This press release is also available in Français (pdf) and Deutsch (pdf)
Follow today's events live
Full details in Events
Reports published today
2020 Financial Statements (pdf)
Corporate Governance Report (pdf)
Other language versions available in Publications
.............
Nestlé reports full-year results for 2020
- Organic growth reached 3.6%, with real internal growth (RIG) of 3.2% and pricing of 0.4%. Growth was supported by strong momentum in the
Americas , Purina PetCare and Nestlé Health Science. - Foreign exchange reduced sales by 7.9% due to the continued appreciation of the Swiss franc against most currencies. Divestitures had a negative impact of 4.6%. As a result, total reported sales decreased by 8.9% to
CHF 84 .3 billion (2019:CHF 92 .6 billion). - The underlying trading operating profit (UTOP) margin reached 17.7%, up 10 basis points on a reported basis and 20 basis points in constant currency. The trading operating profit (TOP) margin increased by 210 basis points to 16.9% on a reported basis.
- Underlying earnings per share increased by 3.5% in constant currency and decreased by 4.5% on a reported basis to
CHF 4.21 . Earnings per share stayed unchanged atCHF 4.30 on a reported basis. - Free cash flow was
CHF 10.2 billion . - Return on invested capital increased by 240 basis points to 14.7%.
- Board proposes a dividend increase of 5 centimes to
CHF 2.75 per share, marking 26 consecutive years of dividend growth. In total,CHF 14.5 billion were returned to shareholders in 2020 through a combination of dividend and share buybacks. - Continued progress in portfolio management. Nestlé divested the Yinlu peanut milk and canned rice porridge businesses in
China and agreed to sell its regional spring water brands, purified water business and beverage delivery service in theU.S. andCanada . Portfolio rotation since 2017 now amounts to around 18% of total 2017 sales. - 2021 outlook: continued increase in organic sales growth towards a mid single-digit rate. Underlying trading operating profit margin with continued moderate improvement. Underlying earnings per share in constant currency and capital efficiency expected to increase.
- Mid-term outlook: sustained mid single-digit organic sales growth. Continued moderate underlying trading operating profit margin improvement. Continued prudent capital allocation and capital efficiency improvement.
In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability and return on invested capital.
The global pandemic did not slow us down. Our nutrition expertise, digital capabilities, decentralized structure and innovation engine allowed us to adapt quickly to changing consumer behaviors and trends. We advanced our portfolio transformation, continued to build Nestlé Health Science into a nutrition powerhouse and expanded our presence in direct-to-consumer businesses.
At the same time, we remained focused on sustainability and set out our path to achieve net zero greenhouse gas emissions by 2050. This journey is expected to support future growth and be earnings neutral – it will generate value for society and our shareholders.
Looking to 2021, we expect continued improvement in organic growth, profitability and capital efficiency in line with our value creation model."
Group Results
Zone AMS | Zone EMENA | Zone AOA | Other Businesses | ||
Sales FY-2020 (CHF m) | 84 343 | 34 010 | 20 226 | 20 730 | 9 377 |
Sales FY-2019 (CHF m)* | 92 568 | 37 828 | 21 464 | 22 119 | 11 157 |
Real internal growth (RIG) | 3.2% | 4.1% | 3.3% | 0.0% | 7.3% |
Pricing | 0.4% | 0.7% | - 0.4% | 0.5% | 0.6% |
Organic growth | 3.6% | 4.8% | 2.9% | 0.5% | 7.9% |
Net M&A | - 4.6% | - 5.0% | - 2.1% | - 0.1% | - 17.6% |
Foreign exchange | - 7.9% | - 9.9% | - 6.6% | - 6.7% | - 6.3% |
Reported sales growth | - 8.9% | - 10.1% | - 5.8% | - 6.3% | - 16.0% |
FY-2020 Underlying TOP Margin | 17.7% | 20.5% | 18.6% | 22.2% | 19.6% |
FY-2019 Underlying TOP Margin* | 17.6% | 20.1% | 18.1% | 22.5% | 18.7% |
* 2019 figures restated following the decision to integrate the Nestlé Waters business into the Group's three geographical Zones, effective
Group sales
Organic growth reached 3.6% in 2020, the highest level in the last five years. RIG accelerated to 3.2%. Pricing contributed 0.4% and improved during the year, particularly in emerging markets.
