16 July 2024
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Global Industry

Update: Nestle S.A. reports nine-month sales for 2020

Vevey / CH. (nsa) Swiss Nestle S.A. reported nine-month sales for 2020 (9M-2020). Organic growth reached 3.5 percent, with real internal growth (RIG) of 3.3 percent and pricing of 0.2 percent. Growth was supported by continued strong momentum in the Americas, Purina PetCare and Nestle Health Science. Zone AOA reached 4.5 percent organic growth in the third quarter. Divestitures and foreign exchange reduced sales by 12.9 percent. Total reported sales decreased by 9.4 percent to CHF 61.9 billion (9M-2019: CHF 68.4 billion). Nestle’s current strategic reviews are fully on track. Further progress in portfolio management was made. The acquisition of Aimmune Therapeutics was completed on October 13, 2020. Nestle updated its full-year guidance for 2020: The company expects full-year organic sales growth around 3 percent. The underlying trading operating profit margin is expected to improve. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

CEO Mark Schneider: «Nestle has remained resilient in a difficult and volatile environment. Our people have acted in a responsible and prompt manner to mitigate the impact of the global pandemic and have adapted quickly to evolving consumer needs. Strong organic growth was broad based and supported by sustained momentum in the Americas, Purina PetCare and Nestle Health Science, as well as the acceleration of our coffee business in the third quarter.

«We continue to develop our portfolio with speed and discipline. As an example, we are transforming Nestle Health Science into a nutrition and health powerhouse through a combination of strong organic growth and targeted acquisitions. The recent additions of Zenpep, Vital Proteins and Aimmune Therapeutics are further steps in the expansion of our nutritional health offerings.»

(CHF in millions) Total Group Zone AMS Zone EMENA Zone AOA Others
Sales 9M-2020 61’912 24’991 14’952 15’251 6’718
Sales 9M-2019(*) 68’367 27’608 15’732 16’340 8’687
Real internal growth (RIG) 3.3% 4.7% 3.3% – 0.2% 6.8%
Pricing 0.2% 0.4% – 0.4% 0.2% 0.6%
Organic growth 3.5% 5.1% 2.9% 0.0% 7.4%
Net M+A – 5.5% – 5.7% – 1.7% 0.0% – 24.0%
Foreign exchange – 7.4% – 8.9% – 6.2% – 6.7% – 6.1%
Reported sales growth – 9.4% – 9.5% – 5.0% – 6.7% – 22.7%

(*)2019 figures restated following the decision to integrate the Nestle Waters business into the Group’s three geographical Zones, effective January 01, 2020.

Group sales

Organic growth reached 3.5 percent, with RIG of 3.3 percent. Pricing contributed 0.2 percent. Organic growth improved to 4.9 percent in the third quarter.

Growth was based on sustained momentum in the Americas and continued robust sales development in EMENA. Growth in AOA was slightly positive. Organic growth was 3.9 percent in developed markets, based entirely on RIG. Growth in emerging markets improved to 2.8 percent, supported by both RIG and pricing.

By product category, the largest contributor to growth was Purina PetCare and its science-based and premium brands Purina Pro Plan, Purina ONE and Felix. Dairy grew at a high single-digit rate, based on increased demand for fortified milks and home-baking products. Coffee posted mid single-digit growth, fueled by strong consumer demand for Starbucks products, Nespresso and Nescafe. Prepared dishes and cooking aids reached mid single-digit growth. Vegetarian and plant-based food products delivered strong double-digit growth, supported by new product launches and continued distribution expansion. Nestle Health Science posted double-digit growth, reflecting increased consumer demand for products that support health and the immune system. Confectionery and water reported a sales decrease due to their high exposure to out-of-home channels, with some improvement in the third quarter.

Divestitures decreased sales by 5.5 percent, largely related to the divestment of Nestle Skin Health and the U.S. ice cream business. Foreign exchange reduced sales by 7.4 percent, reflecting the continued appreciation of the Swiss franc versus most currencies. Total reported sales decreased by 9.4 percent to CHF 61.9 billion.

Business impact of Covid-19

The effects of Covid-19 on organic growth continued to vary, in particular by product category and sales channel.

  • Product categories: Demand for at-home consumption, trusted brands and products with health benefits remained strong. Purina PetCare, dairy, coffee at-home and Nestle Health Science continued to report strong growth. Confectionery and water posted sales decreases, reflecting their high exposure to out-of-home channels and on-the-go consumption.
  • Sales channels: Retail sales accelerated materially, reflecting continued elevated demand for at-home consumption. Growth in out-of-home channels remained significantly negative, with sales declines moderating in the third quarter.
     
    E-commerce sales grew by 47.6 percent, reaching 12.3 percent of total Group sales. Coffee, Purina PetCare and Nutrition + Health Science were the main growth contributors, with continued strong momentum in all other categories.

Portfolio Management

The strategic reviews for parts of the Waters business in North America and the Yinlu peanut milk and canned rice porridge businesses in China are fully on track. Both reviews are expected to be completed in early 2021.

Nestle Health Science continues to build its presence and leadership in the field of nutritional science. In July, Nestle completed the acquisition of a majority stake in Vital Proteins, America’s leading collagen products brand. In September, Nestle closed the acquisition of IM HealthScience, which specializes in medical foods and dietary supplements. On October 13, 2020, Nestle completed the acquisition of Aimmune Therapeutics, a biopharmaceutical company developing and commercializing treatments for potentially life-threatening food allergies.


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