Press Release: Nestle: Nestlé reports half-year results for 2023

[Ad hoc announcement pursuant to Art. 53 LR]

This press release is also available in Français (pdf) https://www.globenewswire.com/Tracker?data=YM730gV4ZthxCaHlyluRL0SYLuXpR8THYOeMQCORzQzD17GfvwYWt0nn6wmMeEEXoBQ-QFkbn24Mkkv2bx_EYTYR1KXfgi5ztw1jXNleXpCmoC_IWabtYx2IJtH0rmstfC8RWU3hk61a-g9jrlGJ4z2DjTSEp6gNS4zOrPldPCsVKpD3OoRhh_CYamE5gPkR and Deutsch (pdf) https://www.globenewswire.com/Tracker?data=Hlm1SzFKsX7Y-ZLdW0lxbvyQysKEcdaObbLDyu0VVkrDCuXfsuNaxHLkozlmCM6VFrdFOHHnZ0OgR3MJK7vHJUefuIkt0SoTnuoLma-2CMBYRd0gckMQBGdwCu6KC4KuAwL6s9EPYGx4nF9wvbX93daWa0nMEGChy6moX1ikRTqgI2RvlUKMOv2_sxHuBmhj

Follow today's event live

14:00 CEST Investor call audio webcast https://www.globenewswire.com/Tracker?data=jpaL01ftaWNSgHmRvfkh0_76s6OqeKsL6iECCKDcUiA_zxqi4iQx67n0YT59CwxgL3ny9NAWPnogHU1qt-Rm-DSkwwSbLmd6cfZ8N51FkVn_qaQflcQWZH8Z0WUPNhU-cx7vPdOBFMTqz7JlolJ49IccrkXe5KO-w8jzJVz77A4=

Full details in Events https://www.globenewswire.com/Tracker?data=Hc8BUo6CP8o8b57dVknaOqLG_jmGOwwb3eIEn3t2zX8RQPJBgbuc7nlat4NlfLb1NEChbI4BtofjUDdYFyP_QJfP8lzLfeXognbY7zS7eJ71eR-AiDIaIgKm_bONhrtIbulVLSQhXt0ZZZc56jmZESkemFq5vcezy1TdMQ7u6rk=

Report published today

Half-Year Report (pdf) https://www.globenewswire.com/Tracker?data=TM3J66bLODtPAI25kXTVvv-Ik6iePkh0Of0GyuP7vQdNl6mrmMipZumD8JFAOfVRQ3u_1KfZqFDvT_E4bzogWPWMy5rFz38bLX9rckfctguodyTkbalv5RJUP4Q_GnVnnDNxp-waOBHEJi9WkV9GuiARz2GQ4rNN8K-hyUC7MtA=

Other language versions available in Publications https://www.globenewswire.com/Tracker?data=TwbdIVW85hULmpPFBysLDdSHEEGsI3RyV8jSiGTfos5wd4tDta5SDThAATv7o_LE-BSbQxjC6QHk9kf73TgKnzNtqDbxSfkb8QLTCqpf7ViDJ367Rlq5qvAzRIoeFwfF

.............

Vevey, July 27, 2023

Nestlé reports half-year results for 2023

-- Organic growth reached 8.7%, with pricing of 9.5% and real internal

growth (RIG) of - 0.8%. Growth was broad-based across geographies and

categories.

-- Total reported sales increased by 1.6% to CHF 46.3 billion (6M-2022: CHF

45.6 billion). Foreign exchange decreased sales by 6.7%. Net acquisitions

had a negative impact of 0.4%.

-- The underlying trading operating profit (UTOP) margin was 17.1%, up 20

basis points on a reported basis and 30 basis points in constant

currency. The trading operating profit (TOP) margin increased by 120

basis points to 15.9% on a reported basis, reflecting one-off items in

the prior year.

-- Underlying earnings per share increased by 11.1% in constant currency and

increased by 4.1% on a reported basis to CHF 2.43. Earnings per share

increased by 10.6% to CHF 2.13 on a reported basis.

-- Free cash flow increased by CHF 1.9 billion to CHF 3.4 billion, mainly

reflecting lower inventory levels.

-- Full-year 2023 outlook updated: we are increasing organic sales growth

guidance to a range of 7% to 8%. The underlying trading operating profit

margin is expected to be between 17.0% and 17.5%. Underlying earnings per

share in constant currency is expected to increase between 6% and 10%.

Mark Schneider, Nestlé CEO, commented: "We pursued our strategic priorities with discipline and focus in a fast-evolving consumer environment. Based on the strong performance in the first half of the year we upgrade our organic sales growth outlook for 2023. At-home consumption post-COVID has now normalized, removing a growth drag on some of our categories. Out-of-home channels continue to see strong growth momentum.

For the remainder of the year, we are confident that we will deliver a positive combination of volume and mix, an improvement in gross margin and a significant increase in marketing investments. Combined with ongoing portfolio management and optimization as well as the continued implementation of our sustainability initiatives, we are well-positioned to grow and to generate value for our stakeholders."

