Press Release: Nestle: Nestlé reports nine-month sales for 2023

[Ad hoc announcement pursuant to Art. 53 LR]

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Vevey, October 19, 2023

Nestlé reports nine-month sales for 2023

-- Organic growth reached 7.8%, with pricing of 8.4% and real internal

growth (RIG) of -0.6%. Growth was broad-based across geographies and

categories.

-- Total reported sales decreased by 0.4% to CHF 68.8 billion (9M-2022: CHF

69.1 billion). Foreign exchange decreased sales by 7.4%. Net acquisitions

had a negative impact of 0.8%.

-- Portfolio management progressing. In the third quarter, Nestlé

announced an agreement to acquire a majority stake in Grupo CRM, a

premium chocolate company in Brazil. Nestlé also divested Palforzia,

its peanut allergy treatment business, to Stallergenes Greer.

-- Full-year 2023 outlook confirmed: we expect organic sales growth between

7% and 8% and underlying trading operating profit margin 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: "Our diversified portfolio and differentiated offerings helped us deliver strong organic growth in the first nine months of the year. Growth was driven by pricing as we continued to navigate historic inflation levels. The recovery of our volume and mix is underway. We are seeing the benefits of our portfolio optimization initiatives and increasing marketing investments behind our billionaire brands. These steps underpin our confidence that real internal growth, the sum of volume and mix, will turn positive in the second half of the year and again become the main driver of growth going forward.

At the same time, Nestlé has further strengthened its nutrition strategy and stepped-up its efforts to guide people towards a balanced diet. Actions include providing clear, front-of-pack portion guidance, transparency on the nutritional value of our products and leading marketing-to-children policies. We also set an ambitious target to grow the sales of our more nutritious products by CHF 20-25 billion by 2030."

Zone Zone Zone Nestlé

Total North Zone Zone Latin Greater Health Other

Group America Europe AOA America China Science Nespresso Businesses

Sales

9M-2023

(CHF m) 68 829 19 027 14 144 13 223 9 139 3 624 4 850 4 617 205

Sales

9M-2022

(CHF m) 69 132 19 093 13 968 13 899 8 648 3 843 4 811 4 674 196

Real

internal

growth

(RIG) - 0.6% - 0.9% - 2.3% 0.0% - 0.6% 2.3% - 1.9% 1.6% 8.3%

Pricing 8.4% 8.9% 11.1% 8.6% 10.5% 2.6% 4.4% 3.5% 1.5%

Organic

growth 7.8% 8.0% 8.8% 8.6% 10.0% 4.9% 2.5% 5.2% 9.8%

Net M&A - 0.8% - 2.2% - 2.4% - 0.1% 0.0% 0.1% 3.8% - 0.6% 0.0%

Foreign

exchange - 7.4% - 6.1% - 5.2% - 13.3% - 4.3% - 10.6% - 5.9% - 5.7% - 5.1%

Reported

sales

growth - 0.4% - 0.3% 1.3% - 4.8% 5.7% - 5.7% 0.5% - 1.2% 4.7%

Group sales

Organic growth was 7.8%. Pricing was 8.4%, reflecting the impact of cost inflation over the last two years. RIG was - 0.6%, impacted by portfolio optimization and remaining capacity constraints. In the third quarter, RIG improved to - 0.3%, despite temporary capacity constraints for Perrier and a short-term supply constraint for vitamins, minerals and supplements, which surfaced in August.

Growth was broad-based across most geographies and categories. In developed markets, organic growth was 6.9%, led by pricing with negative RIG. In emerging markets, organic growth was 9.0%, driven by pricing and slightly positive RIG.

