TIDM76TQ
RNS Number : 1310Q
Nestle SA
16 February 2023
Nestlé Press Release
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Reports published today
2022 Financial Statements:
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Corporate Governance Report:
https://www.nestle.com/sites/default/files/2023-02/corp-governance-report-2022-en.pdf
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Vevey, February 16, 2023
Nestlé reports full-year results for 2022
-- Total reported sales increased by 8.4% to CHF 94.4 billion.
Net acquisitions had a positive impact of 1.1%. Foreign exchange
decreased sales by 0.9%.
-- Organic growth reached 8.3%. Pricing was 8.2%, reflecting
significant cost inflation. Real internal growth (RIG) was positive
at 0.1%. Organic growth was broad-based across most geographies and
categories.
-- The underlying trading operating profit (UTOP) margin was
17.1%, decreasing by 30 basis points on a reported basis and by 40
basis points in constant currency. The trading operating profit
(TOP) margin was unchanged at 14.0%.
-- Underlying earnings per share increased by 9.4% in constant
currency and by 8.4% on a reported basis to CHF 4.80. Earnings per
share decreased by 43.5% to CHF 3.42 on a reported basis, mainly
reflecting the 2021 gain on the disposal of L'Oréal shares.
-- Free cash flow was CHF 6.6 billion, as working capital
increased temporarily in the context of supply chain constraints
and capital expenditure remained above historic trendlines.
-- Board proposes a dividend of CHF 2.95 per share, an increase
of 15 centimes, marking 28 consecutive years of dividend growth. In
total, CHF 18.2 billion were returned to shareholders in 2022
through a combination of dividend and share buybacks.
-- 2023 outlook: we expect 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%.
-- 2025 targets fully confirmed: we expect sustainable mid
single-digit organic sales growth and a return to an underlying
trading operating profit margin range of 17.5% to 18.5% by 2025. We
expect annual underlying earnings per share growth to be in the
range of 6% to 10% in constant currency.
Mark Schneider, Nestlé CEO, commented: "Last year brought many
challenges and tough choices for families, communities and
businesses. Inflation surged to unprecedented levels, cost of
living pressures intensified, and the effects of geopolitical
tensions were felt around the world.
The entire Nestlé team demonstrated dependability, as we
navigated this difficult environment. Organic growth was solid,
margins continued to be resilient, and our underlying earnings per
share development was strong. At the same time, we ensured access
to nutritious products and affordable offerings globally.
During 2022, we also confirmed our longstanding nutrition
strategy, with Good for You, Good for the Planet at its heart. We
took important actions to further strengthen our industry-leading
responsible marketing practices and to provide transparency on the
nutritional value of our global portfolio. At the same time, we
also advanced the implementation of our climate roadmap.
Looking to 2023, we expect another year of robust organic
growth, with a focus on restoring our gross margin, stepping up
marketing investments and increasing free cash flow. Nestlé's value
creation model puts us in a strong position to achieve our 2025
targets and to generate reliable, sustainable shareholder
returns."
Group Results
Zone Zone Zone Nestlé
Total North Zone Zone Latin Greater .Health Other
Group America Europe AOA America China Nespresso Science Businesses
------ -------- ------- ------ --------- ------------ ------------ ------------- -----------
Sales FY-2022 6
(CHF m) 94 424 26 328 19 128 18 484 11 819 5 351 6 448 602 264
Sales FY-2021 4
(CHF m)* 87 088 23 693 18 794 17 894 10 086 5 175 6 418 822 206
---------------- ------ -------- ------- ------ --------- ------------ ------------ ------------- -----------
Real internal
growth (RIG)** 0.1% -1.3% 0.9% 0.1% 1.5% 1.0% * 1.7% 0.6% 25.2%
Pricing** 8.2% 11.6% 6.4% 8.1% 11.6% 2.5% 5.2% 3.4% 3.2%
Organic growth** 8.3% 10.3% 7.2% 8.2% 13.1% 3.5% 3.5% 4.0% 28.4%
Net M&A** 1.1% -3.8% 2.1% -0.1% 0.1% 0.0% * 0.3% 31.5% 0.0%
Foreign
exchange** -0.9% 4.7% -7.6% -4.9% 4.0% * 0.1% * 2.7% 1.5% -0.1%
Reported sales
growth 8.4% 11.1% 1.8% 3.3% 17.2% 3.4% 0.5% 36.9% 28.3%
---------------- ------ -------- ------- ------ --------- ------------ ------------ ------------- -----------
FY-2022
Underlying
TOP Margin 17.1% 21.0% 16.4% 22.9% 21.2% 16.1% 21.5% 13.6% -6.1%
FY-2021
Underlying
TOP Margin* 17.4% 20.3% 18.3% 24.0% 21.9% 13.5% 23.0% 13.6% -15.6%
---------------- ------ -------- ------- ------ --------- ------------ ------------ ------------- -----------
* 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.
