First half of 2009: Nestlé delivers 3.5% organic growth combined with
a 30 bps EBIT margin improveme
(Thomson Reuters ONE) - Corporate news announcement processed and transmitted by Hugin AS.The issuer is solely responsible for the content of this announcement. ------------------------------------------------------------------------------------ [Follow the investor call audio webcast at 0800 CET]+-------------------------------------------------------------------+| | | Change vs. || | | Jan.-June 2008 ||--------------+------------------+---------------------------------|| CHF Millions | Reported | Organic | Reported | Constant || | Jan.-June | growth | | Currencies || | 2009 | | | ||--------------+------------------+---------+----------+------------|| Sales | | | | ||--------------+------------------+---------+----------+------------|| Group | 52 267 | +3.5% | -1.5% | +2.8% ||--------------+------------------+---------+----------+------------|| Food & | 48 313 | +3.4% | -2.0% | +2.7% || Beverages | | | | ||--------------+------------------+---------+----------+------------|| EBIT margin | | | | ||--------------+------------------+---------+----------+------------|| Group | 14.1% | - | +30 bps | +30 bps ||--------------+------------------+---------+----------+------------|| Food & | 12.4% | - | +10 bps | +20 bps || Beverages | | | | ||--------------+------------------+---------+----------+------------|| Earnings Per | | | | || Share | CHF 1.46 | - | +3.5% | +8.5% || Underlying | | | | |+-------------------------------------------------------------------+All calculations based on non-rounded figures * Nestlé Group: 3.5% organic growth, 0.5% real internal growth EBIT margin 14.1%, +30 bps both in reported and constant currencies * Food and Beverages: 3.4% organic growth, 0.1% real internal growth EBIT margin 12.4%, +10 bps reported, +20 bps in constant currencies * Net profit: CHF 5.1 billion, 9.7% of sales * Underlying earnings per share: CHF 1.46, +3.5% reported, +8.5% in constant currencies * Operating cash flow: CHF 6.4 billion, up from CHF 3.5 billion in the first half of 2008Paul Bulcke, CEO of Nestlé: "With 3.5% organic growth and a 30 basispoint EBIT margin improvement, Nestlé delivered a combination ofgrowth and increased profitability in the first half of the year, andthis in a very challenging business environment. The success of ourefficiency initiatives enabled increased investment inconsumer-facing marketing and R&D, which leads me to expect anacceleration in organic growth in the second half of 2009.Furthermore, Nestlé's healthy cash flow over the first half allowedus to return about CHF 6.5 billion in cash to shareholders. The Groupremains committed to its strategic direction focused on sustainable,long-term profitable growth and is well placed to captureopportunities as economic conditions improve."Group sales, profitability and financial positionVevey, 12 August 2009 - In the first six months of 2009, Nestléachieved organic growth of 3.5%, including 0.5% real internal growth.Divestitures, net of acquisitions, reduced Group sales by 0.7%,whilst the currency effect resulted in a 4.3% reduction due to thestrength of the Swiss franc compared to many other currencies. Thesefactors resulted in a decline in Nestlé Group sales of 1.5%, to CHF52.3 billion. Food and Beverages' sales reached CHF 48.3 billion,with organic growth of 3.4%, including real internal growth of 0.1%.This builds on the strong first half of 2008 when Nestlé achievedorganic growth of 8.9%.The Group's EBIT grew to CHF 7.4 billion, resulting in an increasedEBIT margin of 14.1% of sales. This represents a 30 basis pointsimprovement, both in constant and reporting currencies. Food andBeverages' EBIT margin was up 20 basis points in constant currenciesand 10 basis points reported, to 12.4%.The acceleration of Nestlé Continuous Excellence, the Group'sefficiency programme, contributed to a 30 basis points decline inboth the cost of goods sold and distribution costs. The Group'scommitment to brand building, including innovation and renovation, isreflected in the 10 basis