Growth was based on strong momentum in the
By product category, the largest contributor to growth was Purina PetCare and its premium brands Purina Pro Plan, Purina ONE and Felix. Dairy saw high single-digit growth, based on increased demand for home-baking products and fortified affordable milks. Coffee reported mid single-digit growth, boosted by strong consumer demand for Starbucks products, Nespresso and Nescafé. Sales of Starbucks products reached
Divestitures decreased sales by 4.6%, largely related to the divestment of Nestlé
Business impact of COVID-19
The effects of COVID-19 on the Group's organic growth varied by product category and sales channel:
- Product categories: Demand for at-home consumption, trusted brands and products with nutritional benefits was strong. Purina PetCare, dairy, coffee at-home and Nestlé Health Science reported robust growth. Sales in confectionery and water decreased, reflecting their high exposure to out-of-home channels and on-the-go consumption.
- Sales channels: Retail sales posted high single-digit organic growth, reflecting elevated demand for at-home consumption. Sales in out-of-home channels declined significantly.
E-commerce sales grew by 48.4%, reaching 12.8% of total Group sales. Coffee, Purina PetCare and Nutrition & Health Science were the main growth contributors, with strong momentum in all other categories.
In 2020, COVID-19-related incremental costs were CHF 420 million, including expenses for bonuses paid to frontline workers, employee safety protocols, donations and other staff and customer allowances. Around CHF 260 million of these costs impacted underlying trading operating profit, partially offset by savings such as travel expenses. In addition, the Group absorbed costs of
Underlying Trading Operating Profit
Underlying trading operating profit decreased by 8.3% to
Margin expansion was supported by structural cost reductions, portfolio management and slightly lower consumer-facing marketing expenses1 which more than offset commodity inflation and COVID-19-related costs. In the second half of the year, consumer-facing marketing expenses1 returned to a normalized level and increased versus the same period of 2019.
Restructuring expenses and net other trading items decreased by
Net Financial Expenses and Income Tax
Net financial expenses decreased by 14.0% to CHF 874 million, reflecting a reduction in average net debt and a lower cost of debt.
The Group reported tax rate increased by 320 basis points to 24.2%, due to exceptional items in 2019, including the divestiture of Nestlé
Net Profit and Earnings Per Share
Net profit decreased by 3.0% to
Underlying earnings per share increased by 3.5% in constant currency and decreased by 4.5% on a reported basis to
Cash Flow
Free cash flow decreased from
Working capital2 decreased by 60 basis points to 0.0% of sales, marking 9 consecutive years of improvement. This reduction came even as the company increased inventory levels materially to meet COVID-19-related demand.
_______
1 Excluding the divestiture of Nestlé
2 Calculated on a 5-quarter rolling average
Dividend
At the Annual General Meeting on
The last trading day with entitlement to receive the dividend will be
Shareholders entered in the share register with voting rights on
Share Buyback Program
During 2020, the Group repurchased
Net Debt
Net debt increased to
Return on
The Group's ROIC increased by 240 basis points to 14.7%, as a result of disciplined capital allocation and improved operating performance.
Portfolio Management
Nestlé completed acquisitions and divestments with a total value of around
- Divestments: In January, Nestlé completed the sale of its
U.S. ice cream business for USD 4 billion to Froneri. In June, the Group closed the sale of a 60% stake in itsHerta charcuterie business toCasa Tarradellas . OnDecember 31, 2020 , Nestlé completed the sale of the Yinlu peanut milk and canned rice porridge businesses inChina toFood Wise Co., Ltd.
- Acquisitions: In April, Nestlé completed the acquisition of
Lily's Kitchen , a premium natural pet food business. Nestlé also expanded its presence in direct-to-consumer meal delivery services through the acquisition of Freshly inthe United States in November and the purchase of a majority stake in Mindful Chef in theUnited Kingdom in December.
Nestlé Health Science continues to build its presence and leadership in the field of nutritional science. The Group completed the purchase of the Zenpep business in May, the acquisition of a majority stake in Vital Proteins in July and the purchase of Aimmune Therapeutics in October.
On
Zone
- 4.8% organic growth: 4.1% RIG; 0.7% pricing.
North America saw mid single-digit organic growth, with strong RIG and negative pricing.Latin America reached high single-digit organic growth, with positive RIG and pricing.- The underlying trading operating profit margin increased by 40 basis points to 20.5%.
Sales 2020 | Sales 2019 | RIG | Pricing | Organic growth | UTOP 2020 | UTOP 2019 | Margin 2020 | Margin 2019 | |
Zone AMS | 4.1% | 0.7% | 4.8% | 20.5% | 20.1% |
Organic growth was 4.8%, with robust RIG of 4.1% and pricing of 0.7%. Divestitures reduced sales by 5.0%, largely related to the divestment of the
The Zone's underlying trading operating profit margin increased by 40 basis points. Operating leverage, portfolio management and structural cost reductions more than offset commodity inflation and COVID-19-related costs.
Zone
- 2.9% organic growth: 3.3% RIG; -0.4% pricing.
