Strong 2010 performance: 6.2% organic growth and increased EBIT margin - Growth in all regions and categories, continued momentum for 2011
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Nestlé S.A. /
Strong 2010 performance: 6.2% organic growth and increased EBIT margin - Growth
in all regions and categories, continued momentum for 2011
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Strong 2010 performance: 6.2% organic growth and increased EBIT margin
Growth in all regions and categories, continued momentum for 2011
Group
* Group sales of CHF 109.7 billion, 6.2% organic growth, 4.6% real internal
growth
* Extraordinary net profit of CHF 34.2 billion including Alcon disposal
* Underlying earnings per share in constant currencies +10.3%
* Proposed dividend increase of 15.6% to CHF 1.85 per share
* CHF 15.5 billion cash returned to shareholders
Continuing operations
* Sales of CHF 104.6 billion, 6.0% organic growth, 4.4% real internal growth
* EBIT margin +30 basis points to 13.4%
* Growth in all regions and categories, market share gains around the world
Paul Bulcke, Nestlé CEO: "In 2010, we delivered another year of strong top and
bottom line growth, outperforming the market. We increased investment in our
brands, our operations and our people. We continued to drive efficiency and
effectiveness in both developed and emerging markets while at the same time
accelerating innovation, serving well over a billion consumers a day across the
world. We are starting 2011 with continued momentum, well placed to face
uncertainties ahead, including volatile raw material prices. We are therefore
confident of achieving the Nestlé Model in 2011: organic growth between 5% and
6% and an EBIT margin improvement in constant currencies."
Vevey, 17 February 2011 - The Group achieved organic growth of 6.2% and an EBIT
margin improvement of 20 basis points. The EBIT margin is not comparable to that
of 2009 due to the disposal of Alcon in August 2010. The continuing operations
achieved organic growth of 6.0%, real internal growth of 4.4% and an EBIT margin
improvement of 30 basis points.
Food and Beverages achieved good growth with market share gains in all
categories and regions. Organic growth in emerging markets stood at 11.5% which
underlines the increasingly important role they will play in the future. Organic
growth for Food and Beverages was 5.7% in the Americas, 3.7% in Europe and
10.2% in Asia, Oceania and Africa.
Our performance was driven by continued investment in our growth pillars in line
with our strategic roadmap. These include increasing distribution of Popularly
Positioned Products (PPPs) and the continued roll-out of premium products in
both emerging and developed countries; our focus on adding nutritional value to
our products; expanding our reach in the out-of-home market; accelerating
innovation and increasing our consumer-facing marketing spend. We also continued
to strive for operational excellence from farm to fork, resulting in significant
improvements in efficiency and effectiveness. These actions contributed
significantly to our 2010 results and, at the same time, laid the foundation for
a good performance in 2011.
Full-Year Results
Group
* For the full year 2010, organic growth was 6.2%, including real internal
growth of 4.6%. Foreign exchange impacted sales by -3.6%, whilst
divestitures, net of acquisitions, reduced sales by 0.6%. Overall, Group
sales increased by 2% to CHF 109.7 billion. The EBIT margin increased by 20
basis points to 14.8% of sales. As stated above, the EBIT margin is not
comparable to that of 2009.
* Net profit was CHF 34.2 billion, up from CHF 10.4 billion in 2009, and our
earnings per share were CHF 10.16, up from CHF 2.92. These extraordinary
increases in 2010 over 2009 reflect the net profit on disposal of CHF 24.5
billion resulting from the divestiture of our remaining holding in Alcon.
* Underlying earnings per share rose by 7.4% to CHF 3.32 and by 10.3% in
constant currencies. These increases reflect the like-for-like improvement
in the Group's performance.
* Operating cash flow was CHF 13.6 billion. The working capital increased
following the extraordinary low levels of 2009. The Group's return on
invested capital was 15.5% including goodwill, and 36.1% excluding goodwill.
Continuing operations
* Organic growth was 6.0%, with real internal growth of 4.4%. The foreign
exchange impact on sales was -3.8%, whilst acquisitions, net of
divestitures, added 1.8%. Overall, continuing operations' sales increased by
4.0%.
