ensure a transparent, sustainable and resilient food supply chain</td><td>- Negative effect on Nestlé&#x27;s reputation and/or brands
- Penalties and/or fines
- License to operate challenges
- Product shortages</td><td>- Generation Regeneration activities to support the advancement of regenerative food systems
- Sustainable sourcing programs to achieve transparency and traceability on key raw materials</td></tr><tr><td>Systems, security and privacy</td><td>Threat of cyber-attacks; new technologies, including AI; and/or failure of internal systems and digital networks disrupting the reliability, security and privacy of data and/or ability to operate</td><td>- Inability to run operational activities
- Loss of confidential information impacting corporate reputation
- Loss of consumer trust
- Penalties and/or fines
- Litigation</td><td>- Contingencies and policies to protect hardware and software
- Privacy program to guard against data security threats and comply with an evolving regulatory landscape</td></tr><tr><td>Taxation factors</td><td>Change to or new interpretation of existing tax regulations and/or new tax regulations (e.g., OECD Base Erosion and Profit Shifting, BEPS, etc.)</td><td>- Failure to comply with tax regulations
- Increase in effective tax rates
- Increase in the cost of compliance</td><td>- Group Tax Management Principles to manage and monitor tax compliance
- Processes and tools to ensure compliance with new requirements</td></tr></table>

* Listed in alphabetical order



## Factories

<table><tr><td colspan="5">North America (NA)</td></tr><tr><td>Canada</td><td>2</td><td>●</td><td>●</td><td>●</td></tr><tr><td>United States</td><td>54</td><td>●</td><td>●</td><td>●</td></tr><tr><td colspan="5"></td></tr><tr><td colspan="5">Europe (EUR)</td></tr><tr><td>Belgium</td><td>1</td><td>●</td><td></td><td></td></tr><tr><td>Bulgaria</td><td>1</td><td></td><td></td><td>●</td></tr><tr><td>Czech Republic</td><td>3</td><td></td><td></td><td>●</td></tr><tr><td>Denmark</td><td>1</td><td></td><td></td><td>●</td></tr><tr><td>Finland</td><td>2</td><td></td><td>●</td><td>●</td></tr><tr><td>France</td><td>14</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Germany</td><td>12</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Greece</td><td>2</td><td>●</td><td>●</td><td></td></tr><tr><td>Hungary</td><td>2</td><td>●</td><td></td><td>●</td></tr><tr><td>Ireland</td><td>1</td><td></td><td></td><td>●</td></tr><tr><td>Italy</td><td>6</td><td>●</td><td></td><td>●</td></tr><tr><td>Netherlands</td><td>1</td><td></td><td></td><td>●</td></tr><tr><td>Poland</td><td>5</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Portugal</td><td>2</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Republic of Serbia</td><td>1</td><td>●</td><td></td><td>●</td></tr><tr><td>Russia</td><td>6</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Slovak Republic</td><td>1</td><td></td><td></td><td>●</td></tr><tr><td>Spain</td><td>10</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Sweden</td><td>1</td><td>●</td><td></td><td></td></tr><tr><td>Switzerland</td><td>10</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Türkiye</td><td>3</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Ukraine</td><td>3</td><td></td><td></td><td>●</td></tr><tr><td>United Kingdom</td><td>8</td><td>●</td><td>●</td><td>●</td></tr></table>

The figure in black after the country denotes the number of factories.

Powdered and Liquid Beverages

Water

Milk products and Ice cream

Nutrition and Health Science

☑ Prepared dishes and cooking aids

☑ Confectionery

PetCare

<table><tr><td colspan="5">Asia, Oceania and Africa (AOA)</td></tr><tr><td>Algeria</td><td>2</td><td>●</td><td>●</td><td></td></tr><tr><td>Angola</td><td>1</td><td></td><td>●</td><td></td></tr><tr><td>Australia</td><td>6</td><td>●</td><td></td><td>●</td></tr><tr><td>Bahrain</td><td>1</td><td>●</td><td></td><td></td></tr><tr><td>Bangladesh</td><td>1</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Cameroon</td><td>1</td><td></td><td>●</td><td>●</td></tr><tr><td>Côte d&#x27;Ivoire</td><td>2</td><td>●</td><td></td><td>●</td></tr><tr><td>Egypt</td><td>2</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Ghana</td><td>1</td><td>●</td><td>●</td><td>●</td></tr><tr><td>India</td><td>8</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Indonesia</td><td>4</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Iran</td><td>2</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Israel</td><td>6</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Japan</td><td>3</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Jordan</td><td>1</td><td>●</td><td></td><td></td></tr><tr><td>Kenya</td><td>1</td><td>●</td><td></td><td>●</td></tr><tr><td>Lebanon</td><td>1</td><td>●</td><td></td><td></td></tr><tr><td>Malaysia</td><td>6</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Morocco</td><td>1</td><td>●</td><td>●</td><td></td></tr><tr><td>New Zealand</td><td>4</td><td></td><td>●</td><td>●</td></tr><tr><td>Nigeria</td><td>3</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Pakistan</td><td>4</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Papua New Guinea</td><td>1</td><td>●</td><td></td><td>●</td></tr><tr><td>Philippines</td><td>5</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Qatar</td><td>1</td><td>●</td><td></td><td></td></tr><tr><td>Senegal</td><td>1</td><td></td><td>●</td><td>●</td></tr><tr><td>Singapore</td><td>2</td><td>●</td><td></td><td>●</td></tr><tr><td>Saudi Arabia</td><td>5</td><td>●</td><td></td><td></td></tr><tr><td>South Africa</td><td>5</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Sri Lanka</td><td>1</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Thailand</td><td>9</td><td>●</td><td>●</td><td>●</td></tr><tr><td>United Arab Emirates</td><td>2</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Vietnam</td><td>6</td><td>●</td><td>●</td><td>●</td></tr><tr><td>Zimbabwe</td><td>1</td><td>●</td><td></td><td></td></tr></table>