By product category, Purina PetCare was the largest contributor to organic growth, with strong momentum across all channels. Purina ONE, Purina Pro Plan and Felix all recorded double-digit growth. Coffee saw high single-digit growth, with positive sales developments across brands and channels. Starbucks products reported strong growth, supported by innovation and the launch of ready-to-drink offerings in South-East Asia and Oceania. Infant Nutrition posted high single-digit growth, with broad-based contributions across brands and geographies. Confectionery recorded double-digit growth, fueled by a strong sales development for KitKat. Dairy reported high single-digit growth, led by coffee creamers and affordable fortified milks. Prepared dishes and cooking aids posted mid single-digit growth, with strong demand for Maggi. Nestlé Health Science recorded low single-digit growth, as continued momentum for Medical Nutrition was partly offset by a sales decline in vitamins, minerals and supplements. Water posted low single-digit growth, impacted by temporary capacity constraints for Perrier.

By channel, organic growth in retail sales remained robust at 7.1%. E-commerce sales grew by 12.7%, reaching 16.6% of total Group sales. Organic growth of out-of-home channels was 15.7%.

Net divestitures decreased sales by 0.8%, 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 7.4%, following broad-based appreciation of the Swiss Franc. Total reported sales decreased by 0.4% to CHF 68.8 billion.

Portfolio Management

Nestlé and private equity firm PAI Partners have completed the transaction to create a joint venture for Nestlé's frozen pizza business in Europe. The effective date is September 1, 2023. Nestlé retains a non-controlling stake with equal voting rights alongside PAI Partners, remaining invested in this business and participating in future growth and value creation in the category.

On September 4, 2023, Nestlé divested Palforzia, its peanut allergy treatment business, to Stallergenes Greer, a biopharmaceutical company which specializes in the diagnosis and treatment of allergies. The transaction was closed upon signing. Nestlé will receive milestone payments and ongoing royalties from Stallergenes Greer.

Nestlé announced an agreement with Advent International on September 7, 2023, to acquire a majority stake in Grupo CRM, a premium chocolate player in Brazil. The transaction is expected to close in 2024, subject to customary regulatory approvals.

Zone North America

-- 8.0% organic growth: - 0.9% RIG; 8.9% pricing.

Sales Sales Organic Net Foreign Reported

9M-2023 9M-2022 RIG Pricing growth M&A exchange growth

Zone

North CHF 19.0 CHF 19.1

America bn bn - 0.9% 8.9% 8.0% - 2.2% - 6.1% - 0.3%

Organic growth was 8.0%, with pricing of 8.9%. RIG was - 0.9%, reflecting portfolio optimization actions and capacity constraints. Net divestitures reduced sales by 2.2%, as a result of the divestment of a majority stake in Freshly as well as the disposal of the Gerber Good Start infant formula brand. Foreign exchange had a negative impact of 6.1%. Reported sales in Zone North America decreased by 0.3% to CHF 19.0 billion.

Zone North America maintained broad-based growth across most brands and categories, despite a challenging consumer environment. Growth was driven by pricing, favorable mix as well as strong momentum in e-commerce across categories and out-of-home channels. The Zone saw market share gains in pet food, soluble and portioned coffee, as well as frozen meals.

By product category, Purina PetCare was the largest growth contributor, with broad-based demand across brands, segments and channels, particularly e-commerce. In July, the Zone launched Tidy Care, a new range of litter products to enhance comfort and monitor cat health, with strong initial demand. Sales for Nestlé Professional and Starbucks out-of-home continued to grow at a strong double-digit rate, led by new customer acquisition and e-commerce momentum. The beverages category, including Starbucks products, Coffee mate and Nescafé, posted mid single-digit growth. Gerber baby food reported mid single-digit growth, led by healthy snacking and infant cereals. Nido fortified milks reported strong double-digit growth, driven by distribution expansion. Confectionery in Canada recorded double-digit growth, fueled by KitKat. Growth in frozen food was negative, impacted by the winding down of the frozen meals and pizza business in Canada. In the U.S., growth in frozen food was positive, with robust growth and market share gains for mainstream pizza brands Jack's and Tombstone. Water saw a sales decrease, as temporary capacity constraints for Perrier continued to outweigh strong growth for S.Pellegrino and Acqua Panna.

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