points increase in consumer-facingmarketing and a 20 basis points increase in Research and Development.Nestlé's net profit margin reached 9.7% of sales. Underlying earningsper share grew by 3.5% to CHF 1.46, up 8.5% in constant currencies.On 30 June 2009, the Group's operating cash flow was CHF 6.4 billion,significantly up from CHF 3.5 billion in the first half of 2008,reflecting its commitment to capital efficiency. The Group's net debtwas CHF 17.4 billion, down from CHF 25.8 billion at the end of June2008. The continuing share buyback programme and the payment of thedividend together resulted in about CHF 6.5 billion of cash returnedto shareholders in the first half of 2009.Share buyback programmeOn 28 July 2009, Nestlé completed the first stage of its CHF 25billion share buyback programme, amounting to CHF 15 billion. Asecond stage of this programme, amounting to CHF 10 billion, willstart on 13 August 2009. Nestlé's CHF 25 billion share buybackprogramme is foreseen to be completed by end of 2010.Sales and EBIT margin by operating segmentIn the first half of 2009, the organic growth of Nestlé's overallFood and Beverages activities amounted to 0.5% in Europe, 4.6% in theAmericas and 6.6% in Asia, Oceania and Africa.+-------------------------------------------------------------------+| | Jan.-June | Jan.-June | EBIT margins ||------------------| 2009 | 2009 |------------------------|| | Sales | Organic | Jan.-June | Change vs || | in CHF | Growth | 2009 | Jan.-June || | millions | (%) | | 2008 ||------------------+-----------+-----------+-----------+------------|| Food & Beverages | | | | || * Zone Europe | 10 791 | + 0.2 | 11.8% | 0 bps ||------------------+-----------+-----------+-----------+------------|| * Zone Americas | 15 197 | + 6.6 | 15.2% | +20 bps ||------------------+-----------+-----------+-----------+------------|| * Zone Asia, | 7 733 | + 5.9 | 16.7% | +60 bps || Oceania, | | | | || Africa | | | | ||------------------+-----------+-----------+-----------+------------|| Nestlé Waters | 4 723 | - 2.9 | 8.3% | +110 bps ||------------------+-----------+-----------+-----------+------------|| Nestlé Nutrition | 4 995 | + 1.5 | 17.4% | -110 bps ||------------------+-----------+-----------+-----------+------------|| Other Food & | 4 874 | + 6.1 | 16.1% | +20 bps || Beverages | | | | ||------------------+-----------+-----------+-----------+------------|| Total Food & | 48 313 | + 3.4 | 12.4% | +10 bps || Beverages | | | | ||------------------+-----------+-----------+-----------+------------|| Pharma | 3 954 | + 5.0 | 34.6% | +80 bps ||------------------+-----------+-----------+-----------+------------|| Group Total | 52 267 | + 3.5 | 14.1% | +30 bps |+-------------------------------------------------------------------+All calculations based on non-rounded figuresGlobally managed Nestlé Professional activities have been taken outof the Zones and included in "Other Food & Beverages". 2008comparatives have been restated.Zone Europe: sales of CHF 10.8 billion, 0.2% organic growth and -1.5%real internal growth. The EBIT margin was 11.8%, the same level as ayear ago. Savings from the acceleration of the Nestlé ContinuousExcellence Programme compensated temporary volume softness,additional pension costs and continued investment in marketing. GreatBritain and Eastern Europe, particularly Russia and the Ukraine, aswell as the regional petcare business and soluble coffee, achievedhigh organic growth.Zone Americas: sales of CHF 15.2 billion, 6.6% organic growth and1.9% real internal growth. The EBIT margin improved by 20 basispoints due to growth and significant cost savings from the NestléContinuous Excellence Programme. Both North and Latin Americaexperienced strong organic growth, particularly the US, Brazil andMexico. Soluble coffee and beverages, frozen food and petcare didparticularly well.Zone Asia, Oceania and Africa: sales of CHF 7.7 billion, 5.9% organicgrowth and 2.2% real internal growth. The EBIT margin improved by 60basis points due to growth leverage and operational efficiencies.There were good performances across the emerging markets