Nestlé reports organic growth of 2.3% but sales down 0.3%

2 Aug 2017

Nestlé has reported half-year results for 2017. Organic growth was 2.3%, with 1.4% real internal growth (RIG) and 0.9% pricing, but total reported sales were CHF 43.0 billion, down 0.3%.

Nestlé reports organic growth of 2.3% but sales down 0.3%

Nestlé has reported half-year results for 2017. Organic growth was 2.3%, with 1.4% real internal growth (RIG) and 0.9% pricing. Sales were impacted by net divestments of -2.3% (mainly due to the creation of the Froneri JV) and foreign exchange (-0.3%). Total reported sales were CHF 43.0 billion, down 0.3%.

Underlying trading operating profit margin increased by 10 basis points in constant currency, stable at 15.8% on a reported basis. Due to increased restructuring activity the trading operating profit margin decreased by 20 basis points in constant currency and by 30 basis points to 15.0% on a reported basis. Underlying earnings per share increased by 3.4% in constant currency and by 2.1% to CHF 1.68 on a reported basis.

2017 full-year guidance was confirmed with organic growth likely to be in the lower half of the 2-4% range; stable trading operating profit margin in constant currency as a result of considerable increase in restructuring costs; underlying earnings per share in constant currency and capital efficiency are expected to increase

“We are pleased with our value creation progress in the first half of 2017,” said Mark Schneider, Nestlé CEO. “This includes solid operational improvements as well as portfolio management choices and our decision to increase balance sheet efficiency. Organic growth in the first half did not fully meet our expectations. While volume growth remains at the high end of our industry, pricing continues to be soft. Asia and Africa confirmed their positive growth momentum. Western Europe experienced a volume decline, which we consider largely transitory. North America and Latin America saw a slight improvement in organic growth, mainly driven by volume. Our coffee, water and petcare businesses confirmed their growth potential with solid first-half results.”

“Profitability is in line with our expectations, as restructuring savings and efficiencies have offset higher commodity costs. We are accelerating our margin improvement initiatives. We confirm our 2017 guidance with organic growth likely to be in the lower half of the 2-4% range. Our 2020 midrange expectations for organic growth remain unchanged.”