Group sales
Organic growth was 8.3%. Pricing increased to 8.2%, reflecting
significant cost inflation. RIG was positive at 0.1%, following a
high base of comparison in 2021, supply constraints and portfolio
optimization actions.
Organic growth was 7.1% in developed markets, driven by pricing.
In emerging markets, organic growth was 10.0%, supported by both
pricing and 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. Sales of
Starbucks products grew by 12.9% to reach CHF 3.6 billion,
generating over CHF 1.5 billion of incremental sales compared with
2018. Infant Nutrition saw double-digit growth, with broad-based
contributions across geographies and brands. Confectionery posted
high single-digit growth, reflecting particular strength for
KitKat, seasonal products and key local brands. Dairy reported mid
single-digit growth, with continued momentum for coffee creamers,
affordable fortified milks and home-baking products. Water recorded
double-digit growth, with a sales decrease in the fourth quarter as
a result of temporary capacity constraints. Prepared dishes and
cooking aids posted low single-digit growth, following a high base
of comparison in 2021, with continued strong demand for Maggi.
Sales in vegetarian and plant-based food grew at a mid single-digit
rate. Garden Gourmet in Europe continued to see double-digit
growth, while sales for Sweet Earth in North America were impacted
by SKU optimization. Nestlé Health Science reported mid
single-digit growth, driven by Medical Nutrition and healthy-aging
products.
By channel, organic growth in retail sales remained robust at
7.2%. E-commerce sales grew by 9.2%, reaching 15.8% of total Group
sales. Organic growth of out-of-home channels reached 23.5%, with
sales exceeding 2019 levels. In the fourth quarter, RIG for
out-of-home channels moderated to a mid single-digit rate as a
result of post-pandemic normalization.
Net acquisitions increased sales by 1.1%, largely related to the
acquisitions of the core brands of The Bountiful Company and
Orgain. The impact on sales from foreign exchange was negative at
-0.9%. Total reported sales increased by 8.4% to CHF 94.4
billion.
Underlying Trading Operating Profit
Underlying trading operating profit increased by 6.5% to CHF
16.1 billion. The underlying trading operating profit margin
decreased by 30 basis points to 17.1% on a reported basis and by 40
basis points in constant currency, reflecting significant cost
inflation.
Gross profit increased by 2.5% to CHF 42.7 billion. Gross profit
margin decreased by 260 basis points to 45.2%, following
significant broad-based inflation for commodity, packaging, freight
and energy costs. The impact of cost inflation increased in the
second half, reflecting higher costs for dairy, cereals and energy.
Pricing, growth leverage and efficiencies helped to partly offset
the impact of cost inflation.
Distribution costs as a percentage of sales benefited from the
divestment of the Nestlé Waters North America brands.
Marketing and administration expenses decreased by 2.6% to CHF
16.8 billion. Consumer-facing marketing spend decreased
temporarily, following a lower level of promotion and marketing
activities in the context of supply constraints. Consumer-facing
marketing spend increased in the second half of the year compared
to the first half. Administrative expenses as a percentage of sales
benefited from very disciplined cost control.
Restructuring expenses and net other trading items were CHF 2.9
billion, slightly below the prior year. As a result, trading
operating profit increased by 8.5% to CHF 13.2 billion and the
trading operating profit margin was unchanged versus the prior year
on a reported basis at 14.0%.
Net Financial Expenses and Income Tax
Net financial expenses increased by 19.2% to CHF 1.0 billion,
reflecting higher average net debt. Our average cost of net debt
increased slightly to 2.2%, compared to 2.0% in 2021.
The Group reported tax rate increased by 330 basis points to
24.2% as a result of
one-off items. The underlying tax rate was relatively stable at
20.9%.
