Nestlé S.A. : First Half 2012: steady momentum, full-year outlook confirmed
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Nestlé S.A. : First Half 2012: steady momentum, full-year outlook confirmed
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First Half 2012: steady momentum, full-year outlook confirmed
* Sales of CHF 44.1 billion, 6.6% organic growth, 2.9% real internal growth
* Trading operating profit of CHF 6.6 billion (+6.3%), margin 15.0% (-10 bps)
* 12.9% organic growth in emerging markets and 2.6% in developed markets
* Underlying earnings per share CHF 1.63 up 12.4% in constant currencies
* The Group's operating cash flow CHF 5.1 billion, up from CHF 2.1 billion in
the first half of 2011
* Full-year outlook reconfirmed: organic growth of 5% to 6%, improved margin
and underlying earnings per share in constant currencies
Paul Bulcke, Nestlé CEO: "Our first-half performance shows the relevance of our
strategic roadmap in today's new reality and demonstrates our swift and
disciplined execution behind it, making the right choices at the right time. We
continue to drive innovation globally, ranging from popularly positioned
products to super premium offerings. We are continually opening new routes-to-
market to reach emerging consumers, and using new media to increase both our
direct engagement with consumers and our return on brand investment. This
approach has delivered profitable growth in both emerging and developed markets.
Our first-half top line growth and our trading operating profit margin, together
with our focus on capital efficiency, allow us to reconfirm our full-year
outlook."
Vevey, 9 August 2012
* In the first half of 2012, the Nestlé Group's organic growth was 6.6%,
composed of real internal growth of 2.9% and pricing of 3.7%. The impact of
foreign exchange eased to -1.8%. Acquisitions, net of divestitures,
contributed 2.7%. Total Group sales increased 7.5% to CHF 44.1 billion.
* As expected, input cost pressure resulted in an increase in the cost of
goods sold, of 50 bps. This was mitigated by savings from Nestlé Continuous
Excellence implemented throughout all our structures and activities, as well
as timely pricing.
* Distribution costs decreased by 30 bps, mainly due to the cumulative effects
in mix and efficiencies.
* Marketing and administration costs were down 20 bps. Consumer facing
marketing spend is up in constant currencies and is being used more
efficiently and effectively, increasing the return on investment in our
brands and support for launch activities globally.
* We continued to invest in R&D (unchanged at 1.6% of sales), driving our
innovation.
* The Group's trading operating profit (TOP) was CHF 6.6 billion, up 6.3% from
CHF 6.2 billion in the first half of 2011. The margin was 15.0%, in line
with our expectation that our margin performance would be second-half
weighted.
* Net profit was CHF 5.1 billion, up 8.9% from CHF 4.7 billion.
* The underlying earnings per share (EPS) rose 12.4% in constant currencies.
The reported EPS was CHF 1.61 up 10.3% from CHF 1.46 in the first half 2011.
* The Group's operating cash flow was CHF 5.1 billion, up from CHF 2.1 billion
in 2011, due to improvements in operations and working capital.
Business Review
The Nestlé Group continued to grow in all regions of the world: the Americas
achieved organic growth of 6.4%, Europe 2.6% and Asia, Oceania and Africa
12.6%. Our business grew 12.9% in emerging markets and 2.6% in developed
markets.
Zone Americas
Sales CHF 13.4 billion, 5.7% organic growth, -0.1% real internal growth; 17.4%
TOP margin, +10 bps.
* Almost all categories contributed to the Zone's growth, while the trading
environment, particularly in North America, remained challenging.
* In North America, where consumer confidence continued to be low, several
food categories were under pressure including frozen food. In pizza,
however, we were able to further improve our leading position driven by
DiGiorno with new ranges such as Pizza Dipping Strips and Italian Style
Favorites. The innovations and related communications in Lean Cuisine
resulted in a return to growth. In ice cream, we saw growth in super-premium
and snacks, but not in the premium category. Coffee-mate delivered high
single-digit growth, continuing to build on the 2011 launch of Coffee-mate
Natural Bliss its range of natural liquid creamers. Soluble coffee and
confectionery contributed positively thanks to core brands, popularly
positioned products and innovations such as Nescafé Memento and Skinny Cow.
