Nestle S A : Three-month sales

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Nestlé reports three-month sales for 2022

• • Organic growth reached 7.6%, with real internal growth (RIG) of 2.4% and pricing of 5.2%. Growth was broad-based across most geographies and categories, with increased pricing, continued momentum in retail sales and a further recovery in out-of-home channels.

• • Total reported sales increased by 5.4% to CHF 22.2 billion (3M-2021: CHF 21.1 billion). Foreign exchange decreased sales by 0.8%. Net divestitures had a negative impact of 1.3%.

• • Portfolio management on track. In April, Nestlé Health Science completed the acquisition of a majority stake in Orgain, a leader in plant-based nutrition.

• • Full-year 2022 outlook confirmed: we expect organic sales growth around 5% and underlying trading operating profit margin between 17.0% and 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Mark Schneider, Nestlé CEO, commented: "In these first months of the year, the war in Ukraine has caused unspeakable human suffering. We remain focused on supporting our colleagues there and providing humanitarian relief, while standing with the international community in the call for peace.

Amid this challenging environment, we delivered strong organic sales growth with resilient RIG. We stepped up pricing in a responsible manner and saw sustained consumer demand. Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year. The Nestlé team addressed these headwinds and advanced our long-term strategy and sustainability objectives with agility and determination. We confirm our guidance for the year."

Total Group	Zone North America	Zone Europe	Zone AOA	Zone Latin America	Zone Greater China	Nespresso	Nestlé Health Science	Other Businesses
Sales 3M-2022 (CHF m) Sales 3M-2021 (CHF m)*	22 238	5 800	4 633	4 633	2 697	1 361	1 602	1 449	63
21 089	5 887	4 535	4 497	2 357	1 265	1 571	930	47
Real internal growth (RIG)** Pricing** Organic growth** Net M&A** Foreign exchange** Reported sales growth
2.4%	1.4%	2.8%	1.7%	4.7%	3.8%	0.2%	4.3%	30.7%
5.2%	8.5%	4.1%	4.3%	7.7%	-0.5%	3.1%	1.3%	3.6%
7.6%	9.9%	6.9%	6.0%	12.5%	3.4%	3.3%	5.6%	34.3%
-1.3%	-13.6%	0.6%	-0.1%	0.1%	0.0%	0.6%	50.1%	0.0%
-0.8%	2.2%	-5.4%	-2.8%	1.8%	4.2%	-2.0%	0.2%	-0.6%
5.4%	-1.5%	2.2%	3.0%	14.4%	7.6%	2.0%	55.8%	33.6%

* 2021 figures restated following the creation of Zone North America (NA) and Zone Greater China (GC) as of January 1, 2022. Zone AOA includes Middle East and North Africa (MENA) previously included in Zone EMENA.

**RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines. Organic growth would have been higher including the Russia region.

Group sales

Organic growth was 7.6%, with RIG of 2.4%. Pricing increased to 5.2% to reflect significant cost inflation. Organic growth now excludes the Russia region, given significantly disrupted trading conditions and Nestlé's decision to focus on providing essential food.

Growth was broad-based across most geographies and categories. Organic growth was 6.7% in developed markets, with increased pricing and resilient RIG following a high base of comparison in 2021. Organic growth in emerging markets was 8.8%, with strong RIG and pricing.

By product category, Purina PetCare was the largest contributor to organic growth led by its science-based and premium brands Purina ONE, Purina Pro Plan and Fancy Feast as well as veterinary products. Coffee saw high single-digit growth fueled by continued demand for Nescafé, Starbucks and Nespresso. Sales in confectionery grew at a double-digit rate, with strong growth for KitKat and gifting products. Water posted double-digit growth, driven by a further recovery of out-of-home channels and premium brands S.Pellegrino and Perrier. Dairy reported mid single-digit growth, with strong sales developments in coffee creamers and ice cream as well as premium and fortified milks. Growth in Infant Nutrition reached a mid single-digit rate, supported by improved sales developments in the Americas and Europe. Nestlé Health Science recorded mid single-digit growth, reflecting high demand for Medical Nutrition and healthy-aging products. Prepared dishes and cooking aids posted low single-digit growth following a high base of comparison in 2021, with continued strong demand for Maggi and Garden Gourmet.