<table><tr><td colspan="11">Latin America (LATAM)</td></tr><tr><td>Argentina</td><td>6</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr><tr><td>Bolivia</td><td>1</td><td></td><td></td><td></td><td>●</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Brazil</td><td>12</td><td>●</td><td></td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr><tr><td>Chile</td><td>9</td><td>●</td><td></td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr><tr><td>Colombia</td><td>5</td><td>●</td><td></td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr><tr><td>Cuba</td><td>3</td><td></td><td>●</td><td>●</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Dominican Republic</td><td>2</td><td></td><td></td><td>●</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Ecuador</td><td>3</td><td>●</td><td></td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td><td></td></tr><tr><td>Guatemala</td><td>2</td><td></td><td></td><td></td><td>●</td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Mexico</td><td>12</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr><tr><td>Nicaragua</td><td>1</td><td>●</td><td></td><td>●</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Panama</td><td>1</td><td></td><td></td><td>●</td><td></td><td>●</td><td></td><td></td><td></td><td></td></tr><tr><td>Peru</td><td>1</td><td>●</td><td></td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td><td></td></tr><tr><td>Trinidad and Tobago</td><td>1</td><td>●</td><td></td><td>●</td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Uruguay</td><td>1</td><td>●</td><td></td><td></td><td></td><td></td><td></td><td></td><td></td><td></td></tr><tr><td>Venezuela</td><td>5</td><td>●</td><td></td><td>●</td><td></td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr></table>

<table><tr><td colspan="11">Greater China (GC)</td></tr><tr><td>Greater China</td><td>23</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td>●</td><td></td><td></td></tr></table>



## Corporate Governance
and Compliance



# Corporate Governance

A principles-based approach to governance provides the foundation for our many actions to create sustainable value for our shareholders and shared value for all our stakeholders.

Nestlé’s value creation model allows us to continue to invest, renovate and grow. We progress on our path to gradually reduce absolute GHG emissions in our supply chain and continue to support the transition to a regenerative food system. Our engagement on climate action is in line with our detailed Net Zero Roadmap, which our shareholders endorsed at the 2021 Annual General Meeting. As of 2024, we will submit our report on non-financial matters to a vote by shareholders as required by Swiss law. While making our portfolio good for the planet, we further intensified our efforts to provide consumers with nutritious, healthy and enjoyable products and to establish new global best practice in product nutrition transparency.

Nestlé’s Board of Directors is engaged in overseeing the direction of the company. We have continued to strengthen the Board by adding new independent directors with diverse experience and skillsets directly relevant to Nestlé, for example, with respect to food systems, food and beverage, digitalization, marketing, sustainability, geopolitics and other topics. Engagement with our shareholders takes place through our roadshows, investor meetings, analyst calls and Chairman’s Roundtables, where we meet with investors from Asia, North America, Switzerland, Germany, the UK, France and the Netherlands.

The Chair’s and Corporate Governance Committee regularly reviews all aspects of our governance. In 2023, it reviewed the roles and responsibilities with regards to our ESG/sustainability reporting. Our Board approves the ESG/sustainability strategy proposed by management and submits our report on non-financial matters to the Annual General Meeting. Advising on our environmental and social sustainability, including our response to climate change and our human rights due diligence program, the Sustainability Committee has oversight over the structure and content of the ESG/sustainability reporting. The Audit Committee oversees internal and external audit and reviews reports regarding internal controls, compliance, fraud and risk management; it has oversight over the accuracy of our financial and

Share capital distribution by geography



non-financial reporting. Chaired by our Lead Independent Director, the Nomination Committee evaluates Board composition, performance, structure and succession planning, and assesses candidates for nomination to the Board. The Compensation Committee ensures alignment of our remuneration systems with our values, strategies and performance. In 2023, it continued its work to refine the KPIs in our short- and long-term incentive plans and to enhance the related disclosure.



