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Vevey, July 29, 2021
Nestlé reports half-year results for 2021, raises full-year organic sales growth guidance
-- Organic growth reached 8.1%, with real internal growth (RIG) of 6.8% and
pricing of 1.3%. Growth was supported by continued momentum in retail
sales, a return to growth in out-of-home channels, increased pricing and
market share gains.
-- Total reported sales increased by 1.5% to CHF 41.8 billion (6M-2020: CHF
41.2 billion). Foreign exchange reduced sales by 3.5%, reflecting
appreciation of the Swiss franc against most currencies. Net divestitures
had a negative impact of 3.1%.
-- The underlying trading operating profit (UTOP) margin was 17.4%,
unchanged versus the prior year. The trading operating profit (TOP)
margin decreased by 20 basis points to 16.7%.
-- Underlying earnings per share increased by 10.5% in constant currency and
increased by 8.3% on a reported basis to CHF 2.17. Earnings per share
increased by 3.2% to CHF 2.12 on a reported basis.
-- Free cash flow was CHF 2.8 billion.
-- Further progress in portfolio management. In April, Nestlé entered
into an agreement to acquire core brands of The Bountiful Company. The
transaction is expected to close in August. On July 26, 2021, Nestlé
and Starbucks strengthened their collaboration to bring ready-to-drink
coffee beverages to select markets across South-East Asia, Oceania and
-- Full-year 2021 outlook updated: we expect full-year organic sales growth
between 5% and 6%. The underlying trading operating profit margin is now
expected around 17.5%, reflecting initial time delays between input cost
inflation and pricing as well as the one-off integration costs related to
the acquisition of The Bountiful Company's core brands. Beyond 2021, our
mid-term outlook for continued moderate margin improvement remains
unchanged. Underlying earnings per share in constant currency and capital
efficiency are expected to increase this year.
Mark Schneider, Nestlé CEO, commented:"I would like to thank the Nestlé team for their continued commitment to meeting consumer needs and their relentless focus on execution. Organic growth was strong across most geographies and categories, with robust momentum in retail sales and a return to growth in out-of-home channels. Through fast-paced innovation, strong brand support, increased digitalization and stringent portfolio management we have built the foundation for delivering consistent mid single-digit organic growth for years to come.
Nestlé continues to invest for future profitable growth. We are creating a global leader in vitamins, minerals and supplements with the acquisition of The Bountiful Company's core brands. The expansion of our partnership with Starbucks into ready-to-drink coffee will open new opportunities in a fast-growing segment. Our portfolio choices, strong execution and decisive actions on sustainability enable us to create value for all stakeholders."
Total Zone Zone Zone Health Other
Group AMS EMENA AOA Nespresso Science Businesses
(CHF m) 41 755 16 162 10 214 10 210 3 158 1 914 97
(CHF m)* 41 152 16 674 10 029 10 062 2 762 1 540 85
(RIG) 6.8% 5.3% 6.7% 6.3% 13.8% 13.6% 18.4%
Pricing 1.3% 2.3% 0.6% 0.5% 0.8% 0.0% - 0.4%
growth 8.1% 7.6% 7.3% 6.8% 14.6% 13.6% 18.0%
Net M&A - 3.1% - 4.3% - 4.1% - 3.7% - 0.2% 15.1% 0.0%
exchange - 3.5% - 6.3% - 1.4% - 1.7% - 0.1% - 4.4% - 3.0%
growth 1.5% - 3.1% 1.8% 1.5% 14.3% 24.3% 15.0%
Margin 17.4% 19.3% 18.8% 22.3% 26.0% 13.5% 7.6%
Margin* 17.4% 18.9% 18.3% 22.7% 25.9% 19.3% - 28.6%
(*) 2020 figures restated following the disclosure of Nestlé Health Science and Nespresso as standalone segments from 2021 onwards (previously combined and presented in Other Businesses).
Organic growth reached 8.1%, with RIG of 6.8%. Pricing increased to 1.3%, reflecting input cost inflation.
Growth was broad-based across most geographies. Organic growth was 6.7% in developed markets, based mostly on RIG. Organic growth in emerging markets was 10.0%, with strong RIG and positive pricing.
By product category, the largest contributor to organic growth was coffee, fueled by strong demand for the three main brands Nescafé, Nespresso and Starbucks. Starbucks products posted 16.7% growth, with sales reaching CHF 1.4 billion across 79 markets. Purina PetCare saw double-digit growth led by science-based and premium brands Purina Pro Plan, Purina ONE and Felix, as well as veterinary products. Prepared dishes and cooking aids posted high single-digit growth, based on strong demand for Maggi and Stouffer's. Vegetarian and plant-based food offerings continued to see strong double-digit growth, led by Garden Gourmet. Dairy reported high single-digit growth, led by fortified milks, coffee creamers and ice cream. Confectionery recorded double-digit growth, supported by a strong sales development in impulse products. Sales in Nestlé Health Science grew at a double-digit rate, reflecting strong demand for vitamins, minerals and supplements and healthy-aging products. Infant Nutrition saw a sales decrease, impacted by lower birth rates in the context of the pandemic. Water returned to positive growth, led by international premium brands S. Pellegrino and Perrier.
By channel, organic growth in retail sales was 7.3%, moderating to a mid single-digit rate in the second quarter due to a high base of comparison in 2020. E-commerce sales grew by 19.2%, reaching 14.6% of total Group sales, with strong momentum in most categories particularly coffee, Purina PetCare and culinary. Organic growth in out-of-home channels was 21.3%, helped by the easing of movement restrictions in some geographies.
Net divestitures decreased sales by 3.1%, largely related to the divestments of Nestlé Waters North America brands, the Herta charcuterie business and the Yinlu peanut milk and canned rice porridge businesses. Foreign exchange reduced sales by 3.5%, reflecting the appreciation of the Swiss franc versus most currencies. Total reported sales increased by 1.5% to CHF 41.8 billion.
Underlying Trading Operating Profit
Underlying trading operating profit increased by 1.3% to CHF 7.3 billion. The underlying trading operating profit margin was 17.4%, unchanged versus the prior year in constant currency and on a reported basis.
Gross margin increased by 20 basis points to 48.8%. Consumer-facing marketing expenses(1) increased by 80 basis points to above 2019 levels, following reduced in-store activation in 2020. Cost inflation also impacted margin development in the second quarter. Operating leverage, structural cost reductions, increased pricing and lower COVID-19-related costs offset these increases.
Restructuring expenses and net other trading items increased by CHF 78 million to CHF 264 million, reflecting higher asset impairments. Trading operating profit increased by 0.2% to CHF 7.0 billion. The trading operating profit margin was 16.7%, a decrease of 20 basis points in constant currency and on a reported basis.
(1) 2019 figure excludes Nestlé Skin Health
Net Financial Expenses and Income Tax
Net financial expenses decreased by 6.9% to CHF 416 million, reflecting a lower cost of debt.
The Group reported tax rate decreased by 970 basis points to 17.4%, as a result of one-off items. The underlying tax rate decreased by 120 basis points to 20.2%, mainly due to the geographic and business mix.
Net Profit and Earnings Per Share
Net profit grew by 1.1% to CHF 5.9 billion. Net profit margin decreased by 10 basis points to 14.2%, as a result of one-off income related to divestitures in 2020.
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