Petcare continued to outperform the market, driven by expansion into new
channels and new product innovation such as Beneful Baked Delights, and
Friskies Plus, as well as a push into the specialty channel.
* In Latin America, the two largest markets Brazil and Mexico had a good start
to the year as did the southern countries of South America. Among
categories, the key growth drivers were soluble coffee, with Nescafé Dolca
and Nescafé Dolce Gusto, and chocolate, with the KitKat launch and Garoto
brand in Brazil. Launches included Acticol milk in Chile and Mexico and
peelable ice cream, already a success in Zone AOA. Petcare achieved double-
digit growth in the region, with highlights being Purina Proplan, Dog Chow,
Cat Chow and Friskies.
* The Zone's trading operating profit margin of 17.4% improved 10 bps.
Zone Europe
Sales CHF 7.4 billion, 2.4% organic growth, 0.1% real internal growth; 15.4% TOP
margin, -100 bps.
* The key contributors to the Zone's growth, in an environment which
deteriorated during the year particularly in Southern Europe, were
innovation and roll-outs in premium and popularly positioned products.
Overall the Zone was able to hold market share gains made in 2011.
* In Western Europe, France, the Great Britain and the Benelux regions were
highlights, while there was also growth in the Iberian region, Italy, and
Greece.
* In Central and Eastern Europe, the Ukrainian, Adriatic, and Romanian markets
continued to deliver strong performances. In Russia, where trading
conditions have been tough for a while, our business experienced a pick-up
in growth.
* Billionaire brands such as Nescafé, KitKat and Herta and innovation
platforms such as Nescafé Dolce Gusto continued to drive growth in their
categories. Ice cream saw good growth in Greece, Russia and Italy, but the
season had a poor start in Northern Europe. Our popularly positioned
products continued to grow well above the Zone average, examples being
Nescafé 3-in-1 soluble coffee and Pirulo Jungly, our peelable ice cream.
Petcare had a strong first half continuing its growth momentum, with key
brands such as Gourmet, ONE, Pro Plan and Felix performing strongly.
* The Zone's trading operating profit margin declined by 100 bps versus half
year 2011. This performance comes after a 200 bps improvement in the first
half of last year, which was due to lower restructuring and pension costs.
The Zone continued to increase its operational performance and efficiencies
in 2012, with increased savings from Nestlé Continuous Excellence, and it
benefited from bringing increased value to its categories through innovation
and renovation.
Zone Asia, Oceania and Africa
Sales CHF 9.2 billion, 11.6% organic growth, 8.0% real internal growth, TOP
margin of 18.9%, - 60 bps.
* The Zone continued to post double-digit growth, building on a strong 2011,
as we embraced the many opportunities in the region while at the same time
consolidating our positions. The main drivers of this performance were brand
investment and product innovation, deeper and wider distribution with a
multi-tier strategy from popularly positioned products to premiumisation,
while investing in capacity and capabilities for future growth. Yinlu and
Hsu Fu Chi, our two new Chinese partnerships, continued to integrate well
and make good progress.
* The emerging markets delivered double-digit growth in almost all geographies
and categories, most notably in Greater China, Africa, and the Middle
East. In China there was a strong performance in ready-to-drink with Nescafé
Smoovlatté, in ambient culinary with Totole, and in confectionery with Shark
wafer. Our new partnerships are enhancing significantly our footprint in
China. Africa's growth was driven by popularly positioned products, many of
which are fortified with micronutrients to help counter the region's
micronutrient deficiencies. In Egypt we built on the success of innovations
in ice cream and in South Africa we launched sachets for the extremely
popular Nescafé Ricoffy. The Middle East had an outstanding performance with
KitKat, Nido fortified milks and growing up milks, and Nescafé. India
continued to do well thanks to KitKat, Munch and Maggi noodles.
* Amongst the Zone's developed markets Japan's growth accelerated during the
year with innovations such as Nescafé Barista and Nescafé Dolce Gusto.
KitKat also had a strong first half. The renewed growth in Japan was also
driven by strong digital communication in the areas of consumer relationship
marketing and e-commerce.
