TIDM76TQ
RNS Number : 9834B
Nestle SA
17 February 2022
Nestlé Press Release
[Ad hoc announcement pursuant to art. 53 SIX Listing Rules]
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2021 Financial Statements:
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Vevey, February 17, 2022
Nestlé reports full-year results for 2021
-- Organic growth reached 7.5%, with real internal growth (RIG)
of 5.5% and pricing of 2.0%. Growth was supported by continued
momentum in retail sales, steady recovery of out-of-home channels,
increased pricing and market share gains.
-- Total reported sales increased by 3.3% to CHF 87.1 billion
(2020: CHF 84.3 billion). Foreign exchange reduced sales by 1.3%.
Net divestitures had a negative impact of 2.9%.
-- The underlying trading operating profit (UTOP) margin was
17.4%, decreasing by 30 basis points. The trading operating profit
(TOP) margin decreased by 290 basis points to 14.0% on a reported
basis, largely reflecting impairments related to the Wyeth
business.
-- Underlying earnings per share increased by 5.8% in constant
currency and by 5.1% on a reported basis to CHF 4.42. Earnings per
share increased by 41.1% to CHF 6.06 on a reported basis, mainly
reflecting the gain on the disposal of L'Oréal shares.
-- Free cash flow decreased by 14.9% to CHF 8.7 billion,
reflecting temporarily higher capital expenditure and inventory
levels.
-- Board proposes a dividend of CHF 2.80 per share, an increase
of 5 centimes, marking 27 consecutive years of dividend growth. In
total, CHF 13.9 billion were returned to shareholders in 2021
through a combination of dividend and share buybacks.
-- Continued progress in portfolio management. Portfolio
rotation since 2017 now amounts to around 20% of total 2017
sales.
-- 2022 outlook: 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.
-- Mid-term outlook: sustained mid single-digit organic sales
growth. Continued moderate underlying trading operating profit
margin improvements. Continued prudent capital allocation and
capital efficiency improvements.
Mark Schneider, Nestlé CEO, commented: "In 2021, we remained
focused on executing our long-term strategy and stepping up growth
investments, while at the same time navigating global supply chain
challenges. Our organic growth was strong, with broad-based market
share gains, following disciplined execution, rapid innovation and
increased digitalization. We limited the impact of exceptional cost
inflation through diligent cost management and responsible pricing.
Our robust underlying earnings per share growth shows the
resilience of our value creation model. The entire Nestlé team
demonstrated exemplary perseverance and agility in a challenging
environment.
The evolution of our portfolio continued, focusing on categories
with attractive growth opportunities and differentiated offerings.
Recent examples include the acquisition of the core brands of The
Bountiful Company and the divestiture of the mainstream water
brands in North America.
Our sustainability agenda further progressed as we enhance the
well-being of our consumers, help regenerate the environment and
strengthen the farming communities in our supply chains.
We continued to create value for our shareholders through
disciplined capital allocation, steadily increasing dividends and
significant share buybacks. Going forward, we are confident in the
strength of our value creation model."
Group Results
Nestlé
Total .Health Other
Group Zone AMS Zone EMENA Zone AOA Nespresso Science Businesses
------ -------- ---------- -------- ------------ -------------- -----------
Sales FY-2021
(CHF m) 87 088 33 779 21 128 20 735 6 418 4 822 206
Sales FY-2020
(CHF m)* 84 343 34 010 20 226 20 730 5 885 3 326 166
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
Real internal
growth (RIG) 5.5% 4.8% 6.0% 3.5% 8.2% 13.4% 25.1%
Pricing 2.0% 3.7% 1.2% 0.8% 0.6% 0.1% 1.2%
Organic growth 7.5% 8.5% 7.2% 4.2% 8.8% 13.5% 26.3%
Net M&A -2.9% -6.6% -2.2% -3.9% 0.0% 33.2% 0.0%
Foreign exchange -1.3% -2.5% -0.6% -0.4% 0.3% -1.8% -1.8%
Reported sales
growth 3.3% -0.7% 4.5% 0.0% 9.1% 45.0% 24.5%
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
FY-2021 Underlying
TOP Margin 17.4% 20.8% 18.5% 21.8% 23.0% 13.6% -15.6%
FY-2020 Underlying
TOP Margin* 17.7% 20.5% 18.6% 22.2% 23.6% 16.5% -43.9%
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
* 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).