with Africa,China, India and the Philippines, amongst others, achievingdouble-digit organic growth. Soluble coffee, ambient culinary,powdered and ready-to-drink beverages, petcare and chocolate alldelivered strong organic growth. Popularly Positioned Products(PPPs), aimed at emerging consumers, continued to achievedouble-digit organic growth.Nestlé Waters: sales of CHF 4.7 billion, -2.9% organic growth and-3.7% real internal growth. The EBIT margin increased by 110 basispoints, benefiting from lower oil-related costs, efficiencies andsupply chain optimisation. The organic growth reflects the currentenvironment in the bottled water industry as a whole, particularly inWestern Europe and North America. The emerging market businessesachieved double-digit organic growth. Nestlé Pure Life maintainedgood momentum around the world and drove market share gains in theUS.Nestlé Nutrition: sales of CHF 5.0 billion, 1.5% organic growth and-2.4% real internal growth. The EBIT margin decreased by 110 basispoints, reflecting upfront investments in media campaigns andincreased support for the accelerating NaturNes launch in Europe. Alldivisions accelerated during the first half from their first quarterperformance. The infant nutrition business showed signs of improvingmomentum in Europe and the US during the period, and maintained goodorganic growth in Latin America, Asia, Oceania and Africa, supportedby a strong innovation and renovation pipeline.Other Food and Beverages: sales of CHF 4.9 billion, 6.1% organicgrowth and 2.4% real internal growth. The EBIT margin increased by 20basis points due to growth leverage and operational efficiencies.Cereal Partners Worldwide and Nespresso continued to perform well.Nestlé Professional was affected by a softer out-of-home market indeveloped countries but delivered strong performances in manyemerging markets such as Greater China, Philippines and the MiddleEast, resulting in virtually flat organic growth.Pharma: sales of CHF 4.0 billion, 5.0% organic growth and 5.1% realinternal growth. The EBIT margin improved by 80 basis points, mainlydue to growth, operational efficiencies and a positive product mix.Sales and EBIT margin by product+-------------------------------------------------------------------+| | Jan.-June | Jan.-June | EBIT margins ||-----------------| 2009 Sales | 2009 |-----------------------|| | in CHF | Organic | Jan.-June | Change vs || | millions | Growth (%) | 2009 | Jan.-June || | | | | 2008 ||-----------------+------------+------------+-----------+-----------|| Powdered and | 9 242 | + 9.7 | 21.8% | -110 bps || liquid | | | | || beverages | | | | ||-----------------+------------+------------+-----------+-----------|| Water | 4 726 | - 2.9 | 8.3% | +110 bps ||-----------------+------------+------------+-----------+-----------|| Milk products | 9 628 | 0.0 | 11.0% | -20 bps || and ice cream | | | | ||-----------------+------------+------------+-----------+-----------|| Nutrition | 4 997 | + 1.5 | 17.4% | -110 bps ||-----------------+------------+------------+-----------+-----------|| Prepared dishes | 8 221 | + 1.0 | 12.2% | +90 bps || and cooking | | | | || aids | | | | ||-----------------+------------+------------+-----------+-----------|| Confectionery | 5 118 | + 4.3 | 11.3% | +60 bps ||-----------------+------------+------------+-----------+-----------|| PetCare | 6 381 | + 9.1 | 15.7% | +120 bps ||-----------------+------------+------------+-----------+-----------|| Total Food & | 48 313 | + 3.4 | 12.4% | +10 bps || Beverages | | | | ||-----------------+------------+------------+-----------+-----------|| Pharmaceutical | 3 954 | + 5.0 | 34.6% | +80 bps || products | | | | ||-----------------+------------+------------+-----------+-----------|| Group Total | 52 267 | + 3.5 | 14.1% | +30 bps |+-------------------------------------------------------------------+All calculations based on non-rounded figuresThe slight difference in the figures for water and nutrition betweenthe "Sales by operating segment" and "Sales by product" tables is dueto the fact that some water and nutrition products are also sold