Net Profit and Earnings Per Share
Net profit decreased by 45.2% to CHF 9.3 billion. Net profit
margin decreased by 960 basis points to 9.8%, reflecting the gain
on disposal of L'Oréal shares in 2021. As a result, earnings per
share decreased by 43.5% to CHF 3.42 on a reported basis.
Underlying earnings per share increased by 9.4% in constant
currency and by 8.4% on a reported basis to CHF 4.80. The increase
was mainly the result of strong organic growth. Nestlé's share
buyback program contributed 1.8% to the underlying earnings per
share increase, net of finance costs.
Cash Flow
Cash generated from operations before changes in working capital
increased from CHF 16.8 billion to CHF 18.4 billion, up 20 basis
points as a percentage of sales.
Free cash flow decreased from CHF 8.7 billion to CHF 6.6
billion, reflecting a deliberate and temporary increase in
inventories in the context of supply chain disruptions and the
energy crisis in Europe. Capital expenditure remained at an
elevated level due to increased demand, particularly for
PetCare.
Dividend
At the Annual General Meeting on April 20, 2023, the Board of
Directors will propose a dividend of CHF 2.95 per share, an
increase of 15 centimes. If approved, this will be the company's
28th consecutive annual dividend increase. The company has
maintained or increased its dividend in Swiss francs over the last
63 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 21, 2023. The net dividend will be payable as from
April 26, 2023.
Shareholders entered in the share register with voting rights on
April 13, 2023, at 12:00 noon (CEST) will be entitled to exercise
their voting rights.
Share Buyback Programs
In 2022, the Group repurchased CHF 10.6 billion of Nestlé shares
as part of the three-year CHF 20 billion share buyback program,
which began in January 2022. At the upcoming Annual General
Meeting, the Board of Directors will propose to reduce the share
capital by 80 million shares from CHF 275 million to CHF 267
million through the cancellation of shares purchased, as part of
the share buyback program.
Net Debt
Net debt was CHF 48.2 billion as at December 31, 2022, compared
to CHF 32.9 billion at December 31, 2021. The higher level of debt
largely reflected
share buybacks of CHF 10.5 billion, mostly financed by the
disposal of L'Oréal shares in December 2021, and a temporary
increase in working capital.
Return on Invested Capital (ROIC)
The Group's ROIC was unchanged versus 2021 at 12.2%. Excluding
significant impairments, ROIC increased by 10 basis points to
14.3%.
Portfolio Management
Nestlé completed acquisitions and divestments with a total value
of around CHF 1.9 billion in 2022.
On April 1, 2022, Nestlé Health Science completed the
acquisition of a majority stake in Orgain, a leader in plant-based
nutrition. Orgain complements Nestlé Health Science's existing
portfolio of nutrition products that support healthier lives.
On September 1, 2022, Nestlé Health Science completed the
acquisition of Puravida, a premium Brazilian nutrition and health
lifestyle brand. The acquisition will enable Nestlé Health Science
to expand its consumer health portfolio in Latin America.
On September 1, 2022, Nestlé Health Science completed the
acquisition of The Better Health Company. The acquisition includes
the GO Healthy brand, New Zealand's leading supplement brand, and
New Zealand Health Manufacturing, an Auckland-based manufacturing
facility for vitamins, minerals and supplements. The acquisition
will expand Nestlé Health Science's portfolio of vitamins, minerals
and supplements in AOA.
On October 19, 2022, Nestlé announced the acquisition of
Seattle's Best Coffee from Starbucks. This transaction is part of
Nestlé's focus on driving sustained profitable growth in the coffee
category and strengthens the Global Coffee Alliance by allowing
both companies to focus on their core strengths. The transaction
was completed on January 13, 2023.
On November 1, 2022, Nestlé completed the sale of the Gateway
infant formula plant in Eau Claire, Wisconsin, along with U.S. and
Canadian rights to the Gerber Good Start infant formula brand to
Perrigo.
On November 15, 2022, Nestlé and L Catterton created a
partnership that brings together Freshly and Kettle Cuisine, a
leading manufacturer of fresh food products for retail and
foodservice customers. The combined company focuses on offering a
wide assortment of fresh food products to customers across
geographies and a variety of channels. L Catterton is the majority
owner, with Nestlé holding a minority stake.
On November 29, 2022, the Group announced the decision to
explore strategic options for Palforzia, the peanut allergy
treatment, following slower than expected adoption by patients and
healthcare professionals. The review is expected to be completed in
the first half of 2023.