Group sales
Organic growth was 7.5%, with RIG of 5.5%. Pricing increased to
2.0%, reaching 3.1% in the fourth quarter, to offset significant
cost inflation.
Growth was broad-based across most geographies and categories.
Organic growth reached 7.2% in developed markets, the highest level
in more than a decade, based mostly on RIG with positive pricing.
Organic growth in emerging markets was 7.8%, with robust RIG and
positive pricing.
By product category, the largest contributor to organic growth
was coffee, fueled by strong momentum for the three main brands
Nescafé, Nespresso and Starbucks. Sales of Starbucks products grew
by 17.1% to reach CHF 3.1 billion, generating over CHF 1 billion of
incremental sales compared with 2018. Purina PetCare posted
double-digit growth, led by science-based and premium brands Purina
Pro Plan, Fancy Feast and Purina ONE, as well as veterinary
products. Prepared dishes and cooking aids reported high
single-digit growth, based on strong sales developments for Maggi,
Stouffer's and Lean Cuisine. Sales in vegetarian and plant-based
food grew at a double-digit rate, reaching around CHF 800 million.
Nestlé Health Science recorded double-digit growth, reflecting
strong demand for vitamins, minerals and supplements, as well as
healthy-aging products. Dairy saw mid single-digit growth, based on
strong demand for premium and fortified milks, coffee creamers and
ice cream. Sales in confectionery grew at a high single-digit rate,
supported by a strong sales development for KitKat and gifting
products. Water posted high single-digit growth, driven by premium
brands and a recovery in out-of-home channels. Infant Nutrition
reported negative growth, impacted by a sales decline in China and
lower birth rates globally. Sales of human milk oligosaccharides
(HMOs) products continued to see robust growth, reaching CHF 1.2
billion.
By channel, organic growth in retail sales was 6.4%. E-commerce
sales grew by 15.1%, reaching 14.3% of total Group sales, with
strong momentum in most categories, particularly Purina PetCare,
coffee and Nestlé Health Science. Organic growth in out-of-home
channels reached 24.5%, helped by a low base of comparison due to
the pandemic.
Net divestitures decreased sales by 2.9%, largely related to the
Nestlé Waters North America, Yinlu and Herta transactions.
Divestitures were partially offset by acquisitions, including the
core brands of The Bountiful Company and Freshly. The negative
impact on sales from foreign exchange moderated to 1.3%. Total
reported sales increased by 3.3% to CHF 87.1 billion.
Underlying Trading Operating Profit
Underlying trading operating profit increased by 1.4% to CHF
15.1 billion. The underlying trading operating profit margin
decreased by 30 basis points to 17.4% in constant currency and on a
reported basis, reflecting time delays between cost inflation and
pricing actions. The one-off integration costs related to the
acquisition of The Bountiful Company's core brands had a negative
impact of around 10 basis points.
Gross margin decreased by 130 basis points to 47.8%, reflecting
significant broad-based inflation for commodity, packaging, freight
and energy costs. The impact of cost inflation, which increased
strongly in the second half, was partly offset by price increases,
operating leverage and efficiencies.
Distribution costs as a percentage of sales decreased by 20
basis points, mainly as a result of the disposal of the Nestlé
Water brands in North America.
Marketing and administration expenses decreased as a percentage
of sales by 80 basis points, based on strong operating leverage and
efficiencies. At the same time, the Group continued to invest for
growth and increased its consumer-facing marketing expenses in
constant currency.
Restructuring expenses and net other trading items increased by
CHF 2.3 billion to CHF 3.0 billion, largely reflecting impairments
related to the Wyeth business. As a result, trading operating
profit decreased by 14.6% to CHF 12.2 billion and the trading
operating profit margin decreased by 290 basis points on a reported
basis to 14.0%.
Net Financial Expenses and Income Tax
Net financial expenses were unchanged at CHF 873 million, as a
lower cost of debt offset higher average net debt.
The Group reported tax rate decreased by 330 basis points to
20.9%, mainly as a result of one-off items in 2020, including the
divestment of the U.S. ice cream business. The underlying tax rate
decreased by 40 basis points to 20.7%, mainly due to the geographic
and business mix.
