Nestle reports organic growth of 3.6%

Continued strong real internal growth (RIG) of 2.6%

Swiss food and beverage company Nestle has recently reported half year results of 2019-

• Organic growth of 3.6%, with continued strong real internal growth (RIG) of 2.6% and pricing of 1.0%. Increased growth was led by the United States and Brazil.
• Total reported sales increased by 3.5% to CHF 45.5 billion (6M-2018: CHF 43.9 billion). Net acquisitions had a positive impact of 1.1% and foreign exchange reduced sales by 1.2%.
• The underlying trading operating profit (UTOP) margin reached 17.1%, up 100 basis points. The trading operating profit (TOP) margin increased by 90 basis points to 15.5%.
• Underlying earnings per share increased by 15.7% in constant currency and by 14.6% on a reported basis to CHF2.13. Earnings per share decreased by 12.3% to CHF 1.68 on a reported basis, as the prior year benefited from the disposal of the U.S. confectionery business.
• Free cash flow increased by 40.4% to CHF 4.1 billion.
• Portfolio management fully on track. Sale of Nestlé Skin Health expected to be completed in the second half of 2019 at an agreed price of CHF 10.2 billion. The strategic review of the Herta charcuterie business is ongoing and expected to be completed in late 2019.
• Full-year guidance for 2019 confirmed. We expect organic sales growth around 3.5% and the full-year underlying trading operating profit margin at or above 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

 

Mark Schneider, Nestlé CEO:

“We are encouraged by our first half results and have made further progress toward our 2020 financial goals. Disciplined execution and fast innovation contributed to improved organic growth and profitability. Our growth was broad-based with our largest market, the United States, performing particularly well. Across our categories increased investment behind our brands and in innovation is clearly paying off, as reflected in our strong momentum in PetCare and the return to mid single-digit growth in coffee. Our Starbucks launch has been a great success so far and we plan on further geographic expansion and product innovation to make the most of this unique opportunity. Active portfolio management will continue to sharpen our strategic focus and position the company in attractive high-growth businesses. Our value creation model is clearly delivering the expected results and will support sustained profitable growth.”