Zone North America
-- 10.3% organic growth: -1.3% RIG; 11.6% pricing.
-- The Zone's underlying trading operating profit margin increased by 70 basis points to 21.0%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
--------- --------- ----- ------- ------- ------- ------- ------ -------
Zone North CHF 26.3 CHF 23.7 CHF 5.5 CHF 4.8
America bn bn -1.3% 11.6% 10.3% bn bn 21.0% 20.3%
----------- --------- --------- ----- ------- ------- ------- ------- ------ -------
Organic growth was 10.3%, with pricing of 11.6%. RIG was -1.3%,
following pricing activities, a high base of comparison in 2021 and
supply constraints. In the fourth quarter, RIG was -4.9%, largely
impacted by portfolio optimization actions, a growth moderation in
out-of-home channels and temporary capacity constraints for water.
Net divestitures reduced sales by 3.8%, mainly due to the
divestment of the Nestlé Waters North America brands. Foreign
exchange had a positive impact of 4.7%. Reported sales in Zone
North America increased by 11.1% to CHF 26.3 billion.
Zone North America saw broad-based growth across brands and
categories, driven by pricing, strong operational execution and
continued momentum in e-commerce. Nestlé gained market share in the
Zone, led by pet food, portioned coffee and baby food.
By product category, Purina PetCare was the largest growth
contributor with strong momentum across channels, particularly in
e-commerce and pet specialty stores. Purina Pro Plan, including
veterinary products, Purina ONE and Fancy Feast all saw strong
double-digit growth, supported by innovation. Sales in Nestlé
Professional and Starbucks out-of-home products grew at a strong
double-digit rate. Beverages, including Starbucks at-home products,
Coffee mate and Nescafé, posted high single-digit growth, helped by
new product launches. Prior to the divestiture of Gerber Good Start
infant formula in November, the brand recorded strong demand
following supply constraints in the market. Baby food reported
robust growth, led by healthy snacking. Frozen food saw low
single-digit growth, with robust sales developments for Hot Pockets
frozen snacks and DiGiorno pizza. Premium water posted mid
single-digit growth, with a sales decrease in the fourth quarter
mainly due to temporary capacity constraints. Ready-to-drink
Nesquik in the U.S. and KitKat in Canada reported strong growth,
supported by new product launches and execution.
The Zone's underlying trading operating profit margin increased
by 70 basis points. Pricing, growth leverage and portfolio
management more than offset significant cost inflation.
Zone Europe
-- 7.2% organic growth: 0.9% RIG; 6.4% pricing.
-- The Zone's underlying trading operating profit margin decreased by 190 basis points to 16.4%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
--------- --------- ---- ------- ------- ------- ------- ------ -------
CHF 19.1 CHF 18.8 CHF 3.1 CHF 3.4
Zone Europe* bn bn 0.9% 6.4% 7.2% bn bn 16.4% 18.3%
------------- --------- --------- ---- ------- ------- ------- ------- ------ -------
*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 7.2 %, with pricing of 6.4 %. RIG was
resilient at 0.9 %, following a high base of comparison in 2021 as
well as supply constraints. Foreign exchange negatively impacted
sales by 7.6 %, reflecting the appreciation of the Swiss franc
against the Euro. Reported sales in Zone Europe increased by 1.8 %
to CHF 19.1 billion.
In a challenging environment, Zone Europe demonstrated
resilience and a commitment to invest for the long-term. In
Ukraine, Nestlé announced a CHF 40 million investment for a new
production facility in the Volyn region.
The Zone saw market share gains in confectionery, pet food and
Infant Nutrition. By product category, the key growth driver was
Purina PetCare, fueled by premium brands Gourmet, Felix and Purina
Pro Plan. Growth was strong across all channels, particularly in
e-commerce and pet specialty stores. Sales in Nestlé Professional
grew at a strong double-digit rate, helped by new growth platforms
and increased distribution, particularly for beverages. Water saw
double-digit growth, with a sales decrease in the fourth quarter
mainly due to temporary capacity constraints. Coffee posted mid
single-digit growth, led by Nescafé soluble coffee and continued
strong sales developments for Starbucks by Nespresso .
Confectionery reported mid single-digit growth, with strong demand
for KitKat and seasonal offerings. Sales in Infant Nutrition grew
at a double-digit rate, based on strong momentum for premium infant
formula, including human milk oligosaccharides (HMOs) products.