· The EBIT margin increased by 30 basis points to 13.4%, both reported
and in constant currencies. This improvement was delivered at the same time as
we increased the investment in our brands: our marketing expenses increased by
100 basis points, with consumer facing marketing spend up 13.2% in constant
currencies. The improvement in EBIT margin was driven by our sales growth and
business mix, as well as by the achievement of operating efficiencies of over
CHF 1.5 billion through Nestlé Continuous Excellence, which had a positive
impact on the cost of goods sold, distribution and administrative costs.
· The cost of goods sold declined by 40 basis points. Our savings,
procurement strategy and leverage from growth more than compensated the cost
pressures during the year, which increased in the second half. Our efficiency
and effectiveness also contributed to an improved environmental performance in
areas such as energy, water and packaging usage.
· The distribution costs fell by 20 basis points. This is another area
of focus of efficiencies, particularly in our more distribution intensive
businesses such as Nestlé Waters and ice cream. These savings are pursued as
part of our ongoing drive for continuous improvement in both our financial and
our environmental performance.
· The administrative costs fell by 70 basis points. There was a rigorous
control of fixed costs, enabling leverage from growth.
Business Review
Zone Americas
Sales of CHF 34.3 billion, 5.9% organic growth, 3.0% real internal growth; EBIT
margin 16.5%, -30 basis points.
* In North America, we saw a continued strong performance from the Purina
petcare business which grew its market share and achieved growth in all its
segments, double-digit in snacks. Innovations included Purina ONE Shreds and
Fancy Feast Gravy Lovers. Chocolate also had a good year, helped by a strong
performance from our seasonal business, the launch of Wonka into the
chocolate category as well as innovations such as Butterfinger Snackerz.
Frozen prepared meals, particularly Lean Cuisine, continued to suffer from
weak consumer demand for the category. There was a positive performance from
our frozen pizza business in the first year of ownership, with market share
gains for DiGiorno. The integration process is on track. Ice cream performed
well in a tough market, achieving share gains. Strong performances came from
brands such as Skinny Cow and Nestlé Drumstick which grew double-digit.
Other successes included Häagen-Dazs as well as our new cups business which
offers consumers a single-serve snacking occasion and provides them with the
opportunity to try our brands. Soluble coffee also had a good year, with
Nescafé Clásico continuing to be the key growth driver.
* In Latin America, growth was double-digit for the year. Brazil, where Nestlé
will be celebrating its 90(th) anniversary in 2011, had a very strong year,
with good performances across its categories, particularly in milk. In
Mexico, soluble coffee, chocolate and powdered beverages were among the
highlights. Across the region, all our categories grew, many of them double-
digit, including the big three - dairy, chocolate and soluble coffee. There
was also a very good performance from ready-to-drink beverages, in part due
to the launch in Brazil into PET of brands such as Nescau and Alpina.
* The Zone's EBIT margin fell by 30 basis points, reflecting increased
investment in brands, distribution and innovation, not fully compensated by
efficiency gains.
Zone Europe
Sales of CHF 21.6 billion, 2.5% organic growth, 1.7% real internal growth; EBIT
margin 12.6%, +20 basis points.
* In Western Europe, our growth in all major markets was driven by strong
innovation and was achieved despite difficult economic conditions and a
tough competitive environment. France and Great Britain had particularly
positive years, and there were resilient performances in Germany, the
Iberian region, Italy and Switzerland. This reflects market share gains in
many countries including Greece where the market declined.
* In Russia, soluble coffee and ambient culinary continued to do well.
Impulse-driven categories, such as chocolate, which were impacted by the
tough economic environment, showed signs of recovery.
* Amongst the Zone's categories, soluble coffee, petcare, frozen food, in
particular Wagner and Buitoni pizza, and chocolate, especially Kit Kat,
stood out. The Zone's big three regional innovation platforms, Maggi Juicy
Chicken, Nescafé Dolce Gusto and Nescafé Green Blend, all performed well in
2010 and were key contributors to growth.
* The EBIT margin increased by 20 basis points as efficiency gains and the
leverage of growth more than compensated the increased brand support and
investment in innovation and product launches that drove the market share
gains.