Reduction of L'Oréal stake
On December 15, 2021, Nestlé sold 22.26 million of L'Oréal
shares for a total consideration of CHF 9.3 billion. Following the
transaction, Nestlé owns 20.1% of L'Oréal and remains fully
supportive of the company's value creation strategy.
Net Profit and Earnings Per Share
Net profit grew by 38.2% to CHF 16.9 billion. Net profit margin
increased by 490 basis points to 19.4%. The gain on the disposal of
L'Oréal shares more than offset higher asset impairments and other
one-off items.
Underlying earnings per share increased by 5.8% in constant
currency and by 5.1% on a reported basis to CHF 4.42. Sales growth
was the main contributor to the increase. Nestlé's share buyback
program contributed 1.3% to the underlying earnings per share
increase, net of finance costs. Earnings per share increased by
41.1% to CHF 6.06 on a reported basis.
Cash Flow
Cash generated from operations decreased from CHF 17.2 billion
to CHF 16.6 billion, mainly due to slightly higher working capital
at year-end. In the context of significant supply chain
disruptions, the Group increased its inventory levels temporarily.
Free cash flow decreased from CHF 10.2 billion to CHF 8.7 billion,
mainly due to a temporary increase in capital expenditure to meet
strong volume demand, particularly for Purina PetCare and
coffee.
Dividend
At the Annual General Meeting on April 7, 2022, the Board of
Directors will propose a dividend of CHF 2.80 per share, an
increase of 5 centimes. If approved, this will be the company's
27th consecutive annual dividend increase. The company has
maintained or increased its dividend in Swiss francs over the last
62 years. Nestlé is committed to maintaining this long-held
practice to increase the dividend in Swiss francs every year.
The last trading day with entitlement to receive the dividend
will be April 8, 2022. The net dividend will be payable as from
April 13, 2022.
Shareholders entered in the share register with voting rights on
March 31, 2022 at 12:00 noon (CEST) will be entitled to exercise
their voting rights.
Share Buyback Programs
During 2021, the Group repurchased CHF 6.3 billion of Nestlé
shares.
On December 30, 2021, Nestlé terminated its existing CHF 20
billion share buyback program initiated on January 3, 2020. Between
January 3, 2020 and December 30, 2021, the Group repurchased 123.1
million of its shares for a total consideration of CHF 13.1 billion
at an average price of CHF 106.08 per share.
Nestlé initiated a new share buyback program of up to CHF 20
billion on January 3, 2022. The company expects to buy around CHF
10 billion of shares in the first twelve months. The new share
buyback program shall be completed by the end of December 2024.
Net Debt
Net debt increased by CHF 1.6 billion to reach CHF 32.9 billion
as at December 31, 2021. The dividend payment, share buybacks and
the net cash outflow from acquisitions and divestitures more than
offset proceeds from the disposal of L'Oréal shares and free cash
flow generation.
Return on Invested Capital (ROIC)
The Group's ROIC decreased by 250 basis points to 12.2%, as a
result of impairments related to the Wyeth business. Excluding
Wyeth business impairments, the Group's ROIC was 14.2%.
Portfolio Management
Nestlé completed acquisitions and divestments with a total value
of around CHF 9.9 billion in 2021.
Nestlé is transforming its global water business, sharpening its
focus on international premium and mineral water brands and healthy
hydration products. In March, Nestlé completed the acquisition of
Essentia Water, a premium functional water brand in the U.S., and
the sale of its regional spring water brands, purified water
business and beverage delivery service in the U.S. and Canada.
Nestlé Health Science continues to focus on building the leading
global nutrition and health platform. In July, Nestlé completed the
acquisition of Nuun, a leading company in the fast-growing
functional hydration market, and entered into an agreement with
Seres Therapeutics to jointly commercialize SER-109, an
investigational oral microbiome therapeutic in the U.S. and Canada.
In August, Nestlé completed the acquisition of the core brands of
The Bountiful Company for USD 5.75 billion. The Bountiful Company
is the number one pure-play company in the highly attractive global
nutrition and supplement category.
Building on the successful global coffee alliance, Nestlé
continues to expand the reach of Starbucks branded coffee and tea
products outside Starbucks retail stores. In July, Nestlé and
Starbucks announced a new collaboration to bring Starbucks
ready-to-drink coffee beverages to select markets across South-East
Asia, Oceania and Latin America.