Culinary recorded a sales decrease, impacted by negative growth in
pizza and noodles. Garden Gourmet plant-based products continued to
see double-digit growth, reflecting new product launches .
The Zone's underlying trading operating profit margin decreased
by 190 basis points. Significant cost inflation and the impact of
war-induced supply chain constraints outweighed pricing, growth
leverage and cost efficiencies.
Zone Asia, Oceania and Africa (AOA)
-- 8.2% organic growth: 0.1% RIG; 8.1% pricing.
-- The Zone's underlying trading operating profit margin decreased by 110 basis points to 22.9%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
--------- --------- ---- ------- ------- ------- ------- ------ -------
CHF 18.5 CHF 17.9 CHF 4.2 CHF 4.3
Zone AOA bn bn 0.1% 8.1% 8.2% bn bn 22.9% 24.0%
--------- --------- --------- ---- ------- ------- ------- ------- ------ -------
Organic growth reached 8.2%, with pricing of 8.1%. RIG was 0.1%,
impacted by a high base of comparison in 2021 and portfolio
optimization actions. Foreign exchange reduced sales by 4.9%.
Reported sales in Zone AOA increased by 3.3% to CHF 18.5
billion.
Growth in Zone AOA was driven by pricing, continued recovery of
out-of-home channels and innovation. The Zone saw market share
gains in coffee, culinary and Infant Nutrition.
South-East Asia saw mid single-digit growth, led by Nescafé,
Maggi and Milo. South Asia posted double-digit growth, with market
share gains and continued momentum for Maggi, KitKat and Nescafé.
Sales in the Middle East and Africa grew at a double-digit rate,
based on strong momentum for affordable offerings across Maggi and
Milo as well as broad-based demand for Infant Nutrition products.
Despite portfolio optimization, Japan reported low single-digit
growth, supported by Nescafé, Starbucks and Purina PetCare. Sales
in South Korea grew at a double-digit rate, driven by Starbucks
products and increased demand for KitKat. Oceania recorded high
single-digit growth, with particular strength for Nescafé, Maggi
and KitKat.
By product category, culinary was the largest growth
contributor, led by Maggi cooking aids and noodles. Sales in Nestlé
Professional grew at a strong double-digit rate across geographies
and categories, fueled by increased distribution. Coffee saw high
single-digit growth, with continued strong demand for Nescafé and
Starbucks products. The Zone launched Starbucks ready-to-drink
products in seven markets. Infant Nutrition reached high
single-digit growth, based on innovation and increased
distribution. Cocoa and malt beverages posted high single-digit
growth, driven by Milo. Sales in confectionery grew at a
double-digit rate, led by KitKat. Purina PetCare reported high
single-digit growth, with continued momentum for Purina ONE, Felix
and Purina Pro Plan. Ambient dairy saw a slight sales decrease,
largely due to portfolio optimization actions.
The Zone's underlying trading operating profit margin decreased
by 110 basis points. Significant cost inflation more than offset
pricing, growth leverage and disciplined cost control.
Zone Latin America
-- 13.1% organic growth: 1.5% RIG; 11.6% pricing.
-- The Zone's underlying trading operating profit margin decreased by 70 basis points to 21.2%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
--------- --------- ---- ------- ------- ------- ------- ------ -------
Zone Latin CHF 11.8 CHF 10.1 CHF 2.5 CHF 2.2
America bn bn 1.5% 11.6% 13.1% bn bn 21.2% 21.9%
----------- --------- --------- ---- ------- ------- ------- ------- ------ -------
Organic growth was 13.1 %, with pricing of 11.6 %. RIG was 1.5
%, following a high base of comparison in 2021. Foreign exchange
had a positive impact of 4.0 %. Reported sales in Zone Latin
America increased by 17.2 % to CHF 11.8 billion.
Zone Latin America saw sustained broad-based growth, supported
by pricing, strong operational execution and continued momentum of
out-of-home channels. The Zone saw market share gains in Infant
Nutrition, pet food and culinary.
Sales in Brazil grew at a strong double-digit rate, reflecting
high demand for confectionery and Infant Nutrition as well as cocoa
and malt beverages. Mexico saw double-digit growth, with strong
sales developments for Purina PetCare, Nescafé and Carnation. Sales
in Chile grew at a double-digit rate, led by confectionery, coffee
and Purina PetCare. Colombia and the Plata Region continued to see
strong double-digit growth.