By channel, organic growth in retail sales was 5.9%. Within retail, e-commerce sales grew by 5.0%, building on very strong growth of 39.6% in the first quarter of 2021. Organic growth in out-of-home channels reached 35.6%, with sales exceeding 2019 levels.

Net divestitures decreased sales by 1.3%, largely related to the Nestlé Waters North America transaction, which closed on March 31, 2021. Divestitures were partially offset by acquisitions, including the core brands of The Bountiful Company. The impact on sales from foreign exchange was negative at 0.8%. Total reported sales increased by 5.4% to CHF 22.2 billion.

Portfolio Management

On April 1, 2022, Nestlé Health Science completed the acquisition of a majority stake in Orgain, a leader in plant-based nutrition. Orgain complements Nestlé Health Science's existing portfolio of nutrition products that support healthier lives. The deal is expected to be slightly accretive to Nestlé's organic growth, while slightly dilutive to the Group's underlying trading profit margin in 2022. The agreement includes the option for Nestlé Health Science to fully acquire Orgain in 2024.

Zone North America

• • 9.9% organic growth: 1.4% RIG; 8.5% pricing.

Sales 3M-2022	Sales 3M-2021	RIG	Pricing	Organic growth	Net M&A	Foreign exchange	Reported Growth
Zone North America
CHF 5.8 bn	CHF 5.9 bn	1.4%	8.5%	9.9%	-13.6%	2.2%	-1.5%

Organic growth was 9.9%, with RIG of 1.4%. Pricing reached 8.5%. Net divestitures reduced sales by13.6%, as the divestment of the Nestlé Waters North America brands more than offset the acquisition of Essentia Water. Foreign exchange had a positive impact of 2.2%. Reported sales in Zone North America decreased by 1.5% to CHF 5.8 billion.

Organic growth in Zone North America was close to a double-digit rate, supported by increased pricing, strong momentum in e-commerce and a further recovery of out-of-home channels. The Zone saw continued broad-based market share gains, led by pet food, coffee and creamers.

By product category, Purina PetCare was the largest growth contributor, supported by strong momentum in e-commerce and premium brands, Purina ONE, Purina Pro Plan and Fancy Feast. Nestlé Professional and Starbucks out-of-home products posted double-digit growth. The beverages category reported high single-digit growth, with strong demand for Starbucks at-home products and Coffee mate. Sales in water grew at a double-digit rate, fueled by a recovery for premium brands, S.Pellegrino andPerrier as well as continued strong demand for Essentia. Growth in Infant Nutrition reached a double-digit rate, reflecting supply shortages in the market. Frozen food saw positive growth, despite supply chain constraints and a high base of comparison in 2021. Positive sales developments in frozen pizza and Hot Pockets were partially offset by negative growth for frozen meals. Confectionery in Canada reported double-digit growth, led by KitKat.

Zone Europe

• • 6.9% organic growth: 2.8% RIG; 4.1% pricing.

Sales 3M-2022	Sales 3M-2021	RIG	Pricing	Organic growth	Net M&A	Foreign exchange	Reported Growth
Zone Europe*	CHF 4.6 bn	CHF 4.5 bn	2.8%	4.1%	6.9%	0.6%	-5.4%	2.2%

*RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines

Organic growth reached 6.9%, with solid RIG of 2.8%. Pricing increased to 4.1%, with an acceleration across most geographies and categories. Foreign exchange negatively impacted sales by 5.4%. Reported sales in Zone Europe increased by 2.2% to CHF 4.6 billion.