# Board of Directors
of Nestlé S.A.

Board of Directors of Nestlé S.A.
at December 31, 2023

Paul Bulcke \( ^{(1, 2, 4)} \) 
Chairman

U. Mark Schneider \( ^{(1, 2)} \) 
Chief Executive Officer

Henri de Castries \( ^{(1, 2, 4, 6)} \) 
Vice Chairman
Lead Independent Director
Former Chairman and CEO, AXA

Pablo Isla \( ^{(1, 2, 3)} \) 
Former Chairman and CEO,
Inditex

Renato Fassbind \( ^{(1, 2, 6)} \) 
Former Vice Chairman,
Swiss Re AG

Patrick Aebischer \( ^{(1, 3)} \) 
President Emeritus of the Swiss
Federal Institute of Technology
Lausanne (EPFL)

Kimberly A. Ross \( ^{(1, 6)} \) 
Former CFO, Baker Hughes LLC,
Avon Products Inc. and Royal
Ahold NV.

Dick Boer \( ^{(1, 3, 5)} \) 
Former President and CEO,
Ahold Delhaize NV.

Peter Brabeck-Letmathe
Chairman Emeritus

David P. Frick
Secretary to the Board

EY \( ^{(1)} \) 
Independent auditors

Dinesh Paliwal \( ^{(1, 3, 4)} \) 
Former President and CEO,
Harman International
Industries Inc.

Hanne Jimenez de Mora \( ^{(1, 2, 5)} \) 
Co-founder, a-connect group

Lindwide M. Sibanda \( ^{(1, 5)} \) 
Professor Extraordinary, University
of Pretoria, RSA

Luca Maestri \( ^{(1, 6)} \) 
Chief Financial Officer, Apple Inc.

Chris Leong \( ^{(1, 5)} \) 
Chief Marketing Officer,
Schneider Electric

Rainer Blair \( ^{(1)} \) 
President and CEO,
Danaher Corporation

Marie-Gabrielle
Ineichen-Fleisch \( ^{(1, 4)} \) 
Former State Secretary and
Director of the Swiss State
Secretariat for Economic Affairs
SECO

(1) Term expires on the date of the Annual General Meeting 2024
(2) Chair’s and Corporate Governance Committee
(3) Compensation Committee
(4) Nomination Committee
(5) Sustainability Committee
(6) Audit Committee

For further information on the Board of Directors, please refer to the Corporate Governance Report 2023.




Paul Bulcke



U. Mark Schneider



Henri de Castries



Pablo Isla



Renato Fassbind



Patrick Aebischer



Kimberly A. Ross



Dick Boer



Dinesh Paliwal



Hanne Jimenez de Mora



Lindiwe M. Sibanda



Luca Maestri



Chris Leong



Rainer Blair



Marie-Gabrielle Ineichen-Fleisch



David P. Frick
Secretary to the Board



# Executive Board of Nestlé S.A.



Executive Board of Nestlé S.A.
at December 31, 2023

From left to right

EVP: Executive Vice President
CEO: Chief Executive Officer

For further information on the Executive Board, please refer to the Corporate Governance Report 2023.
Greg Behar
Deputy EVP, CEO,
Nestlé Health Science

Stefan Palzer
EVP, Innovation Technology,
Research and Development

Leanne Geale
EVP, Group General Counsel
Steven Wood Presley
EVP, CEO Zone North America

Laurent Freixe
EVP, CEO Zone Latin America

David Xiqiang Zhang
EVP, CEO Zone Greater China

Stephanie Pullings Hart
EVP, Operations

U. Mark Schneider
Chief Executive Officer




Lisa Gibby
Deputy EVP, Chief
Communications Officer

Bernard Meunier
EVP, Strategic Business Units,
Marketing and Sales
Béatrice Guillaume-Grabisch
EVP, Human Resources
and Business Services

David Rennie
Deputy EVP, Nestlé Coffee Brands

Remy Ejel
EVP, CEO Zone Asia,
Oceania and Africa
Marco Settembri
EVP, CEO Zone Europe

Sanjay Bahadur
Deputy EVP, Group Strategy
and Business Development

François-Xavier Roger
EVP, Chief Financial Officer
Visiting a LENs farm
EJ Barker and Sons based at Lodge Farm, Suffolk, in the UK, is one of the Landscape Enterprise Networks (LENs) partner farms implementing regenerative agricultural management practices to improve resource management and biodiversity. The farm supplies wheat to Purina and Nestlé Cereal Partners UK.



