Foodservice

Nestle lifts 2023 earnings despite sale dip

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February 22, 2024

Nestle S.A. lifted its 2023 earnings against a slight sales decline, impacted by soft consumer demand, capacity constraints and a temporary supply disruption for vitamins, minerals and supplements in the second half, according to an earnings report. Highlights include:

• Net sales fell 0.3% from CHF 94.424 billion ($107.14 billion) in fiscal 2022 to CHF 93 billion ($105.52 billion) in fiscal 2023.
• Net profit increased by 20.9% to CHF 11.2 billion ($12.7 billion).
• Underlying earnings per share increased by 8.4% in constant currency and by 0.1% on a reported basis to CHF 4.80 ($5.45).
• By channel, organic growth in retail sales remained robust at 6.5%. E-commerce sales grew by 13.4%, reaching 17.1% of total group sales. Organic growth of out-of-home channels was 15.9%.
• By product category, Purina PetCare was the largest contributor to organic growth, with strong momentum across all channels. Purina One, Purina Pro Plan and Friskies all recorded double-digit growth. Sales of Purina Pro Plan reached almost CHF 3 billion ($3.4 billion).
• Coffee saw high single-digit growth, with positive sales developments across brands, supported by strong demand in out-of-home channels.
• Infant nutrition posted high single-digit growth, based on continued momentum for premium infant formula, including human milk oligosaccharides (HMOs) products as well as specialty formulas.
• Dairy reported mid-single-digit growth, led by fortified milks, coffee creamers and home-baking products.
• Confectionery recorded high single-digit growth, fueled by continued double-digit growth for KitKat.
• Prepared dishes and cooking aids posted mid single-digit growth, with robust demand for Maggi across geographies and segments.
• Water posted mid single-digit growth, led by S.Pellegrino and Acqua Panna.
• Nespresso sales remained flat at CHF 6.4 billion ($7.26 billion) posting 5.3% organic growth with pricing of 3.3% and real internal growth of 2%.
• Nestle health science fell from 6.6 CHF ($7.5 billion) to 6.5 CHF ($7.37 billion), with organic growth of 1.6%, pricing of 4.8% and real internal growth of -3.2%.

Shares traded at $107.10 today against a 52-week range of $106.73 to $131.64.

The CHF 93 billion ($105.52 billion) in annual sales missed analyst estimates of 93.68 billion ($106.31 billion), according to Reuters.

"Unprecedented inflation over the last two years has increased pressure on many consumers and impacted demand for food and beverage products," CEO Mark Schneider said in the press release. "In this challenging context, we delivered strong organic growth and solid margin improvement with increased marketing and other growth investments. Our free cash flow generation returned to historical levels."

The company expects 2024 to have organic sales around 4% and underlying EPS in constant currency to increase 6% to 10%.