By product category, confectionery was the largest growth
contributor, based on strong demand for key local brands and
KitKat. Sales in Purina PetCare grew at a double-digit rate, led by
Dog Chow, Cat Chow and Purina Pro Plan, as well as the continued
expansion of Purina ONE across the Zone. Coffee posted broad-based
double-digit growth, supported by Nescafé soluble coffee, Nescafé
Dolce Gusto and Starbucks products. Dairy reported high
single-digit growth, based on strong sales developments for
fortified milks and home-baking products. Infant Nutrition recorded
high single-digit growth, based on continued momentum for Nido and
NAN. Sales in Nestlé Professional grew at a strong double-digit
rate, significantly exceeding 2019 levels, with growth fueled by
new digital platforms. Water also posted strong double-digit
growth. Plant-based products saw strong growth, helped by the
expansion of dairy alternatives for La Lechera and by Nature's
Heart.
The Zone's underlying trading operating profit margin decreased
by 70 basis points, as one-off items and cost inflation more than
offset pricing, growth leverage and disciplined cost control.
Zone Greater China
-- 3.5% organic growth: 1.0% RIG; 2.5% pricing.
-- The Zone's underlying trading operating profit margin increased by 260 basis points to 16.1%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
-------- -------- ---- ------- ------- ------- ------- ------ -------
Zone Greater CHF 5.4 CHF 5.2 CHF 0.9 CHF 0.7
China bn bn 1.0% 2.5% 3.5% bn bn 16.1% 13.5%
------------- -------- -------- ---- ------- ------- ------- ------- ------ -------
Organic growth was 3.5%, with pricing of 2.5%. RIG was 1.0%,
impacted by COVID-19-related movement restrictions. Foreign
exchange had a negative impact of 0.1%. Reported sales in Zone
Greater China increased by 3.4% to CHF 5.4 billion.
Growth in Zone Greater China was supported by strong operational
execution, e-commerce momentum and continued innovation.
By product category, Infant Nutrition saw high single-digit
growth, with improved market share trends for NAN and illuma.
Coffee posted high single-digit growth, led by Nescafé soluble and
ready-to-drink coffee as well as Starbucks products. In
confectionery, Hsu Fu Chi reported high single-digit growth, helped
by innovation including the launch of savory snacks. Culinary
recorded mid single-digit growth, helped by increased distribution
and innovation. Sales in Purina PetCare grew at a double-digit
rate, with strong growth in specialty channels and e-commerce. As a
result of movement restrictions, Nestlé Professional saw a mid
single-digit sales decrease, with market share gains supported by
new customers and product launches.
The Zone's underlying trading operating profit margin increased
by 260 basis points. Favorable mix and disciplined cost control
more than offset cost inflation.
Nestlé Health Science
-- 4.0% organic growth: 0.6% RIG; 3.4% pricing.
-- The underlying trading operating profit margin was unchanged at 13.6%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
-------- -------- ---- ------- ------- ------- ------- ------ -------
Nestlé CHF 6.6 CHF 4.8 CHF 0.9 CHF 0.7
Health Science* bn bn 0.6% 3.4% 4.0% bn bn 13.6% 13.6%
----------------- -------- -------- ---- ------- ------- ------- ------- ------ -------
*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 4.0%, with increased pricing of 3.4%. RIG was
0.6%, following strong double-digit growth in both 2020 and 2021
during the pandemic. Net acquisitions increased sales by 31.5%,
largely related to the acquisitions of the core brands of The
Bountiful Company and Orgain. Foreign exchange positively impacted
sales by 1.5%. Reported sales in Nestlé Health Science increased by
36.9% to CHF 6.6 billion.
Consumer Care posted positive growth, as double-digit growth in
active nutrition was offset by a slight sales decrease in vitamins,
minerals and supplements. Within active nutrition, healthy-aging
products were the largest contributor to growth, led by Boost and
Nutren. Vital Proteins and Orgain saw double-digit growth with
market share gains. Within vitamins, minerals and supplements,
growth for The Bountiful Company brands and Garden of Life were
impacted by a high base of comparison for immunity-related products
during the pandemic.
Medical Nutrition recorded double-digit growth, with strong
sales developments for pediatric and allergy products, Althéra,
Alfaré and Alfamino. Adult medical care products also posted strong
growth based on new product launches.