New Zone structure
As of January 1, 2022, the company is organized into five Zones:
Zone North America, Zone Latin America, Zone Europe, Zone Asia,
Oceania and Africa, and Zone Greater China. Nestlé will report the
sales and growth numbers of the new Zone structure for the first
time on April 21, 2022.
The new structure will strengthen the company's market-led
approach and enhance Nestlé's ability to win in a rapidly changing
environment. It also underscores the company's deep commitment to
succeeding in all parts of the world, including its two top markets
North America and Greater China.
Zone Americas (AMS)
-- 8.5% organic growth: 4.8% RIG; 3.7% pricing.
-- North America posted high single-digit organic growth, with robust RIG and positive pricing.
-- Latin America reported double-digit organic growth, with both strong RIG and pricing.
-- The underlying trading operating profit margin increased by
30 basis points to 20.8%, mainly due to the
divestment of the Nestlé Waters North America brands.
Sales Sales Organic UTOP UTOP Margin Margin
2021 2020 RIG Pricing growth 2021 2020 2021 2020
--------- --------- ----- ------- ------- ------- ------- ------- ------
CHF 33.8 CHF 34.0 CHF 7.0 CHF 7.0
Zone AMS bn bn 4.8% 3.7% 8.5% bn bn 20.8% 20.5%
--------- --------- --------- ----- ------- ------- ------- ------- ------- ------
Organic growth was 8.5%, with strong RIG of 4.8%. Pricing
increased to 3.7%, reaching 5.2% in the fourth quarter. Net
divestitures reduced sales by 6.6%, as the divestment of the Nestlé
Waters North America brands more than offset the acquisitions of
Freshly and Essentia Water. Foreign exchange had a negative impact
of 2.5%. Reported sales in Zone AMS decreased by 0.7% to CHF 33.8
billion.
Zone AMS reported high single-digit organic growth, building on
a strong sales development in 2020. Increased pricing, continued
innovation, strong momentum in e-commerce and a further recovery of
out-of-home channels supported growth. The Zone saw continued
broad-based market share gains, led by coffee, pet food, frozen
food and ambient culinary.
North America posted high single-digit growth in the context of
continued significant supply chain constraints. Sales in Purina
PetCare grew at a double-digit rate, led by Purina Pro Plan, Fancy
Feast and Purina ONE. Scienced-based innovations continued to
support growth, with new launches including Pro Plan Cardio Care
and new varieties of Sensitive Skin & Stomach formula. Nestlé
Professional and Starbucks out-of-home products saw strong
double-digit growth, helped by further recovery in out-of-home
channels. Sales in the beverages category, including Starbucks
at-home products, Coffee mate and Nescafé, grew at a mid
single-digit rate. Frozen and chilled food reported mid
single-digit growth, supported by strong sales developments for
Stouffer's, Lean Cuisine and Hot Pockets. Pizza saw a sales
decrease following a high base of comparison in 2020, with a return
to positive growth in the fourth quarter. Water reported mid
single-digit growth, led by strong growth for the recently acquired
Essentia Water business. Sales in confectionery in Canada grew by
close to 10%, driven by KitKat. Home-baking products, including
Toll House and Carnation, saw a sales decrease following
exceptional demand in 2020 but remained above 2019 levels.
Latin America posted double-digit growth, with broad-based
contributions across geographies and product categories. Sales in
Mexico grew at a double-digit rate, led by coffee, Purina PetCare
and confectionery. Brazil reported double-digit growth, reflecting
strong demand for confectionery, particularly KitKat, as well as
Purina PetCare and Nescafé. Chile also recorded double-digit
growth, supported by Purina PetCare, confectionery and ice cream.
By product category, Purina PetCare was the largest growth
contributor, led by Purina Pro Plan and Dog Chow. Confectionery and
coffee also reported strong double-digit growth. Sales in Nestlé
Professional exceeded 2019 levels, with strong growth across
markets. Infant Nutrition saw mid single-digit growth, based on
robust demand for NAN premium and functional products. Growth in
dairy moderated to a low single-digit rate, following exceptionally
strong demand in 2020. Plant-based products continued to grow
strongly, supported by the expansion of Nature's Heart across all
markets.
The Zone's underlying trading operating profit margin increased
by 30 basis points, with the positive margin impact of the Nestlé
Waters North America brands divestment more than offsetting
significant cost inflation.