Western Europe saw low single-digit organic growth with solid RIG, partially offset by negative pricing.- Central and
Eastern Europe reported mid single-digit organic growth, with strong RIG and negative pricing. Middle East andNorth Africa posted low single-digit organic growth, entirely driven by pricing.- The underlying trading operating profit margin grew by 50 basis points to 18.6%.
Sales 2020 | Sales 2019 | RIG | Pricing | Organic growth | UTOP 2020 | UTOP 2019 | Margin 2020 | Margin 2019 | |
Zone EMENA | 3.3% | - 0.4% | 2.9% | 18.6% | 18.1% |
Organic growth reached 2.9%, with robust RIG of 3.3% supported by favorable mix. Pricing decreased by 0.4%. Divestitures reduced sales by 2.1%, largely related to the divestment of a 60% stake in the
Zone EMENA recorded its best organic growth in the last five years. Each region saw broad-based positive growth, with strong momentum in
By product category, coffee, Purina PetCare and culinary were the largest contributors to growth. Coffee was supported by strong demand for Nescafé and Starbucks products. Purina PetCare reported sustained momentum, supported by premium brands, successful innovation and strong demand in e-commerce and specialist channels. Felix, Purina Pro Plan, Tails.com and the newly acquired
The Zone's underlying trading operating profit margin increased by 50 basis points. Lower consumer-facing marketing expenses, structural cost reductions and portfolio management outweighed COVID-19-related costs.
Zone
- 0.5% organic growth: flat RIG; 0.5% pricing.
China posted a high single-digit decrease in organic growth, with negative RIG and slightly negative pricing.South-East Asia saw low single-digit organic growth, with positive RIG and pricing.South Asia reported mid single-digit organic growth, with positive RIG and pricing.- Sub-Saharan Africa recorded double-digit organic growth, led by strong RIG and positive pricing.
Japan ,South Korea andOceania combined saw almost flat organic growth. Positive RIG was offset by negative pricing.- The underlying trading operating profit margin decreased by 30 basis points to 22.2%.
Sales 2020 | Sales 2019 | RIG | Pricing | Organic growth | UTOP 2020 | UTOP 2019 | Margin 2020 | Margin 2019 | |
Zone AOA | 0.0% | 0.5% | 0.5% | 22.2% | 22.5% |
Organic growth was 0.5%, with flat RIG and pricing of 0.5%. Divestitures had a negative impact of 0.1%. Foreign exchange reduced sales by 6.7%. Reported sales in Zone AOA decreased by 6.3% to
Zone AOA reported positive organic growth. A sales decline in
By product category, the largest growth contributors were dairy, culinary and coffee. In coffee, there was continued strong demand for Starbucks products. Outside of
The Zone's underlying trading operating profit margin decreased by 30 basis points. Commodity inflation and COVID-19-related costs outweighed lower consumer-facing marketing expenses.
Other Businesses
- 7.9% organic growth: 7.3% RIG; 0.6% pricing.
- Nespresso reported 7.0% organic growth, with strong RIG and positive pricing.
- Nestlé Health Science saw 12.2% organic growth, entirely driven by RIG.
- The underlying trading operating profit margin of Other Businesses increased by 90 basis points to 19.6%.
Sales 2020 | Sales 2019 | RIG | Pricing | Organic growth | UTOP 2020 | UTOP 2019 | Margin 2020 | Margin 2019 | |
Other Businesses | 7.3% | 0.6% | 7.9% | 19.6% | 18.7% |
Organic growth of 7.9% was based on strong RIG of 7.3% and pricing of 0.6%. Divestitures reduced sales by 17.6%, due to the divestment of Nestlé
Nespresso sales reached
Nestlé Health Science sales reached
The underlying trading operating profit margin of Other Businesses increased by 90 basis points, based on operating leverage and structural cost reductions.
Nespresso and Nestlé Health Science will be reported as stand-alone operating segments in Nestlé's published accounts from 2021 onwards. This change reflects their increased financial contribution and provides greater transparency on their performance.
Business as a force for good: making milk more climate friendly
Agriculture accounts for nearly two-thirds of Nestlé's total greenhouse gas emissions, with dairy and livestock making up about half of that. Yet milk is an excellent source of nutrients and one of our key raw materials. Significantly reducing the carbon footprint of dairy is therefore a must. We are working together with our many partners to define innovative solutions. In particular, in traditional dairy markets, such as
If you can't measure it, you can't manage it. It starts with knowing the emissions of individual farms. Nestlé uses the Cool Farm Tool, a widely accepted third-party tool, to work with our suppliers to calculate their emissions. The specific, primary data it provides enables us to group thousands of different supplier farms into clusters based on similar characteristics, serving as the basis for defining solutions and measuring their impact. And as more and more companies use this tool, it enables consistency and comparability of data across the industry.