Zone Asia, Oceania and Africa
Sales of CHF 17.4 billion, 8.7% organic growth, 7.0% real internal growth; EBIT
margin 16.9%, +20 basis points.
* The Zone's emerging markets achieved double digit growth, with strong
performances across the Zone: from Africa, Asia, including India and China,
Indonesia and Indochina, and the Middle East.
* The developed markets, Japan, Australia and South Korea, also achieved
growth. Particularly notable was the performance of Nescafé in Japan, where
we sold about 500,000 coffee systems, either under the Nescafé barista or
Nescafé Dolce Gusto brand, and where we also enjoyed success with the
relaunch of our super-premium variant of pure soluble Nescafé.
* There were strong performances by most categories in the Zone. Ambient
culinary, primarily Maggi, ambient dairy and ready-to-drink beverages,
including brands such as Milo and Nescafé, all grew double-digit. Other
categories, such as powdered beverages and chocolate enjoyed high single-
digit growth. Innovation highlights included the roll-out in Africa and
South Asia of a new flavour enhancer by Maggi, and PPPs across the Zone,
including for confectionery in China, India and Indonesia.
* The EBIT margin increased by 20 basis points, again reflecting the benefits
of growth and increased efficiencies.
Nestlé Waters
Sales of CHF 9.1 billion, 4.4% organic growth, 4.8% real internal growth; EBIT
margin 7.4%, +40 basis points.
* Nestlé Waters achieved growth in all three Zones, with momentum building
throughout the year, as growth returned to the industry in the developed
world and continued to be very strong in emerging markets. We gained market
share in Europe and North America, as well as in most emerging markets.
Nestlé Pure Life, the biggest water brand in the world, had another year of
double-digit growth. There were good performances also from Perrier and S.
Pellegrino, as well as many regional brands.
* In North America, there was underlying growth driven by bottled water's
improved value proposition and helped by sunny weather conditions and
consumers switching from other beverages. Among brands, Poland Spring,
Ozarka, Deer Park and Ice Mountain were highlights.
* In Europe, all markets improved their growth levels over 2009, and it was
double-digit in the UK. France, where Vittel and Contrex performed well, saw
mid-single digit growth and a gain in market share.
* The emerging markets achieved double-digit growth and now represent 15% of
water sales.
* The EBIT margin improvement was driven in part by the return to growth in
the developed world. Significant improvements in efficiencies both in
manufacturing and distribution also contributed, enabling increased brand
support despite increased input costs and reduced pricing.
Nestlé Nutrition
Sales of CHF 10.4 billion, 6.7% organic growth, 5.5% real internal growth; EBIT
margin 18.1%, +70 basis points.
* Infant nutrition, the biggest division, had a very positive year,
particularly in infant formula and infant cereals. There was growth in all
three Zones, double digit in Asia, Oceania and Africa and market share was
up on a global basis. The business performed well in the US and Canada, with
high single-digit growth, as well as in Latin America, particularly Brazil.
The trading environment was tough in Western Europe, but in the East, Russia
again achieved double-digit growth. The division's three biggest brands,
Gerber, Cerelac and Nestlé Nan all grew double-digit, benefiting from
increased brand support.
* Healthcare nutrition had a positive year both for growth and EBIT margin.
All the key strategic platforms, such as critical care and pediatrics,
performed well. Growth was particularly strong in emerging markets but also
in France and Spain. Performance Nutrition also made good progress in the
year, particularly in Europe and Oceania.
* Jenny Craig outperformed its market which remained subdued by the tough
economic environment in the United States. Growth in Jenny Craig At Home
(the Home delivery business) compensated the lower number of visitors to
Jenny Craig Centers.
* Nestlé Nutrition's EBIT margin increased by 70 basis points, reflecting the
benefit of a high level of growth, of mix, and a good contribution from
efficiencies.
Other Food and Beverages
Sales of CHF 11.0 billion, 9.8% organic growth, 8.5% real internal growth; EBIT
margin 16.4%, +70 basis points.