Zone Europe, Middle East and North Africa (EMENA)
-- 7.2% organic growth: 6.0% RIG; 1.2% pricing.
-- Western Europe saw mid single-digit organic growth with
strong RIG and slightly positive pricing.
-- Central and Eastern Europe posted double-digit organic
growth, with strong RIG and positive pricing.
-- Middle East, North Africa, Turkey and Israel reported high
single-digit organic growth, with a balanced contribution from RIG
and pricing.
-- The underlying trading operating profit margin decreased by 10 basis points to 18.5%.
Sales Sales Organic UTOP UTOP Margin Margin
2021 2020 RIG Pricing growth 2021 2020 2021 2020
--------- --------- ----- ------- ------- ------- ------- ------- ------
CHF 21.1 CHF 20.2 CHF 3.9 CHF 3.8
Zone EMENA bn bn 6.0% 1.2% 7.2% bn bn 18.5% 18.6%
----------- --------- --------- ----- ------- ------- ------- ------- ------- ------
Organic growth reached 7.2%, with strong RIG of 6.0% supported
by volume and mix. Pricing increased by 1.2%, with 2.5% pricing in
the fourth quarter. Net divestitures reduced sales by 2.2%, largely
related to the divestiture of the Herta charcuterie business,
partly offset by the acquisitions of Mindful Chef and Lily's
Kitchen. Foreign exchange negatively impacted sales by 0.6%.
Reported sales in Zone EMENA increased by 4.5% to CHF 21.1
billion.
Zone EMENA reported high single-digit organic growth, reaching
the highest level in the last decade. Growth was supported by
continued evolution of the portfolio toward fast-growing categories
and channels, as well as innovation. All markets posted positive
growth, with strong sales developments led by the United Kingdom,
Russia, Italy and France. The Zone continued to see broad-based
market share gains, particularly for pet food, coffee, ambient and
chilled culinary.
By product category, Purina PetCare posted double-digit growth
led by premium brands Gourmet, Felix and Purina Pro Plan, as well
as veterinary products. Growth was strong across all channels,
particularly in e-commerce and pet specialty stores. Sales in new
growth platforms Tails.com, Lily's Kitchen and Terra Canis combined
increased by close to 40%. Sales in coffee grew at a high
single-digit rate, supported by strong momentum for Nescafé and
Starbucks at-home products. Nestlé Professional reported strong
double-digit growth, helped by further recovery in out-of-home
channels, with particular strength in coffee. Water posted high
single-digit growth, led by S.Pellegrino as well as Nestlé Pure
Life in the Middle East and North Africa. Sales in confectionery
grew at a mid single-digit rate, led by KitKat. Culinary reported
low single-digit growth, with a high base of comparison for Maggi.
Sales in Garden Gourmet and Mindful Chef continued to grow at a
double-digit rate. Garden Gourmet Vuna, the recently launched
plant-based tuna alternative, saw strong demand. Infant Nutrition
posted positive growth, with continued market share gains, despite
lower birth rates in the context of the pandemic.
The Zone's underlying trading operating profit margin decreased
by 10 basis points. Cost inflation and increased growth investments
more than offset operating leverage and product mix.
Zone Asia, Oceania and sub-Saharan Africa (AOA)
-- 4.2% organic growth: 3.5% RIG; 0.8% pricing.
-- China posted low single-digit organic growth, based on
positive RIG and slightly positive pricing.
-- South-East Asia saw positive organic growth, with positive RIG and slightly negative pricing.
-- South Asia reported double-digit organic growth, with strong RIG and positive pricing.
-- Sub-Saharan Africa recorded double-digit organic growth, led
by strong RIG with positive pricing.
-- Japan, South Korea and Oceania saw mid single-digit organic
growth. Strong RIG was partially offset by slightly negative
pricing.
-- The underlying trading operating profit margin decreased by 40 basis points to 21.8%.
Sales Sales Organic UTOP UTOP Margin Margin
2021 2020 RIG Pricing growth 2021 2020 2021 2020
--------- --------- ----- ------- ------- ------- ------- ------- ------
CHF 20.7 CHF 20.7 CHF 4.5 CHF 4.6
Zone AOA bn bn 3.5% 0.8% 4.2% bn bn 21.8% 22.2%
--------- --------- --------- ----- ------- ------- ------- ------- ------- ------
Organic growth was 4.2%, with RIG of 3.5%. Pricing was 0.8%,
increasing to 2.2% in the fourth quarter. Net divestitures had a
negative impact of 3.9%, largely related to the divestment of the
Yinlu peanut milk and canned rice porridge businesses in China.
