Friday 29 March 2024
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Nestlé reports 1Q sales of CHF 23.5B (+5.6%), coffee posts high single digit growth, Nespresso sales are down 2.2% to CHF 1.6B

Coffee saw high single-digit growth, with positive sales developments for Nescafé, Starbucks and Nespresso. Nespresso’s organic growth was 2.9%, with pricing of 4.0%. Following strong growth during the pandemic, comparable sales were around 30% above 2019 levels. Reported sales in Nespresso decreased by 2.2% to CHF 1.6 billion. The key growth contributor was the Vertuo system, which continued to see broad-based momentum

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VEVEY, Switzerland – Nestlé reported today results for the first quarter of 2023. Total sales increased by 5.6% to CHF 23.5 billion (3M-2022: CHF 22.2 billion). Foreign exchange decreased sales by 4.0%. Net acquisitions had a positive impact of 0.3%. Organic growth reached 9.3%, with broad-based contributions across geographies and categories. Pricing was 9.8%, reflecting significant cost inflation. Real internal growth (RIG) was -0.5%.

Full-year 2023 outlook was confirmed: Nestlé expects organic sales growth between 6% and 8% and underlying trading operating profit margin between 17.0% and 17.5%. Underlying earnings per share in constant currency is expected to increase between 6% and 10%.

By product category, Purina PetCare was the largest contributor to organic growth, fueled by strong momentum for science-based and premium brands Purina ONE, Purina Pro Plan and Friskies.

Coffee saw high single-digit growth, with positive sales developments for Nescafé, Starbucks and Nespresso. Sales in confectionery grew at a double-digit rate, with strong growth for KitKat and seasonal products.

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Growth in Infant Nutrition reached a double-digit rate, with broad-based contributions across geographies and segments. Dairy reported high single-digit growth, with strong demand for coffee creamers and affordable fortified milks.

Prepared dishes and cooking aids posted high single-digit growth, led by Maggi, Stouffers and Hot Pockets.

Nestlé Health Science recorded low single-digit growth, with continued strong demand for Medical Nutrition and a positive sales development for active nutrition. Despite temporary capacity constraints for Perrier, water posted low single-digit growth led by S.Pellegrino.

By channel, organic growth in retail sales remained robust at 8.7%. E-commerce sales grew by 13.6%, reaching 16.2% of total Group sales. Organic growth of out-of-home channels was 17.8%.

Net acquisitions increased sales by 0.3%, largely related to the acquisition of Orgain. The impact on sales from foreign exchange was negative at 4.0%. Total reported sales increased by 5.6% to CHF 23.5 billion.

Nestlé 1Q results: Coffee

In Zone North America, sales for Nestlé Professional and Starbucks out-of-home solutions grew at a strong double-digit rate, supported by distribution expansion. The beverages category, including Coffee mate, Nescafé and Starbucks products, posted high single-digit growth.

In Zone Europe, sales in Nestlé Professional grew at a double-digit rate, supported by branded coffee solutions. Coffee saw high single-digit growth, supported by Nescafé and Starbucks products. Nescafé Farmers Origins, a range of coffee capsules for Nespresso machines, saw strong growth and is now sold in seven markets.

In Zone Asia, Oceania and Africa, coffee saw high single-digit growth, with continued robust demand for Nescafé and Starbucks products.

In Zone Latin America, coffee saw high single-digit growth, supported by Nescafé. In the first quarter, Nescafé Dolce Gusto launched Neo in Brazil, the most sustainable system to date with compostable coffee pods.

In Zone Greater China, coffee saw a sales decrease, as a positive sales development in soluble coffee was offset by negative growth for ready-to-drink coffee.

Nespresso

Organic growth was 2.9%, with pricing of 4.0%. RIG was -1.1%, mainly due to post-pandemic normalization. Following strong growth during the pandemic, comparable sales were around 30% above 2019 levels. Foreign exchange negatively impacted sales by 3.8%. Reported sales in Nespresso decreased by 2.2% to CHF 1.6 billion.

The key growth contributor was the Vertuo system, which continued to see broad-based momentum. Growth in out-of-home channels was also strong, with further adoption for the Momento system, particularly in the office segment. Innovation continued to resonate with consumers, including the expansion of the Ispirazione Italiana range through the launch of the Milano Intenso coffee.

By geography, North America posted double-digit growth with continued market share gains. Europe reported a sales decrease. Other regions combined saw low single-digit growth.

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