* Nestlé Professional had a good year relative to its market, with mid single-
digit growth. This reflects double-digit growth in the emerging markets of
Asia and Latin America, as well as a good performance in the US. The
beverage business saw strong growth in its proprietary Nescafé systems,
bolstered by successful machine launches such as Milano and Viaggi in the
premium and super-premium segments. The Vitality acquisition in the US
performed to expectation, proving to be a highly complementary addition to
our beverage business. Growth in the food business was led by Maggi and the
Nestlé milk brands.
* Nespresso had another year of above 20% organic growth, and passed CHF 3
billion in annual sales for the first time. It opened its 215(th) boutique
during a year which saw 36 openings, including in New York, Munich, and
Sydney, and increased the share of coffee it sourced from the Nespresso AAA
Sustainable Quality(TM) Program from 50% in 2009 to 60%. 2010 also saw the
first expansion of the Avenches facility to meet anticipated demand for
Nespresso capsules. In 2010, with the combined performances of Nespresso and
Nescafé Dolce Gusto, Nestlé strengthened its leadership in the dynamic
portioned coffee market.
* Cereal Partners Worldwide's global brands such as Nestlé Fitness, Nesquik
and Cheerios, grew three times as fast as the market with the business
achieving double-digit growth in many emerging markets, including Russia,
Brazil and Turkey, and strong performances in more developed cereal markets
such as Mexico, France, Greece and Australia. Beverage Partners Worldwide
achieved mid-single digit growth in 2010 and share gains in many of its
markets.
* The EBIT margin increased by 70 basis points, with all constituents
contributing.
Pharma
Sales of CHF 6.0 billion, 10.8% organic growth, 9.0% real internal growth; EBIT
margin 38.7%, +520 basis points, +220 basis points like-for-like.
* These numbers are not comparable to 2009 due to no longer being allowed to
depreciate the Alcon assets held for sale in 2010 by IFRS5, and due to the
disposal of Alcon in August 2010.
* All constituents (Alcon, Galderma and Laboratoires innéov) performed well.
Corporate highlights 2010
* Sale of our remaining stake in Alcon to Novartis for USD 28.3 billion.
* Creation of Nestlé Health Science S.A. and the Nestlé Institute of Health
Sciences to pioneer a new industry between food and pharma.
* Acquisitions of more than CHF 5 billion including Kraft's frozen pizza
business, Vitaflo (clinical nutrition products) and Waggin' Train (dog
snacks).
* Investment of CHF 4.6 billion in operations across the world with strong
emphasis on emerging markets such as India, Indonesia, the Philippines, the
Equatorial African Region and Poland.
* Opening of a R&D Centre for biscuits in Chile and groundbreaking of a R&D
Centre for PPPs in India.
* Following the announcement of the Nestlé Cocoa Plan in 2009, launch of the
Nescafé Plan, announcing investments of CHF 500 million over ten years in
coffee projects and doubling of direct coffee purchases, thereby
strengthening our commitment to rural development.
* Completion of our CHF 25 billion three-year share buy-back programme and
launch of a new CHF 10 billion programme.
* Change of our sales recognition policy as from 2011.
Board proposals to the Annual General Meeting
At the Annual General Meeting of 14 April 2011, the Board of Directors will
propose a dividend increase from CHF 1.60 to CHF 1.85 per share to shareholders,
representing an increase of 15.6%. At the same time, it will propose the
cancellation of shares which Nestlé bought back under the CHF 25 billion buyback
programme completed in June 2010 and the ongoing CHF 10 billion programme to be
completed during 2011.
Furthermore, the Board of Directors will propose the individual re-elections of
Messrs. Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Jean-Pierre Meyers and Beat
Hess as well as of Mrs. Naïna Lal Kidwai, each for a further term of three
years, as well as the election of a new member: Ms. Ann Veneman, a U.S. citizen
and former Executive Director of the United Nations Children's Fund (UNICEF).
She also served as Secretary of the United States Department of Agriculture
(USDA) and is a member of the Nestlé Creating Shared Value Advisory Board, with
extensive experience in areas such as children's health and education.
Outlook
We are starting 2011 with continued momentum, well placed to face uncertainties
ahead, including volatile raw material prices. We are therefore confident of
achieving the Nestlé Model in 2011: organic growth between 5% and 6% and an EBIT
margin improvement in constant currencies.