Foreign exchange reduced sales by 0.4%. Reported sales in Zone AOA
were unchanged at CHF 20.7 billion.
Zone AOA reported mid single-digit organic growth in a difficult
economic environment with continued regional lockdowns. The Zone
saw market share gains in culinary, coffee and pet food. Infant
Nutrition reported market share losses.
China saw low single-digit growth. Strong sales developments in
most categories were partly offset by a sales decline in Infant
Nutrition where turnaround initiatives continued. The largest
growth contributor was Nestlé Professional, with sales exceeding
2019 levels. Coffee, culinary and Purina PetCare all reported
strong double-digit growth. Dairy recorded high single-digit
growth, with a strong sales development for healthy-aging products,
particularly Yiyang certified functional foods for improved
immunity and mobility. Confectionery posted mid single-digit
growth, led by robust demand for Shark wafer chocolate.
South-East Asia saw positive growth, with sales reaching a mid
single-digit rate in the fourth quarter despite continued movement
restrictions. Sales in Malaysia grew at a mid single-digit rate,
with broad-based growth across most categories. The Philippines and
Indonesia saw negative growth, turning positive in the fourth
quarter led by Nescafé and Bear Brand. Indochina posted positive
growth, despite a sales decrease in on-the-go products and
out-of-home channels.
South Asia recorded double-digit growth, supported by
distribution expansion in rural areas and continued strong
e-commerce momentum. Growth was broad-based across most categories
in both India and Pakistan, led by Maggi, KitKat, Nescafé and
Nestlé Professional.
Sub-Saharan Africa recorded double-digit growth, based on strong
sales developments for Maggi, Milo and Nescafé, particularly for
affordable offerings.
Japan posted high single-digit growth, led by coffee and Purina
PetCare. Sales in South Korea grew at a strong double-digit rate,
driven by coffee. Oceania reported positive growth, with robust
demand for Purina PetCare, KitKat and Maggi.
By product category, the key growth driver was coffee driven by
new launches for Nescafé and Starbucks products. Culinary and
Nestlé Professional posted double-digit growth. Sales in
confectionery, ice cream and Purina PetCare grew at a high
single-digit rate. Dairy reported mid single-digit growth, led by
strong demand for premium and fortified milks. Infant Nutrition saw
a sales decline, with positive growth outside of China in the
second half.
The Zone's underlying trading operating profit margin decreased
by 40 basis points. Cost inflation and product mix more than offset
operating leverage.
Nespresso
-- 8.8% organic growth: 8.2% RIG; 0.6% pricing.
-- The underlying trading operating profit margin decreased by 60 basis points to 23.0%.
Sales Sales Organic UTOP UTOP Margin Margin
2021 2020 RIG Pricing growth 2021 2020 2021 2020
-------- -------- ----- ------- ------- ------- ------- ------- ------
CHF 6.4 CHF 5.9 CHF 1.5 CHF 1.4
Nespresso bn bn 8.2% 0.6% 8.8% bn bn 23.0% 23.6%
---------- -------- -------- ----- ------- ------- ------- ------- ------- ------
Organic growth reached 8.8%, based on strong RIG of 8.2% and
pricing of 0.6%. Foreign exchange positively impacted sales by
0.3%. Reported sales in Nespresso increased by 9.1% to CHF 6.4
billion.
Nespresso posted high single-digit growth, moderating to a mid
single-digit rate in the second half following a high base of
comparison in 2020. Growth was fueled by new consumer adoption,
particularly for the Vertuo system, continued momentum in
e-commerce and a recovery in boutiques and out-of-home channels.
Continuous innovation resonated strongly with consumers and
significant new product launches included the expansion of the
World Explorations and Reviving Origins ranges, as well as strong
demand for year-end festive offerings.
By geography, the Americas and AOA posted double-digit growth.
Sales in EMENA grew at a mid single-digit rate. Overall Nespresso
gained market share, with contributions from most markets.
The underlying trading operating profit margin of Nespresso
decreased by 60 basis points. Increased growth investments more
than offset operating leverage.
Nestlé Health Science
-- 13.5% organic growth: 13.4% RIG; 0.1% pricing.