## Compliance

Compliance is our commitment to act with honesty, integrity and respect for our own values, principles and policies, and for the laws and regulations where we operate. It is a non-negotiable requirement for everything we do and enables sustainable business growth. Our comprehensive Compliance Management System, comprised of policies, processes, controls and tools, is regularly reviewed to ensure we proactively uphold our values and address relevant risks, while also meeting the multiple and incremental regulatory requirements.

Nestlé’s Board of Directors and Executive Board oversee and promote good practices throughout the company. Management is supported by our Legal and Compliance function, which provides guidance and functional leadership, as well as by all other functions engaged in our risk- and principles-based compliance program. The Group Compliance Committee ensures a continuous evolution of our Integrated Assurance Framework, while market compliance officers and committees ensure a consistent approach across the Group and help identify local compliance priorities. Compliance is monitored through our corporate functions, including Audit, and external auditors.

In 2023, employees completed more than 970 000 e-modules on topics such as our Corporate Business Principles, compliance, human rights, security, sexual harassment, antitrust, and diversity and inclusion. We also launched a new mandatory training on transacting ethically and responsibly (with a focus on anti-money laundering) for a selected subset of people managers and a recommended training on anti-bribery and corruption for all employees.

This year marks the last year of the 2021-2023 CARE program cycle, through which we assess our sites on specific aspects of our social compliance including health and safety, environment and working conditions, with the help of independent external auditors. A total of 194 audits were performed in 2023, covering 440 sites. We have enhanced the program in preparation for the new 2024-2026 CARE cycle, particularly in assessing human rights in our sites.

Our Speak Up system, independently operated by a third party, allows us to investigate and address potential non-compliance concerns from employees and external stakeholders. We have addressed substantiated complaints on issues such as abuse of power and/or mobbing/bullying, labor practices, sexual harassment and conflicts of interest, among others. As a consequence of all the substantiated cases in 2023, 122 employees had to leave our company and 15 service providers were terminated as a result of non-compliance incidents. In 2023, we developed a new training, Conducting Investigations on Behavioral Allegations, to guide our markets and serve as a comprehensive toolkit of best practices.

An annual compliance communication plan strengthens and sustains a business ethics and compliance culture. This enables good business decisions and enhances the trust in Nestlé by our stakeholders.



# Shareholder information

## Stock exchange listing

At December 31, 2023, Nestlé S.A. shares are listed on the SIX Swiss Exchange, Zurich (ISIN code: CH0038863350). American Depositary Receipts (ISIN code: US6410694060) representing Nestlé S.A. shares are offered in the USA by Citibank, N.A., New York.

## Registered Offices

Nestlé S.A.
Avenue Nestlé 55
CH-1800 Vevey (Switzerland)
tel. +41 (0)21 924 21 11

Nestlé S.A. (Share Transfer Office)
Zugerstrasse 8
CH-6330 Cham (Switzerland)
tel. +41 (0)41 785 20 20

For additional information, contact:
Nestlé S.A.
Investor Relations
Avenue Nestlé 55
CH-1800 Vevey (Switzerland)
tel. +41 (0)21 924 35 09
e-mail: ir@nestle.com

As to information concerning the share register (registrations, transfers, dividends, etc.), please contact:
Nestlé S.A. (Share Transfer Office)
Zugerstrasse 8
CH-6330 Cham (Switzerland)
tel. +41 (0)41 785 20 20
fax +41 (0)41 785 20 24
e-mail: shareholder@nestle.com

The Annual Review is available online as a PDF in English, French and German. The consolidated income statement, balance sheet and cash flow statement are also available as Excel files.

www.nestle.com

April 18, 2024
157th Annual General Meeting

April 19, 2024
Last trading day with entitlement to dividend

April 22, 2024
Ex-dividend date

April 24, 2024
Payment of the dividend

April 25, 2024
2024 three-month sales figures

July 25, 2024
2024 half-year results

October 17, 2024
2024 nine-month sales figures

February 13, 2025
2024 full-year results

© 2024, Nestlé S.A., Cham and Vevey (Switzerland)

The Annual Report contains forward-looking statements which reflect Management’s current views and estimates. The forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Potential risks and uncertainties include factors such as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures, and regulatory developments.

The Annual Report is published in English, German and French. The English version is binding for the content.

The brands in italics are trademarks used by the Nestlé Group.

Visual concept and design
Société des Produits Nestlé S.A.,
Corporate Identity & Design,
with Large Network

Photography
Niels Ackermann,
Gaëtan Bally,
Matthew Joseph,
Nestlé S.A.

Prepress
Images3 S.A. (Switzerland)

Production
Stämpfli AG (Switzerland)

## Paper

This report is printed on Refutura, a paper certified by the Forest Stewardship Council (FSC) produced from 100% recycled content.