Nestle reports organic growth reached 7.6%, with real internal growth (RIG) of 2.4% and pricing of 5.2%. Growth was broad-based across most geographies and categories, with increased pricing, continued momentum in retail sales and a further recovery in out-of-home channels.
Total reported sales increased by 5.4% to CHF 22.2 billion (3M-2021: CHF 21.1 billion). Foreign exchange decreased sales by 0.8%. Net divestitures had a negative impact of 1.3%.
Portfolio management on track. In April, Nestlé Health Science completed the acquisition of a majority stake in Orgain, a leader in plant-based nutrition.
Full-year 2022 outlook confirmed: we expect organic sales growth around 5% and underlying trading operating profit margin between 17.0% and 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
Mark Schneider, Nestlé CEO, commented:“In these first months of the year, the war in Ukraine has caused unspeakable human suffering. We remain focused on supporting our colleagues there and providing humanitarian relief, while standing with the international community in the call for peace.
Amid this challenging environment, we delivered strong organic sales growth with resilient RIG. We stepped up pricing in a responsible manner and saw sustained consumer demand. Cost inflation continues to increase sharply, which will require further pricing and mitigating actions over the course of the year. The Nestlé team addressed these headwinds and advanced our long-term strategy and sustainability objectives with agility and determination. We confirm our guidance for the year.”
Organic growth was 7.6%, with RIG of 2.4%. Pricing increased to 5.2% to reflect significant cost inflation. Organic growth now excludes the Russia region, given significantly disrupted trading conditions and Nestlé’s decision to focus on providing essential food.
Growth was broad-based across most geographies and categories. Organic growth was 6.7% in developed markets, with increased pricing and resilient RIG following a high base of comparison in 2021. Organic growth in emerging markets was 8.8%, with strong RIG and pricing.
By product category, Purina PetCare was the largest contributor to organic growth led by its science-based and premium brands Purina ONE, Purina Pro Plan and Fancy Feast as well as veterinary products. Coffee saw high single-digit growth fueled by continued demand for Nescafé, Starbucks and Nespresso. Sales in confectionery grew at a double-digit rate, with strong growth for KitKat and gifting products. Water posted double-digit growth, driven by a further recovery of out-of-home channels and premium brands S.Pellegrino and Perrier. Dairy reported mid single-digit growth, with strong sales developments in coffee creamers and ice cream as well as premium and fortified milks. Growth in Infant Nutrition reached a mid single-digit rate, supported by improved sales developments in the Americas and Europe. Nestlé Health Science recorded mid single-digit growth, reflecting high demand for Medical Nutrition and healthy-aging products. Prepared dishes and cooking aids posted low single-digit growth following a high base of comparison in 2021, with continued strong demand for Maggi and Garden Gourmet.
By channel, organic growth in retail sales was 5.9%. Within retail, e-commerce sales grew by 5.0%, building on very strong growth of 39.6% in the first quarter of 2021. Organic growth in out-of-home channels reached 35.6%, with sales exceeding 2019 levels.
Net divestitures decreased sales by 1.3%, largely related to the Nestlé Waters North America transaction, which closed on March 31, 2021. Divestitures were partially offset by acquisitions, including the core brands of The Bountiful Company. The impact on sales from foreign exchange was negative at 0.8%. Total reported sales increased by 5.4% to CHF 22.2 billion.
On April 1, 2022, Nestlé Health Science completed the acquisition of a majority stake in Orgain, a leader in plant-based nutrition. Orgain complements Nestlé Health Science’s existing portfolio of nutrition products that support healthier lives. The deal is expected to be slightly accretive to Nestlé’s organic growth, while slightly dilutive to the Group’s underlying trading profit margin in 2022. The agreement includes the option for Nestlé Health Science to fully acquire Orgain in 2024.
Zone North America
Organic growth was 9.9%, with RIG of 1.4%. Pricing reached 8.5%. Net divestitures reduced sales by 13.6%, as the divestment of the Nestlé Waters North America brands more than offset the acquisition of Essentia Water. Foreign exchange had a positive impact of 2.2%. Reported sales in Zone North America decreased by 1.5% to CHF 5.8 billion.
Organic growth in Zone North America was close to a double-digit rate, supported by increased pricing, strong momentum in e-commerce and a further recovery of out-of-home channels. The Zone saw continued broad-based market share gains, led by pet food, coffee and creamers.
By product category, Purina PetCare was the largest growth contributor, supported by strong momentum in e-commerce and premium brands, Purina ONE, Purina Pro Plan and Fancy Feast. Nestlé Professional and Starbucks out-of-home products posted double-digit growth. The beverages category reported high single-digit growth, with strong demand for Starbucks at-home products and Coffee mate. Sales in water grew at a double-digit rate, fueled by a recovery for premium brands, S.Pellegrino and Perrier as well as continued strong demand for Essentia. Growth in Infant Nutrition reached a double-digit rate, reflecting supply shortages in the market. Frozen food saw positive growth, despite supply chain constraints and a high base of comparison in 2021. Positive sales developments in frozen pizza and Hot Pockets were partially offset by negative growth for frozen meals. Confectionery in Canada reported double-digit growth, led by KitKat.
Read more of the latest industry news and developments here: April 2022 Single Issue form – International Confectionery Magazine (in-confectionery.com)
Editor, International Confectionery
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