By geography, sales in North America grew at a low single-digit
rate. Europe reported positive growth. Other regions combined
posted high single-digit growth. Overall, Nestlé Health Science saw
broad-based market share gains.
The underlying trading operating profit margin of Nestlé Health
Science was unchanged versus the prior year, as cost synergies from
newly acquired businesses and growth leverage were offset by cost
inflation and growth investments.
Nespresso
-- 3.5% organic growth: -1.7% RIG; 5.2% pricing.
-- The underlying trading operating profit margin of Nespresso
decreased by 150 basis points to 21.5%.
Sales Sales Organic UTOP UTOP Margin Margin
2022 2021 RIG Pricing growth 2022 2021 2022 2021
-------- -------- ----- ------- ------- ------- ------- ------ -------
CHF 6.4 CHF 6.4 CHF 1.4 CHF 1.5
Nespresso* bn bn -1.7% 5.2% 3.5% bn bn 21.5% 23.0%
----------- -------- -------- ----- ------- ------- ------- ------- ------ -------
*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 3.5%, with pricing of 5.2%. RIG was -1.7%,
following strong growth of 8.2% in 2021 during the pandemic.
Foreign exchange negatively impacted sales by 2.7%. Reported sales
in Nespresso increased by 0.5% to CHF 6.4 billion.
Growth in Nespresso was led by broad-based momentum for the
Vertuo system. Vertuo Pop , a new compact machine, was launched in
10 markets. Growth was also supported by a strong recovery of
out-of-home channels, with continued expansion of the Momento
system and improved sales development for the office segment.
Innovation and new product launches, including the year-end festive
campaign with Pierre Hermé, continued to resonate with
consumers.
By geography, North America posted double-digit growth with
continued market share gains. Europe reported a sales decrease,
with growth turning positive in the fourth quarter. Other regions
combined recorded high single-digit growth.
The underlying trading operating profit margin of Nespresso
decreased by 150 basis points, impacted by cost inflation and
investments in the rollout of the Vertuo system.
Business as a force for good: Making progress on 'Good for You,
Good for the Planet'
Two important pillars of Nestlé's strategy include: 'Good for
You', which covers the company's products and their nutritional
value, and 'Good for the Planet', which encompasses the company's
sustainability efforts.
On 'Good for You' , the company has a long heritage of
supporting peoples' nutrition and has made great progress in
reducing the sodium, sugar and saturated fat in its products over
the past decade. Starting next month, the company will begin making
the nutritional value of its global portfolio transparent, using an
external, internationally recognized model for reporting. Nestlé
will also start reporting on local portfolios in 14 countries,
using local external benchmarks. In addition, Nestlé recently
strengthened its responsible marketing practices, voluntarily
restricting its marketing to kids under the age of 16. The company
wants to be at the forefront of the industry when it comes to
bringing balanced diets within reach for people around the
world.
On 'Good for the Planet' , Nestlé's greenhouse gas emissions are
now below the 2018 levels, based on SBTi standards, even as the
company has continued to grow since then. The biggest part of
Nestlé's emissions come from activities within its supply chain
(Scope 3), which is why the company is heavily focused on reducing
them through the sourcing of its raw materials and regenerative
agriculture. It is working with farmers all over the world to help
them make the transition to regenerative agriculture. It is
sourcing more volumes from farmers who make that transition, while
providing technical and financial support to help other farmers
start. Through the Nescafé Plan 2030, for example, Nestlé is
piloting a financial support scheme to encourage coffee farmers to
accelerate the shift.
Nestlé is also tackling the emissions it has more direct control
over (Scope 1 and 2). It is using its R&D expertise and
innovation capabilities to adapt recipes to lower the emissions of
new and established products. Nestlé is becoming more energy
efficient and ramping up its use of renewable electricity. In fact,
the company is on track to source 100% renewable electricity by
2025. In North America, for example, Nestlé completed a large-scale
solar energy farm and invested in two more. Combined, the solar
energy farms will supply approximately 80% of Nestlé's energy in
the U.S. and reduce its carbon emissions by 3.3 million tonnes of
carbon equivalents.