Zone Zone Zone Nestlé

Total North Zone Zone Latin Greater Health Other

Group America Europe AOA America China Science Nespresso Businesses

Sales

6M-2023

(CHF m) 46 293 12 553 9 467 9 060 6 082 2 548 3 318 3 128 137

Sales

6M-2022

(CHF m) 45 580 12 138 9 283 9 335 5 659 2 677 3 167 3 190 131

Real

internal

growth

(RIG) - 0.8% - 1.0% - 2.4% 0.1% - 0.9% 1.3% - 1.9% 0.8% 8.3%

Pricing 9.5% 11.0% 11.3% 9.2% 12.5% 3.4% 5.3% 3.7% 1.3%

Organic

growth 8.7% 10.0% 8.9% 9.3% 11.6% 4.7% 3.5% 4.5% 9.6%

Net M&A - 0.4% - 2.1% - 0.9% - 0.1% 0.1% 0.0% 6.0% - 0.8% 0.0%

Foreign

exchange - 6.7% - 4.4% - 6.0% - 12.1% - 4.3% - 9.5% - 4.8% - 5.6% - 4.3%

Reported

sales

growth 1.6% 3.4% 2.0% - 2.9% 7.5% - 4.8% 4.7% - 1.9% 5.3%

6M-2023

Underlying

TOP

Margin 17.1% 21.6% 16.6% 22.8% 19.8% 16.6% 13.0% 21.7% - 12.5%

6M-2022

Underlying

TOP

Margin 16.9% 18.8% 17.3% 23.5% 21.1% 15.0% 13.7% 24.3% - 3.6%

Group sales

Organic growth was 8.7%. Pricing was 9.5%, reflecting the impact of cost inflation over the last two years. RIG was - 0.8%, with a negative impact of around 60 basis points from portfolio optimization actions. Remaining capacity constraints also limited RIG. Overall, demand elasticity was limited in the context of pricing actions.

Growth was broad-based across most geographies and categories. In developed markets, organic growth was 8.0%, led by pricing with negative RIG. In emerging markets, organic growth was 9.6%, driven by pricing and flat RIG.

By product category, Purina PetCare was the largest contributor to organic growth, with strong momentum for both wet and dry offerings. Purina ONE, Purina Pro Plan and Friskies all recorded double-digit growth. Coffee saw high single-digit growth, with positive sales developments across brands and a continued recovery for out-of-home channels. Infant Nutrition posted double-digit growth, with broad-based contributions across brands and geographies. Dairy reported high single-digit growth, with strong demand for coffee creamers and affordable fortified milks. Confectionery recorded double-digit growth, fueled by a strong sales development for KitKat. Prepared dishes and cooking aids posted mid single-digit growth, led by Maggi. Nestlé Health Science recorded low single-digit growth, with a return to positive growth for vitamins, minerals and supplements in the second quarter, led by Garden of Life and Pure Encapsulations. Despite temporary capacity constraints for Perrier, water posted mid single-digit growth led by S.Pellegrino and Acqua Panna.

By channel, organic growth in retail sales remained robust at 8.0%. E-commerce sales grew by 13.5%, reaching 16.7% of total Group sales. Organic growth of out-of-home channels was 17.1%.

Net divestitures decreased sales by 0.4%, largely related to the divestment of a majority stake in Freshly as well as the disposal of the Gerber Good Start infant formula brand. The impact on sales from foreign exchange was negative at 6.7%, following broad-based appreciation of the Swiss Franc. Total reported sales increased by 1.6% to CHF 46.3 billion.

Underlying Trading Operating Profit

Underlying trading operating profit increased by 2.9% to CHF 7.9 billion. The underlying trading operating profit margin reached 17.1%, an increase of 20 basis points on a reported basis and 30 basis points in constant currency.

Gross margin decreased by 40 basis points to 45.6%, following significant inflation for commodity and packaging costs as well as salaries and wages. Pricing, cost efficiencies and portfolio optimization helped to partly offset the impact of cost inflation. Compared to the second half of 2022, gross margin improved by 110 basis points.

Distribution costs as a percentage of sales decreased by 50 basis points to 8.6% of sales, mainly as a result of lower freight and energy costs.

Marketing and administration expenses as a percentage of sales were 18.6%. Within this line item, advertising and marketing expenses were 7.1% of sales, increasing by 50 basis points compared to the second half of 2022. In constant currency, advertising and marketing expenses increased by 7.5% compared to the prior year.

Net other trading items decreased to CHF 0.6 billion from CHF 1.0 billion, reflecting one-off items in the prior year, particularly asset impairments. As a result, trading operating profit increased by 10.0% to CHF 7.4 billion. The trading operating profit margin reached 15.9%, an increase of 120 basis points on a reported basis and 130 basis points in constant currency. This increase reflects one-off items in the prior year and an improved underlying trading operating profit margin in the current year.

Net Financial Expenses and Income Tax

Net financial expenses increased to CHF 697 million. The average cost of net debt was 2.6% compared to 1.9% in the first half of 2022.

The Group reported tax rate decreased by 90 basis points to 23.3% as a result of one-off items. The underlying tax rate decreased by 30 basis points to 20.6%, mainly due to the geographic and business mix.

Net Profit and Earnings Per Share

Net profit increased by 7.7% to CHF 5.6 billion. Net profit margin increased by 70 basis points to 12.2% on a reported basis and by 90 basis points in constant currency. The increase was mainly due to one-off items in the prior year. As a result, earnings per share increased by 10.6% to CHF 2.13 on a reported basis.

(MORE TO FOLLOW) Dow Jones Newswires

July 27, 2023 01:15 ET (05:15 GMT)