Zone Europe reported high single-digit organic growth, supported by higher pricing, sustained e-commerce momentum and a further recovery in out-of-home channels. The Zone continued to see market share gains, particularly in pet food, coffee and plant-based food.

By product category, the key growth driver was Nestlé Professional, with sales exceeding 2019 levels. Sales in Purina PetCare grew at a double-digit rate, driven by premium brands Purina ONE, Purina Pro Plan and Gourmet as well as veterinary products. Tails.com and Lily's Kitchen also saw strong momentum, supported by continued distribution expansion. Sales in Infant Nutrition grew at a double-digit rate, helped by market share gains. Water posted double-digit growth, led by S.Pellegrino. Confectionery reported mid single-digit growth, with a strong recovery for KitKat and gifting products. Growth in coffee was almost flat, following strong double-digit growth in the first quarter of 2021. Starbucks products and Nescafé Farmers Origins, a new range of coffee capsules for Nespresso machines, resonated strongly with consumers. Culinary posted a sales decrease, following a high base of comparison in 2021. Garden Gourmet plant-based products continued to see strong momentum.

Zone Asia, Oceania and Africa (AOA)

• • 6.0% organic growth: 1.7% RIG; 4.3% pricing.

Sales 3M-2022	Sales 3M-2021	RIG	Pricing	Organic growth	Net M&A	Foreign exchange	Reported Growth
Zone AOA
CHF 4.6 bn	CHF 4.5 bn	1.7%	4.3%	6.0%	-0.1%	-2.8%	3.0%

Organic growth reached 6.0%, with RIG of 1.7%. Pricing increased to 4.3%, with broad-based contributions from most geographies and categories. Foreign exchange reduced sales by 2.8%. Reported sales in Zone AOA increased by 3.0% to CHF 4.6 billion.

Zone AOA reported mid single-digit organic growth, with particular strength in South Asia and Sub-Saharan Africa. Growth was supported by increased pricing, a further recovery in out-of-home channels and continued momentum for affordable offerings. The Zone saw market share gains in most categories, particularly culinary, coffee and ice cream.

South-East Asia posted low single-digit growth, with robust demand in Maggi and Nescafé, particularly in Malaysia. South Asia recorded double-digit growth, supported by continued distribution expansion and innovation, with strong growth for Maggi and KitKat. Sales in Sub-Saharan Africa grew at a double-digit rate, based on strong momentum for affordable nutrition offerings particularly in Maggi and Milo. Middle East and North Africa posted low single-digit growth, as robust demand in culinary was partially offset by a sales decline in dairy. Japan reported high single-digit growth, driven by coffee and Purina PetCare. Sales in South Korea grew at a double-digit rate, driven by coffee. Oceania reported mid single-digit growth, with particular strength in Nescafé and Maggi.

By product category, culinary was the largest growth contributor, led by Maggi. Coffee posted high single-digit growth, with continued strong demand for Nescafé and Starbucks products. Sales in Nestlé Professional grew at a double-digit rate. Cocoa and malt beverages grew at a high single-digit rate. The recently launched Milo Soy resonated strongly with consumers. Confectionery reported high single-digit growth, with strong demand for KitKat. Growth in Infant Nutrition turned positive, driven by Lactogen. Sales in Purina PetCare grew at a high single-digit rate, led by Purina Pro Plan and Purina ONE.

Zone Latin America

• • 12.5% organic growth: 4.7% RIG; 7.7% pricing.

Sales 3M-2022	Sales 3M-2021	RIG	Pricing	Organic growth	Net M&A	Foreign exchange	Reported Growth
Zone Latin America	CHF 2.7 bn	CHF 2.4 bn	4.7%	7.7%	12.5%	0.1%	1.8%	14.4%

Organic growth was 12.5%, with strong RIG of 4.7%. Pricing increased to 7.7%. Foreign exchange had a positive impact of 1.8%. Reported sales in Zone Latin America increased by 14.4% to CHF 2.7 billion.