Vending

Nestle lifts 2022 sales on price hikes, suffers earnings decline

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February 16, 2023

Nestle S.A. reported an earnings decline for 2022 despite higher sales boosted by price increases, according to an earnings report. Highlights include:

• Total reported sales increased by 8.4% to CHF 94.4 billion ($102.09 billion).
• Organic growth reached 8.3% driven by an 8.2% pricing gain, reflecting significant cost inflation.
• Organic growth was 7.1% in developed markets, driven by pricing. In emerging markets, organic growth was 10%, supported by both pricing and real internal growth.
• Earnings per share decreased by 43.5% to CHF 3.42 ($3.70) on a reported basis.
• Underlying earnings per share increased by 9.4% in constant currency and by 8.4% on a reported basis to CHF 4.80 ($5.19). The increase was mainly the result of strong organic growth.
• Coffee sales grew at a high single-digit rate, with broad-based growth across brands and geographies, supported by a strong recovery of out-of-home channels.
• Sales of Starbucks products grew by 12.9% to reach CHF 3.6 billion ($3.89 billion), generating over CHF 1.5 billion ($1.62 billion) of incremental sales compared with 2018.
• Infant nutrition saw double-digit growth, with broad-based contributions across geographies and brands.
• Confectionery posted high single-digit growth, reflecting particular strength for KitKat, seasonal products and key local brands.
• Dairy reported mid single-digit growth, with continued momentum for coffee creamers, affordable fortified milks and home-baking products.
• Water recorded double-digit growth, with a sales decrease in the fourth quarter as a result of temporary capacity constraints.
• Prepared dishes and cooking aids posted low single-digit growth, following a high base of comparison in 2021, with continued strong demand for Maggi.
• Sales in vegetarian and plant-based food grew at a mid-single-digit rate. Garden Gourmet in Europe continued to see double-digit growth, while sales for Sweet Earth in North America were impacted by SKU optimization.
• Nestlé health science reported mid-single-digit growth, driven by medical nutrition and healthy-aging products.

The board proposed a dividend of CHF 2.95 ($3.19) per share, an increase of 15 centimes, marking 28 consecutive years of dividend growth.

For 2023 the company expects organic sales growth between 6% and 8% and underlying trading operating profit margin between 17% and 17.5%. Underlying earnings per share in constant currency is expected to increase between 6% and 10%.

Shares traded today at $116.78 against a 52-week range of $102.78-$133.86.

"Last year brought many challenges and tough choices for families, communities and businesses," CEO Mark Schneider said in the press release. "Inflation surged to unprecedented levels, cost of living pressures intensified and the effects of geopolitical tensions were felt around the world.

"Looking to 2023, we expect another year of robust organic growth, with a focus on restoring our gross margin, stepping up marketing investments and increasing free cash flow."