* The Zone's like-for-like trading operating profit margin improved, whereas
the reported figure of 18.9% shows the expected dilution from the
partnerships in China, which remain accretive in both cash flow and earnings
per share.
Nestlé Waters
Sales CHF 3.6 billion, 5.6% organic growth, 3.5% real internal growth; TOP
margin of 10.0%, +140 bps.
* Nestlé Waters' growth was driven by North America and emerging markets. The
water category continued to evolve positively overall. Nestlé Pure Life
drove our geographic expansion in emerging markets, as did our international
brands Perrier and S.Pellegrino globally.
* North America maintained its momentum from 2011 both in the retail and home
and office channels. All tiers of our business, from Nestlé Pure Life at the
value end, to the regional waters such as Poland Spring and Ice Mountain, to
the premium international sparkling waters such as Perrier and S.Pellegrino
contributed to this performance.
* Growth in Europe was impacted by a slow start generally to the season in
contrast to 2011. However there was double-digit growth in the UK thanks to
the strong performance of Nestlé Pure Life and Buxton. Perrier also had a
strong start, helped by its new advertisement "The Drop" which generated
3.6 million YouTube views in less than a month.
* The emerging markets delivered double-digit growth with Nestlé Pure Life and
the local brands, such as Al Manhal in Saudi Arabia, Minéré in Thailand and
Baraka in Egypt contributing.
* The trading operating profit margin for Nestlé Waters increased by 140 bps
thanks to continued growth, product mix, effective pricing and cost
management initiatives.
Nestlé Nutrition
Sales CHF 3.8 billion, 5.7% organic growth, 2.0% real internal growth; TOP
margin of 20.6%, -50 bps.
* Infant Nutrition achieved double-digit growth across the emerging markets, a
performance which resulted in share gains in many markets. In spite of
slower category growth in developed markets, our infant formula business was
nonetheless able to deliver double-digit growth globally. In Latin America
we continued to build on the momentum across our existing product range,
helped by the newly launched anti-reflux infant formula Nestlé NAN AR and a
new Gerber shelf-stable infant dairy product. South Asia had successful
launches with Lactogen Gut Comfort and Baby&Me, a maternal nutritional
supplement. In South East Asia we continued the roll out of our anti-colic
formula. In general, infant cereals continued to do well with the probiotics
expansion started in late 2011 with the Middle East a highlight.
* In Performance Nutrition a major revamp of our portfolio to refocus on high-
performance athletes, combined with successful product launches, drove
strong momentum and good growth. Our Weight Management business, Jenny
Craig, remained challenged in North America, affected by the economic and
competitive environment. We are taking corrective actions.
* Nestlé Nutrition's trading operating profit margin was 20.6%, down 50 bps,
reflecting the challenges at Jenny Craig.
Other
Sales CHF 6.7 billion, 9.6% organic growth, 6.6% real internal growth; TOP
margin of 17.6%, +10 bps.
* Nestlé Professional showed good growth for the first half of 2012, both in
beverages and food, in the face of ongoing challenges in the out of home
industry in some parts of the world. Emerging markets, which represent
around a third of Nestlé Professional's sales, delivered double-digit
organic growth. In beverages, our investment behind our proprietary systems
Nescafé Alegria and Nescafé Milano delivered accelerated growth, whilst
Viaggi by Nescafé, building on its success in France, was rolled out to
customers in the UK, Italy and Switzerland.
* Nespresso continued to deliver high double-digit growth in a tough economic
and competitive environment. It launched a limited edition, Naora,
relaunched Kazaar due to popular demand, and continued to expand with new
boutiques around the world. As announced, Nespresso is building a third
factory in Switzerland in order to meet growing demand.
* Nestlé Health Science (NHSc) delivered a solid performance with double-digit
growth in North America and the emerging markets. The work of the Nestlé
Institute of Health Sciences is enhancing our capabilities to address
specific medical conditions through personalised nutritional solutions, as
do the acquisitions, Prometheus and Vitaflo, in both gastro-intestinal
diagnostics and the treatment of metabolic disorders. Following the period
close, NHSc acquired a stake in Accera. Its key brand Axona, a medical food
on the market in the USA, is for the clinical dietary management of mild to
moderate Alzheimer's disease.