-- The underlying trading operating profit margin decreased by 290 basis points to 13.6%.
Sales Sales Organic UTOP UTOP Margin Margin
2021 2020 RIG Pricing growth 2021 2020 2021 2020
-------- -------- ------ ------- ------- ------- ------- ------- ------
Nestlé
Health CHF 4.8 CHF 3.3 CHF 0.7 CHF 0.5
Science bn bn 13.4% 0.1% 13.5% bn bn 13.6% 16.5%
------------ -------- -------- ------ ------- ------- ------- ------- ------- ------
Organic growth was 13.5%, with strong RIG of 13.4% and 0.1%
pricing. Net acquisitions increased sales by 33.2%, largely related
to the acquisitions of the core brands of The Bountiful Company,
Vital Proteins, Zenpep and Aimmune. Foreign exchange negatively
impacted sales by 1.8%. Reported sales in Nestlé Health Science
increased by 45.0% to CHF 4.8 billion.
Nestlé Health Science posted double-digit organic growth,
building on a strong sales development in 2020, with broad-based
market share gains across channels and markets. Growth was
supported by e-commerce momentum, innovation, geographic expansion
and strong execution in the supply chain.
Consumer Care posted double-digit growth. Vitamins, minerals and
supplements that support health and the immune system continued to
see strong demand. Vital Proteins almost doubled its sales. Garden
of Life saw continued strength, driven by new product launches such
as Dr. Formulated MD Protein for improved heart health and
immunity. Sales for the newly acquired core brands of The Bountiful
Company grew at a high single-digit rate, led by Nature's Bounty
and Solgar. Healthy-aging products recorded double-digit growth,
supported by Boost in North America.
Medical Nutrition reported high single-digit growth, with robust
demand for pediatric care products Althéra, Alfaré and Alfamino, as
well as for Compleat, a comprehensive nutritional tube-feeding
formula. The rollout of Palforzia, the peanut allergy treatment,
was impacted by the pandemic. In the fourth quarter, the product
started to see increased adoption in the U.S. and was also launched
in the United Kingdom and Germany.
By geography, the Americas and AOA posted double-digit growth.
Sales in EMENA grew at a high single-digit rate.
The underlying trading operating profit margin of Nestlé Health
Science decreased by 290 basis points, mainly due to investments in
Palforzia, increased consumer-facing marketing expenses and one-off
integration costs related to the acquisition of The Bountiful
Company's core brands.
Business as a force for good: innovative plan to tackle child
labor risks and achieve full traceability in cocoa
On January 27, 2022, Nestlé unveiled an innovative plan building
on its longstanding efforts to tackle child labor risks in cocoa
production. T he company plans to invest a total of CHF 1.3 billion
by 2030, more than tripling its current annual investment. A novel
incentive program aims to help farmers and their families steadily
and sustainably build social and economic stability. This new
program focuses on complex root causes of child labor, including
poverty, school enrollment and agricultural practices.
The program, which builds on the Nestlé Cocoa Plan, rewards
practices that increase crop productivity and help secure
additional sources of income. By engaging in these practices,
families can earn up to CHF 500 in additional annual income for the
first two years of the program leveled at CHF 250 as the program
starts delivering tangible results.
As the incentive is not paid based on volume of cocoa sold, it
also provides smaller farmers meaningful support, leaving no one
behind. These payments are on top of support provided by the
government of producing countries and the premiums Nestlé pays for
certified cocoa, independently audited against the Rainforest
Alliance Sustainable Agriculture Standard.
The program divides the payments between the traditionally male
farmer and his female spouse, typically responsible for the
household and childcare, thereby helping to empower women and
improve gender equality.
Practices that Nestlé is incentivizing through the program
include:
-- Enrolling all children in the household aged 6-16 in school.
-- Implementing good agricultural practices, such as pruning, which increase crop productivity.
-- Performing agroforestry activities to increase climate resilience, like planting shade trees.
-- Generating diversified incomes, for example through growing
other crops, raising livestock such as chickens, beekeeping or
processing other products like cassava.
In line with Nestlé's Creating Shared Value approach, the
company will help ensure farmers have the resources, training, and
social and financial structures to make lasting changes.