Different farms, different solutions. In designing solutions, we look at individual farms in their local context. We consider the geography and soil of the farm, as well as whether cows can graze freely, are confined, or a combination of both.
Together with the livestock farmers on the ground, we build comprehensive, innovative tailored solutions that focus on several key areas. We aim to reduce the methane produced by cows during digestion; to use local, sustainably produced feed for livestock; to improve the management of manure; to enhance grassland management; to optimize herd structure and ensure animal health and welfare; and to expand the use of renewable energy. We simulate different combinations of measures to see which will have the greatest impact and make the most economic and ecological sense.
Across the globe, efforts from our milk sourcing team to upgrade farms have already led to a reduction of emissions. In
Outlook
2021 outlook: continued increase in organic sales growth towards a mid single-digit rate. Underlying trading operating profit margin with continued moderate improvement. Underlying earnings per share in constant currency and capital efficiency expected to increase.
Mid-term outlook: sustained mid single-digit organic sales growth. Continued moderate underlying trading operating profit margin improvement. Continued prudent capital allocation and capital efficiency improvement.
Annex
Full-year sales and underlying trading operating profit (UTOP) overview by operating segment
Zone AMS | Zone EMENA | Zone AOA | Other Businesses | ||
Sales FY-2020 (CHF m) | 84 343 | 34 010 | 20 226 | 20 730 | 9 377 |
Sales FY-2019 (CHF m)* | 92 568 | 37 828 | 21 464 | 22 119 | 11 157 |
Real internal growth (RIG) | 3.2% | 4.1% | 3.3% | 0.0% | 7.3% |
Pricing | 0.4% | 0.7% | - 0.4% | 0.5% | 0.6% |
Organic growth | 3.6% | 4.8% | 2.9% | 0.5% | 7.9% |
Net M&A | - 4.6% | - 5.0% | - 2.1% | - 0.1% | - 17.6% |
Foreign exchange | - 7.9% | - 9.9% | - 6.6% | - 6.7% | - 6.3% |
Reported sales growth | - 8.9% | - 10.1% | - 5.8% | - 6.3% | - 16.0% |
FY-2020 Underlying TOP (CHF m) | 14 903 | 6 975 | 3 766 | 4 599 | 1 841 |
FY-2019 Underlying TOP (CHF m)* | 16 260 | 7 608 | 3 878 | 4 977 | 2 089 |
FY-2020 Underlying TOP Margin | 17.7% | 20.5% | 18.6% | 22.2% | 19.6% |
FY-2019 Underlying TOP Margin* | 17.6% | 20.1% | 18.1% | 22.5% | 18.7% |
Full-year sales and underlying trading operating profit (UTOP) overview by product
Powdered & liquid beverages | Water | Milk products & ice cream | Nutrition & Health Science | Prepared dishes & cooking aids | Confec-tionery | PetCare | ||
Sales FY-2020 (CHF m) | 84 343 | 22 256 | 6 421 | 11 007 | 12 160 | 11 523 | 6 975 | 14 001 |
Sales FY-2019 (CHF m) | 92 568 | 23 221 | 7 391 | 13 268 | 14 990 | 12 188 | 7 888 | 13 622 |
Real internal growth (RIG) | 3.2% | 2.8% | - 5.5% | 5.6% | 1.2% | 4.7% | - 1.1% | 9.7% |
Pricing | 0.4% | 0.4% | - 1.5% | 2.3% | 0.5% | 0.0% | - 0.4% | 0.5% |
Organic growth | 3.6% | 3.2% | - 7.0% | 7.9% | 1.7% | 4.7% | - 1.5% | 10.2% |
FY-2020 Underlying TOP (CHF m) | 14 903 | 5 008 | 639 | 2 652 | 2 640 | 2 171 | 990 | 3 081 |
FY-2019 Underlying TOP (CHF m)* | 16 260 | 5 197 | 914 | 2 706 | 3 314 | 2 170 | 1 332 | 2 919 |
FY-2020 Underlying TOP Margin | 17.7% | 22.5% | 10.0% | 24.1% | 21.7% | 18.8% | 14.2% | 22.0% |
FY-2019 Underlying TOP Margin* | 17.6% | 22.4% | 12.4% | 20.4% | 22.1% | 17.8% | 16.9% | 21.4% |
* 2019 figures restated following the decision to integrate the Nestlé Waters business into the Group's three geographical Zones, effective
Contacts:
Media:
mediarelations@nestle.com
Investors:
Luca Borlini Tel.: +41 21 924 3820
ir@nestle.com
© OMX, source