bymanagement segments other than Nestlé Waters and Nestlé Nutrition.Powdered and liquid beverages: sales of CHF 9.2 billion, 9.7% organicgrowth and 4.7% real internal growth. The EBIT margin declined by 110basis points, mainly due to the increased support for the enlargedNescafé Dolce Gusto roll-out and raw material cost pressures. Thestrong growth confirms the dynamism of Nestlé's billionaire brandsNescafé, Nesquik, Nespresso, Milo and Nestea. These brands benefitedfrom a strong pipeline of new products, ranging from PPP offerings tosuper-premium. The successful roll-out of Nescafé Dolce Gustocontinued and allowed Nestlé to increase its market share in thefast-growing portioned coffee segment. Nespresso continued itsoutstanding performance with organic growth over 25%. Overall, theproduct segment achieved double-digit growth in Eastern Europe, theAmericas, Asia, Oceania, the Middle East and Africa.Milk products and ice cream: sales of CHF 9.6 billion, 0% organicgrowth and -1.3% real internal growth. The EBIT margin declined by 20basis points due to lower pricing in ambient dairy in anticipation offalling raw material costs. The EBIT margin in ice cream increaseddue to efficiencies and the exit from underperforming markets. Therewere the first signs of a pick up in consumer demand for ambientdairy in emerging markets after the high prices seen in 2008. Icecream's organic growth improved over the first half of 2009 thanks toinnovations such as Häagen Dazs 5 in North America and the successfullaunch of Nestlé Extrême all natural in Switzerland.Prepared dishes and cooking aids: sales of CHF 8.2 billion, 1.0%organic growth and 0% real internal growth. The EBIT margin improvedby 90 basis points due to product range rationalisation. Maggiachieved double-digit organic growth in Africa, Asia and EasternEurope. In the US, Hot Pockets, Stouffer's and Lean Cuisine frozenprepared meals delivered a good first half performance. In Europe,frozen prepared meals were weak while the pizza business continued toperform well.Confectionery: sales of CHF 5.1 billion, 4.3% organic growth and-1.3% real internal growth. The EBIT margin increased by 60 basispoints due to efficiencies and product lines streamlining. Kit Katcontinued its excellent performance with strong organic growth andmarket share gains. The UK business continued to perform well withits focus on its seven key brands, as did the US. Overall, theemerging markets in Asia, Africa, the Middle East and Latin Americacontinued to deliver strong organic growth.PetCare: sales of CHF 6.4 billion, 9.1% organic growth and 2.7% realinternal growth. The EBIT margin increased by 120 basis points due tocontinued growth of high value-added strategic brands, together withpricing to offset input cost pressures. The global petcare business'excellent performance was driven by resilient demand for key premiumand super premium brands such as One, Beneful, Cat Chow, Pro Plan andFriskies.OutlookNestlé's first half performance of 3.5% organic growth combined witha 30 basis points EBIT margin improvement reflects the Group'sstrength in challenging times while making it fitter for the future.Indeed, Nestlé's successful efficiency programmes enabled it both toinvest for growth and deliver this EBIT margin improvement. The Groupexpects volume-driven organic growth to accelerate in the second halfas well as an EBIT margin improvement in constant currencies for thefull year. The Group remains committed to its strategic directionfocused on sustainable, long-term profitable growth and is wellplaced to capture opportunities as economic conditions improve.The investor call will be webcast live today at 0800 CET. Anon-demand webcast will also be available. Full details in our Eventssection.Contacts Media RobinTickle Tel.: +41 (0)21 92422 00 Investors RoddyChild-Villiers Tel.: +41 (0)21 924 3622 --- End of Message ---Nestlé S.A.Avenue Nestlé 55 Vevey WKN: 887208; ISIN: CH0012056047; Index: SLCI, SMI, SPI, SMIEXP;Listed: Main Market in SIX Swiss Exchange;
Datum: 12.08.2009 - 07:29 Uhr
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