Building on the positive results of an initial pilot in 2020
Nestlé conducted with 1 000 farmers in Côte d'Ivoire, the company
will run a sizeable test program with 10 000 families in the
country starting this year. The aim is to reach approximately 160
000 cocoa-farming families in Nestlé's global cocoa supply chain by
2030.
As part of the program, Nestlé will transform the sourcing of
cocoa to achieve full traceability and segregation of its cocoa
products from origin to factory. This new effort will help drive
accountability and transparency across Nestlé's supply chain and
the broader industry at a time when customers, employees and
communities increasingly expect companies to deliver on their
shared values.
Nestlé will introduce a range of products with cocoa sourced
from this innovative program, offering consumers the opportunity to
support improvement in farmer family livelihoods and protection of
children. This will start with a selection of KitKat products in
2023.
Outlook
2022 outlook: 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.
Mid-term outlook: sustained mid single-digit organic sales
growth. Continued moderate underlying trading operating profit
margin improvements. Continued prudent capital allocation and
capital efficiency improvements.
Contacts
Media
Christoph Meier
Tel.: +41 21 924 2200
mediarelations@nestle.com
Investors
Luca Borlini
Tel.: +41 21 924 3509
ir@nestle.com
Annex
Full-year sales and underlying trading operating profit (UTOP)
overview by operating segment
Nestlé
Total .Health Other
Group Zone AMS Zone EMENA Zone AOA Nespresso Science Businesses
------ -------- ---------- -------- ------------ -------------- -----------
Sales FY-2021
(CHF m) 87 088 33 779 21 128 20 735 6 418 4 822 206
Sales FY-2020
(CHF m)* 84 343 34 010 20 226 20 730 5 885 3 326 166
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
Real internal
growth (RIG) 5.5% 4.8% 6.0% 3.5% 8.2% 13.4% 25.1%
Pricing 2.0% 3.7% 1.2% 0.8% 0.6% 0.1% 1.2%
Organic growth 7.5% 8.5% 7.2% 4.2% 8.8% 13.5% 26.3%
Net M&A -2.9% -6.6% -2.2% -3.9% 0.0% 33.2% 0.0%
Foreign exchange -1.3% -2.5% -0.6% -0.4% 0.3% -1.8% -1.8%
Reported sales
growth 3.3% -0.7% 4.5% 0.0% 9.1% 45.0% 24.5%
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
FY-2021 Underlying
TOP (CHF m) 15 119 7 012 3 903 4 524 1 475 654 -32
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
FY-2020 Underlying
TOP (CHF m)* 14 903 6 975 3 766 4 599 1 392 549 -73
FY-2021 Underlying
TOP Margin 17.4% 20.8% 18.5% 21.8% 23.0% 13.6% -15.6%
FY-2020 Underlying
TOP Margin* 17.7% 20.5% 18.6% 22.2% 23.6% 16.5% -43.9%
------------------- ------ -------- ---------- -------- ------------ -------------- -----------
Full-year sales and underlying trading operating profit (UTOP)
overview by product
Milk Prepared
Powdered products Nutrition dishes
Total & liquid & ice & Health & cooking
Group beverages Water cream Science aids Confec-tionery PetCare
------ ---------- ----- --------- --------- ---------- -------------- -------
Sales FY-2021
(CHF m) 87 088 23 975 4 040 10 700 13 157 12 146 7 514 15 556
Sales FY-2020
(CHF m) 84 343 22 256 6 421 11 007 12 160 11 523 6 975 14 001
------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
Real internal
growth (RIG) 5.5% 7.8% 3.0% 3.0% 0.4% 4.6% 6.3% 9.4%
Pricing 2.0% 1.1% 3.7% 2.9% 1.0% 1.9% 1.6% 3.4%
Organic growth 7.5% 8.9% 6.8% 5.9% 1.4% 6.6% 7.9% 12.7%
------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
FY-2021 Underlying
TOP (CHF m) 15 119 5 631 364 2 707 2 307 2 040 1 205 3 282
FY-2020 Underlying
TOP (CHF m)* 14 903 5 035 639 2 652 2 640 2 171 990 3 081
FY-2021 Underlying
TOP Margin 17.4% 23.5% 9.0% 25.3% 17.5% 16.8% 16.0% 21.1%
FY-2020 Underlying
TOP Margin* 17.7% 22.6% 10.0% 24.1% 21.7% 18.8% 14.2% 22.0%
------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
* 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).
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END
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