* Cereal Partners Worldwide continued to deliver strong growth in emerging
markets, in contrast to softness across Europe. The realignment of Beverage
Partners Worldwide is on track. The pharmaceutical joint ventures, Galderma
and Laboratoires innéov, posted double-digit growth driven by dermatology.
Outlook
We expect the tough trading environment, especially in developed markets, to
continue in the second half. However, we have started the year in line with our
expectations. The actions and initiatives we have in place combined with some
expected easing in input cost pressures in the second half allow us to confirm
our guidance for the full year: we are well positioned to deliver the Nestlé
Model of organic growth of 5% to 6%, improved margin and underlying earnings per
share in constant currencies.
Contacts
Media: Robin Tickle Tel.: +41 21 924 22 00
Investors: Roddy Child-Villiers Tel.: +41 21 924 36 22
Annex
Half-year sales and Trading operating profit margins overview
+---------------------+---------------+------------+---------------------------+
| | | | Trading operating profit |
| | | | margins |
| +---------------+------------+------------+--------------+
| |Jan.-June 2012 | Jan.-June | Jan.-June | Change vs |
| | Sales | 2012 | 2012 |Jan.-June 2011|
| |in CHF millions| Organic | (%) | |
| | | Growth | | |
| | | (%) | | |
| | | | | |
| | | | | |
+---------------------+---------------+------------+------------+--------------+
|By operating segment |
+---------------------+---------------+------------+------------+--------------+
| | | | | |
| | 13'419 | +5.7 | 17.4 | +10 bps |
|· Zone Americas | | | | |
+---------------------+---------------+------------+------------+--------------+
|· Zone Europe | 7'379 | +2.4 | 15.4 | -100 bps |
+---------------------+---------------+------------+------------+--------------+
|· Zone Asia, Oceania,| 9'192 | +11.6 | 18.9 | -60 bps |
|Africa | | | | |
+---------------------+---------------+------------+------------+--------------+
|Nestlé Waters | 3'555 | +5.6 | 10.0 | +140 bps |
+---------------------+---------------+------------+------------+--------------+
|Nestlé Nutrition | 3'831 | +5.7 | 20.6 | -50 bps |
+---------------------+---------------+------------+------------+--------------+
|Other | 6'721 | +9.6 | 17.6 | +10 bps |
+---------------------+---------------+-+----------+-+----------+--------------+
|Total Group | 44'097 | +6.6 | 15.0 | -10 bps |
+---------------------+-----------------+------------+----------+--------------+
|By product |
+---------------------+-----------------+------------+----------+--------------+
|Powdered and liquid| 9'620 | +10.8 | 23.7 | -60 bps |
|beverages | | | | |
+---------------------+-----------------+------------+----------+--------------+
|Water | 3'558 | +5.7 | 9.9 | +130 bps |
+---------------------+-----------------+------------+----------+--------------+
|Milk products and ice| 9'078 | +6.7 | 14.4 | +30 bps |
|cream | | | | |
+---------------------+-----------------+------------+----------+--------------+
|Nutrition &| 5'207 | +6.4 | 18.6 | -40 bps |
|HealthCare | | | | |
+---------------------+-----------------+------------+----------+--------------+
|Prepared dishes and| 6'888 | +1.5 | 13.3 | -10 bps |
|cooking aids | | | | |
+---------------------+-----------------+------------+----------+--------------+
|Confectionery | 4'560 | +6.4 | 14.0 | -210 bps |
+---------------------+-----------------+------------+----------+--------------+
|PetCare | 5'186 | +8.2 | 20.7 | +70 bps |
+---------------------+-----------------+------------+----------+--------------+
|Total Group | 44'097 | +6.6 | 15.0 | -10 bps |
+---------------------+---------------+-+----------+-+----------+--------------+
| | | | | |
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Unternehmensinformation / Kurzprofil:
Datum: 09.08.2012 - 07:18 Uhr
Sprache: Deutsch
News-ID 173067
Anzahl Zeichen: 22980
contact information:
Town:
Vevey
Kategorie:
Business News
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