Additionally, Nestlé is implementing nature-based solutions
where it sources its raw materials to remove emissions and store
them in the ground. In Nicaragua, for instance, the company reached
its 2022 goal of planting one million trees, as part of a six-year
reforestation project to plant 8.6 million trees on the Nescafé and
dairy farms from which Nestlé sources. The project is estimated to
capture about 3.3 million tonnes of carbon equivalents over 20
years. It is expected to improve biodiversity and forest
connectivity, to protect water sheds and to provide job
opportunities.
Outlook
2023 outlook: we expect 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%.
2025 targets fully confirmed: we expect sustainable mid
single-digit organic sales growth and a return to an underlying
trading operating profit margin range of 17.5% to 18.5% by 2025. We
expect annual underlying earnings per share growth to be in the
range of 6% to 10% in constant currency.
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
Zone Zone Zone Nestlé
Total North Zone Zone Latin Greater .Health Other
Group America Europe AOA America China Nespresso Science Businesses
------ -------- ------- ------ --------- ------------ ------------- ------------- -----------
Sales FY-2022 6
(CHF m) 94 424 26 328 19 128 18 484 11 819 5 351 6 448 602 264
Sales FY-2021 4
(CHF m)* 87 088 23 693 18 794 17 894 10 086 5 175 6 418 822 206
--------------- ------ -------- ------- ------ --------- ------------ ------------- ------------- -----------
Real internal
growth (RIG)** 0.1% -1.3% 0.9% 0.1% 1.5% 1.0% * 1.7% 0.6% 25.2%
Pricing** 8.2% 11.6% 6.4% 8.1% 11.6% 2.5% 5.2% 3.4% 3.2%
Organic
growth** 8.3% 10.3% 7.2% 8.2% 13.1% 3.5% 3.5% 4.0% 28.4%
Net M&A** 1.1% -3.8% 2.1% -0.1% 0.1% 0.0% * 0.3% 31.5% 0.0%
Foreign
exchange** -0.9% 4.7% -7.6% -4.9% 4.0% * 0.1% * 2.7% 1.5% -0.1%
Reported sales
growth 8.4% 11.1% 1.8% 3.3% 17.2% 3.4% 0.5% 36.9% 28.3%
--------------- ------ -------- ------- ------ --------- ------------ ------------- ------------- -----------
FY-2022
Underlying
TOP (CHF m) 16 103 5 528 3 138 4 237 2 501 862 1 388 899 -17
--------------- ------ -------- ------- ------ --------- ------------ ------------- ------------- -----------
FY-2021
Underlying
TOP (CHF m)* 15 119 4 804 3 439 4 288 2 208 700 1 475 654 -32
--------------- ------ -------- ------- ------ --------- ------------ ------------- ------------- -----------
FY-2022
Underlying
TOP Margin 17.1% 21.0% 16.4% 22.9% 21.2% 16.1% 21.5% 13.6% -6.1%
FY-2021
Underlying
TOP Margin* 17.4% 20.3% 18.3% 24.0% 21.9% 13.5% 23.0% 13.6% -15.6%
--------------- ------ -------- ------- ------ --------- ------------ ------------- ------------- -----------
* 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
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-2022 (CHF
m) 94 424 25 218 3 536 11 289 15 678 12 484 8 118 18 101
Sales FY-2021 (CHF
m) 87 088 23 975 4 040 10 700 13 157 12 146 7 514 15 556
--------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
Real internal growth
(RIG)** 0.1% 0.2% 2.2% -4.3% 1.7% -6.9% 4.8% 4.3%
Pricing** 8.2% 7.8% 8.9% 9.6% 5.7% 10.0% 4.7% 10.2%
Organic growth** 8.3% 8.0% 11.0% 5.4% 7.4% 3.1% 9.4% 14.5%
--------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
FY-2022 Underlying
TOP (CHF m) 16 103 5 593 277 2 568 2 990 2 038 1 364 3 706
FY-2021 Underlying
TOP (CHF m) 15 119 5 631 364 2 707 2 307 2 040 1 205 3 282
--------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
FY-2022 Underlying
TOP Margin 17.1% 22.2% 7.8% 22.7% 19.1% 16.3% 16.8% 20.5%
--------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
FY-2021 Underlying
TOP Margin 17.4% 23.5% 9.0% 25.3% 17.5% 16.8% 16.0% 21.1%
--------------------- ------ ---------- ----- --------- --------- ---------- -------------- -------
**RIG, pricing and organic growth figures exclude the Russia
region, with a corresponding impact on the M&A and foreign
exchange lines
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