Nestlé reports half-year results for 2021, raising full year organic sales growth by reaching 8.1%. In May, Nestlé announced it will acquire core brands of The Bountiful Company for USD 5.75 billion. The Bountiful Company is a highly attractive and growing global nutrition and supplement category.
- Organic growth reached 8.1%, with real internal growth (RIG) of 6.8% and pricing of 1.3%. Growth was supported by continued momentum in retail sales, a return to growth in out-of-home channels, increased pricing and market share gains.
- Total reported sales increased by 1.5% to CHF 41.8 billion (6M-2020: CHF 41.2 billion). Foreign exchange reduced sales by 3.5%, reflecting appreciation of the Swiss franc against most currencies. Net divestitures had a negative impact of 3.1%.
- The underlying trading operating profit (UTOP) margin was 17.4%, unchanged versus the prior year. The trading operating profit (TOP) margin decreased by 20 basis points to 16.7%.
- Underlying earnings per share increased by 10.5% in constant currency and increased by 8.3% on a reported basis to CHF 2.17. Earnings per share increased by 3.2% to CHF 2.12 on a reported basis.
- Free cash flow was CHF 2.8 billion.
- Further progress in portfolio management. In April, Nestlé entered into an agreement to acquire core brands of The Bountiful Company. The transaction is expected to close in August. On July 26, 2021, Nestlé and Starbucks strengthened their collaboration to bring ready-to-drink coffee beverages to select markets across South-East Asia, Oceania and Latin America.
- Full-year 2021 outlook updated: we expect full-year organic sales growth between 5% and 6%. The underlying trading operating profit margin is now expected around 17.5%, reflecting initial time delays between input cost inflation and pricing as well as the one-off integration costs related to the acquisition of The Bountiful Company’s core brands. Beyond 2021, our mid-term outlook for continued moderate margin improvement remains unchanged. Underlying earnings per share in constant currency and capital efficiency are expected to increase this year.
Mark Schneider, Nestlé CEO, commented: “I would like to thank the Nestlé team for their continued commitment to meeting consumer needs and their relentless focus on execution. Organic growth was strong across most geographies and categories, with robust momentum in retail sales and a return to growth in out-of-home channels. Through fast-paced innovation, strong brand support, increased digitalization and stringent portfolio management we have built the foundation for delivering consistent mid single-digit organic growth for years to come.
Nestlé continues to invest for future profitable growth. We are creating a global leader in vitamins, minerals and supplements with the acquisition of The Bountiful Company’s core brands. The expansion of our partnership with Starbucks into ready-to-drink coffee will open new opportunities in a fast-growing segment. Our portfolio choices, strong execution and decisive actions on sustainability enable us to create value for all stakeholders.”
Image caption: Mark Schneider, Chief Executive Officer, Nestlé S.A., Paul Bulcke, Chairman, Nestlé S.A.
Image credit: Nestlé
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Editor, International Confectionery
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