Friday 19 August 2022

Nestlé reports 1H 2022 sales of $47.4 billion, Nespresso sales up marginally to $3.15 billion

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VEVEY, Switzerland – Nestlé reported on Thursday half-year results for 2022 showing a 1.7% increase in sales to CHF 45.58 billion ($47.38 billion) . This brought like-for-like net sales growth to 8.1 per cent and prompted the group to raise full-year sales expectations to 7-8%. Hit by one-off items including higher impairments and taxes, net profits fell 11.7% to 5.2 billion Swiss francs ($5.42 billion), the company said in a statement, missing an average 5.815 billion Swiss francs in a company-compiled consensus.

Nespresso 6-month sales reached CHF3.2 billion ($3.15 billion) from CHF 3.158 billion in the equivalent period of 2021.

Organic growth reached 8.1%, with real internal growth (RIG) of 1.7% and pricing of 6.5%. Growth was broad-based across most geographies and categories, with increased pricing and resilient RIG.

Total reported sales increased by 9.2% to CHF 45.6 billion (6M-2021: CHF 41.8 billion). Net acquisitions had a positive impact of 1.0%. Foreign exchange increased sales by 0.1%.

The underlying trading operating profit (UTOP) margin was 16.9%, decreasing by 50 basis points. The trading operating profit (TOP) margin decreased by 200 basis points to 14.7%, mainly due to one-off items.

Underlying earnings per share increased by 8.1% in constant currency and increased by 7.3% on a reported basis to CHF 2.33. Earnings per share decreased by 9.5% to CHF 1.92 on a reported basis.

Free cash flow was CHF 1.5 billion, as working capital and capital expenditure increased temporarily in the context of supply chain constraints and high volume demand.

Continued portfolio management progress. In the second quarter, Nestlé Health Science agreed to acquire Puravida in Brazil and The Better Health Company in New Zealand.

Full-year 2022 outlook updated: “we expect organic sales growth between 7% and 8%. The underlying trading operating profit margin is now expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.”

*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

Nestlé: Group sales

Organic growth was 8.1%. Pricing increased to 6.5% to reflect significant and unprecedented cost inflation. RIG was resilient at 1.7%, given the high base of comparison in 2021 and supply chain constraints.

Organic growth was 6.9% in developed markets, with strong pricing and positive RIG. Organic growth in emerging markets was 10.0%, with increased pricing and solid RIG.

By product category, Purina PetCare was the largest contributor to organic growth, with continued momentum for science-based and premium brands Purina Pro Plan, Purina ONE and Fancy Feast as well as veterinary products. Sales in coffee grew at a high single-digit rate, with broad-based growth across brands and geographies, supported by a strong recovery of out-of-home channels. Confectionery reported double-digit growth, reflecting particular strength for KitKat and seasonal products.

Dairy reported mid single-digit growth, with strong sales developments for coffee creamers and affordable nutrition offerings.

By channel, organic growth in retail sales remained robust at 6.7%. Within retail, e-commerce sales grew by 8.3%, building on growth of 19.2% in the first half of 2021. Organic growth in out-of-home channels reached 29.6%, with sales exceeding 2019 levels.

Net acquisitions increased sales by 1.0%, largely related to the acquisitions of the core brands of The Bountiful Company as well as Orgain. The impact on sales from foreign exchange was positive at 0.1%. Total reported sales increased by 9.2% to CHF 45.6 billion.

Nespresso

Nestlé Nespresso

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

Organic growth was 2.6%, with increased pricing of 4.2%. RIG was – 1.6% following strong double-digit growth in 2021 during the pandemic. Foreign exchange negatively impacted sales by 1.7%.

Reported sales in Nespresso increased by 1.0% to CHF 3.2 billion.

Nespresso reported low single-digit organic growth, following strong double-digit growth in 2021.

Out-of-home channels saw further recovery, with strong demand for the Momento system. The Vertuo system saw sustained momentum and is now sold in 44 countries.

Innovation continued to resonate with consumers with new product launches, including the summer collection of Barista Creations Liminha over Ice and Exotic Liminha over Ice.

By geography, North America posted double-digit growth with continued market share gains. Europe reported a sales decrease, following a high base of comparison in 2021. Other regions combined recorded high single-digit growth.

In the second quarter, Nespresso obtained global certification as a B Corp, reflecting the business’s ongoing commitment to sustainability and transparency.

The underlying trading operating profit margin of Nespresso decreased by 170 basis points, impacted by investments in the roll-out of the Vertuo system and cost inflation.

Zone North America

NestléThe beverages category, including Starbucks at-home products, Coffee mate and Nescafé, saw mid single-digit growth, following a high base of comparison in 2021.

Zone Europe

Coffee posted low single-digit growth, led by Nescafé soluble coffee. Starbucks by Nespresso and other Nespresso-compatible capsules saw further market share gains in the retail segment.

Zone Asia, Oceania and Africa (AOA)

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.

Zone Latin America

Coffee reported broad-based double-digit growth, supported by Nescafé soluble coffee, Nescafé Dolce Gusto and the further roll-out of Starbucks products. Sales in Nestlé Professional grew at a strong double-digit rate, with particular strength for beverages.

Zone Greater China

Coffee posted mid single-digit growth. Starbucks products and Nescafé soluble coffee saw continued momentum.

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