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MarketScreener Homepage  >  Equities  >  Swiss Exchange  >  Nestlé S.A.    NESN   CH0038863350

NESTLÉ S.A.

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Pet-Food Sales Set the Pace for Nestlé, Rivals -- WSJ

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02/14/2020 | 02:48am EST

By Saabira Chaudhuri

Pet food sales are soaring, boosting revenue at packaged-food giants that have struggled in recent years selling staples like frozen food, cereal and bottled water.

Nestlé SA, the maker of Nescafe coffee and KitKat chocolate, said its North America volume growth for the year was the best in a decade, buoyed by strong sales of its Purina brand. The boost comes amid a yearslong fight by packaged-goods companies to keep up with fast-changing tastes. Pet food has been a bright spot.

Nestlé's strong pet food showing, disclosed as part of its annual earnings, comes after General Mills Inc. said in December that pet food sales helped it outweigh weaker snack bar and yogurt sales in its latest quarter.

In developed markets, later marriages and smaller families are propelling consumers to focus on their pets. Petfood sales globally have climbed 61% since 2010, according to research firm Euromonitor.

But some of the headwinds that have buffeted big consumer-goods makers in selling food for humans are creeping into the pet food business. Nestlé, Kraft Heinz Co., Unilever PLC and other packaged food makers have fought to keep up with smaller, nimbler brands offering healthier or more locally sourced packaged-food options.

As pet owners increase their spending, brands are rushing to sell organic, customized, grain-free and other kinds of pricey pet food. In 2018, General Mills bought premium pet-food maker Blue Buffalo and Nestlé that year bought a majority stake in British tailor-made dog food company Tails.com.

Nontraditional players are moving in as well. Amazon.com Inc. rolled out premium pet-food brand Wag in 2018. Actor Will Smith and musician Nas invested in dog food startup Jinx Inc., which blends meats with so-called superfoods like avocados and sweet potatoes.

In November, J.M. Smucker Co. blamed intense competition for a drop in premium pet food sales, lowering its overall outlook.

Nestlé and Mars Inc. -- which between them control 43% of the global pet food market -- have been trying to defend share by investing in emerging pet foods and snacks. Nestlé last year held a pet-care summit to hear pitches from startups in the field. It funded a U.S. startup, Basepaws, that sequences the DNA of cats to provide health and dietary recommendations to customers and a dating app called Dig that connects like-minded dog owners. Mars is running similar events and offering to help startups that use cricket protein and hemp to make pet food and supplements.

Underscoring the pressure on consumer giants to find new growth avenues, Nestlé lowered Thursday its sales guidance for 2020, saying it no longer sought to achieve mid-single-digit growth in organic sales. It delayed that target to 2021. Shares in Nestlé fell more than 2% after it released its earnings and guidance.

Nestlé's overall organic sales growth -- a key measure that strips out currency changes, acquisitions and divestments -- rose 3.5% last year.

Its North America volumes were driven by online sales of its Purina PetCare brand. Upscale brands like Purina Pro Plan -- marketed as a "scientifically-formulated" food made from high-quality ingredients -- and Purina One performed well in the U.S., while its Tidy Cats litter reported double-digit growth. Purina also sold strongly in Europe and Japan.

Nestlé's net profit for the year rose 24.4% to 12.6 billion Swiss Francs ($12.9 billion), boosted by a one-time gain from the sale of its skin-health arm. Total sales rose to 92.6 billion francs from 91.4 billion francs a year earlier.

Under Chief Executive Mark Schneider, Nestlé has sold off slow-growth products and invested in areas like coffee, plant-based foods and vitamins. That has contributed to its improving performance. On Thursday, Mr. Schneider said Nestlé would continue to review its portfolio and pivot toward high-growth businesses.

Write to Saabira Chaudhuri at saabira.chaudhuri@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
AUTOBACS SEVEN CO.,LTD. -0.91% 1525 End-of-day quote.-0.20%
BUFFALO CO.,LTD. -0.49% 1215 End-of-day quote.-0.49%
DNA OYJ 0.00%End-of-day quote.-0.10%
GENERAL MILLS, INC. -0.39% 53.92 Delayed Quote.0.67%
LONDON COFFEE -1.07% 1765 End-of-day quote.0.00%
LONDON SUGAR -0.26% 420.1 End-of-day quote.16.79%
NESTLÉ S.A. -0.31% 109.02 Delayed Quote.4.37%
NEW YORK COCOA 0.48% 2939 End-of-day quote.16.44%
TELENOR -0.65% 161.5 Delayed Quote.3.24%
THE KRAFT HEINZ COMPANY -0.58% 27.26 Delayed Quote.-15.16%
UNILEVER N.V. -0.24% 53.92 Delayed Quote.5.25%
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Financials (CHF)
Sales 2020 90 601 M
EBIT 2020 16 379 M
Net income 2020 12 376 M
Debt 2020 28 418 M
Yield 2020 2,58%
P/E ratio 2020 24,9x
P/E ratio 2021 23,4x
EV / Sales2020 3,78x
EV / Sales2021 3,68x
Capitalization 314 B
Chart NESTLÉ S.A.
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Nestlé S.A. Technical Analysis Chart | MarketScreener
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Technical analysis trends NESTLÉ S.A.
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Income Statement Evolution
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Mean consensus OUTPERFORM
Number of Analysts 28
Average target price 112,38  CHF
Last Close Price 109,02  CHF
Spread / Highest target 11,9%
Spread / Average Target 3,08%
Spread / Lowest Target -16,5%
EPS Revisions
Managers
NameTitle
Ulf Mark Schneider Chief Executive Officer & Director
jeff hamilton President
Paul Bulcke Chairman
Magdi Batato Executive Vice President-Operations
François-Xavier Michel Marie Roger Chief Financial Officer & Executive Vice President
Sector and Competitors
1st jan.Capitalization (M$)
NESTLÉ S.A.4.37%320 961
MONDELEZ INTERNATIONAL, INC6.66%84 185
DANONE-3.92%50 002
THE HERSHEY COMPANY9.08%33 627
THE KRAFT HEINZ COMPANY-15.16%33 295
GENERAL MILLS, INC.0.67%32 612