Vending

Nestle boosts 9-month organic sales amid challenging market

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October 23, 2020

Nestle SA reported sales for the first nine months decreased by 9.4% from CHF 68.4 billion ($75.47 billion) in 2019 to CHF 61.9 billion ($68.3 billion) in 2020, with divestitures and foreign exchange reducing sales by 12.9%.

The company's organic sales, however, rose 3.5% for the period, with real internal growth of 3.3% and pricing of 0.2%. Growth was supported by continued strong momentum in the Americas, Purina PetCare and Nestlé Health Science, according to the company's earning report.

Shares traded at CHF 106.16 ($117.13) today, according to marketscreener.com, while earnings before interest, taxes and amortization for the year is estimated at CHF 18.7 billion ($20.63 billion).

Retail sales accelerated "materially" for the 9-month period, reflecting continued elevated demand for at-home consumption, while growth in out-of-home channels remained "significantly negative," with sales declines moderating in the third quarter. E-commerce sales grew by 47.6%, reaching 12.3% of total group sales.

In the Americas zone, reported sales for the period decreased by 9.5% from CHF 27.6 billion ($30.45 billion) to CHF 25.0 billion ($27.58 billion) while sales increased 5.1%, supported by real internal growth of 4.7%. Divestitures reduced sales in the Americas zone by 5.7%, largely related to the divestment of the U.S. ice cream business.

The company expects full-year organic sales growth around 3% for 2020.

"Nestlé has remained resilient in a difficult and volatile environment," CEO Mark Schneider said in a statement. "Our people have acted in a responsible and prompt manner to mitigate the impact of the global pandemic and have adapted quickly to evolving consumer needs."

Purina PetCare and its brands were the largest growth contributor.

Dairy grew at a high single-digit rate, based on increased demand for fortified milks and home baking products.

Coffee posted mid-single-digit growth, fueled by strong consumer demand for Starbucks products, Nespresso and Nescafé.

Prepared dishes and cooking aids reached mid-single-digit growth.

Vegetarian and plant-based food products delivered strong double-digit growth, supported by new product launches and continued distribution expansion.

Confectionery and water reported a sales decrease due to their high exposure to out-of-home channels, with some improvement in the third quarter.

Nestlé Health Science posted double-digit growth, reflecting increased consumer demand for products that support health and the immune system.

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