Contacts
Media Robin Tickle Tel.:
+41 21 924 22 00
Investors Roddy Child-Villiers Tel.:
+41 21 924 36 22
Annex
Full-year sales and EBIT margin overview
+---------------------+---------------+--------------+-------------------------+
| | | |EBIT margins |
| +---------------+--------------+------------+------------+
| |Jan.-Dec. 2010 |Jan.-Dec. 2010|Jan.-Dec. |Change vs|
| | |Organic Growth|2010 |Jan.- Dec.|
| |Sales in CHF|(%) |(%) |2009 |
| |millions | | | |
+---------------------+---------------+--------------+------------+------------+
|By operating segment |
+---------------------+---------------+--------------+------------+------------+
|Food and Beverages | 34,301 | | 16.5 | -30 bps |
|· Zone Americas | | 5.9 | | |
+---------------------+---------------+--------------+------------+------------+
|· Zone Europe | 21,580 | 2.5 | 12.6 | +20 bps |
+---------------------+---------------+--------------+------------+------------+
|· Zone Asia, Oceania,| 17,409 | 8.7 | 16.9 | +20 bps |
|Africa | | | | |
+---------------------+---------------+--------------+------------+------------+
|Nestlé Waters | 9,095 | 4.4 | 7.4 | +40 bps |
+---------------------+---------------+--------------+------------+------------+
|Nestlé Nutrition | 10,366 | 6.7 | 18.1 | +70 bps |
+---------------------+---------------+--------------+------------+------------+
|Other Food & | 10,971 | 9.8 | 16.4 | +70 bps |
|Beverages | | | | |
+---------------------+---------------++-------------++-----------+------------+
|Nestlé Food and | 103,722 | 5.9 | 13.4 | +30 bps |
|Beverages | | | | |
+---------------------+----------------+--------------+-----------+------------+
|Pharma | 6,000 | 10.8 | 38.7 | +520 bps |
|(incl. Alcon) | | | | |
+---------------------+----------------+--------------+-----------+------------+
|Total Group | 109,722 | 6.2 | 14.8 | +20 bps |
+---------------------+----------------+--------------+-----------+------------+
|By Product |
+---------------------+----------------+--------------+-----------+------------+
|Powdered and liquid | 20,612 | 8.5 | 21.0 | -70 bps |
|beverages | | | | |
+---------------------+----------------+--------------+-----------+------------+
|Water | 9,101 | 4.5 | 7.4 | +40 bps |
+---------------------+----------------+--------------+-----------+------------+
|Milk products and ice| 20,360 | 6.6 | 12.9 | +90 bps |
|cream | | | | |
+---------------------+----------------+--------------+-----------+------------+
|Nutrition( ) | 10,368 | 6.7 | 18.1 | +70 bps |
+---------------------+----------------+--------------+-----------+------------+
|Prepared dishes and | 18,093 | 2.6 | 12.3 | -60 bps |
|cooking aids( ) | | | | |
+---------------------+----------------+--------------+-----------+------------+
|Confectionery | 12,097 | 7.0 | 13.8 | +20 bps |
+---------------------+----------------+--------------+-----------+------------+
|PetCare | 13,091 | 4.9 | 17.3 | +100 bps |
+---------------------+----------------+--------------+-----------+------------+
|Pharmaceutical | | | | |
|products | 6,000 | 10.8 | 38.7 | +520 bps |
|(incl. Alcon) | | | | |
+---------------------+----------------+--------------+-----------+------------+
|Total Group | 109,722 | 6.2 | 14.8 | +20 bps |
+---------------------+---------------++-------------++-----------+------------+
Nestlé Waters, Nestlé Nutrition and Other Food & Beverages (including Nestlé
Professional) are not included in the Zones. The slight difference in the
figures for water and nutrition between the "Sales by operating segment" and
"Sales by product" tables is due to the fact that some water and nutrition
products are also sold by operating segments other than Nestlé Waters and Nestlé
Nutrition.
--- End of Message ---
Nestlé S.A.
Avenue Nestlé 55 Vevey
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Datum: 17.02.2011 - 07:15 Uhr
Sprache: Deutsch
News-ID 51606
Anzahl Zeichen: 27996
contact information:
Town:
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