Vending

Nestle reports strong HY 2023

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July 28, 2023

Nestle SA lifted its sales and profits for first half 2023 over the prior year period, according to a press release, with organic sales surpassing analyst expectations.

Highlights include:

• Sales rose 1.6% from 45.6 billion CHF ($52.48 billion) in HY 2022 to $46.3 billion CHF ($53.29 billion) for the half year ending June 30, 2023.
• Organic growth was 8.7%, driven by pricing at 9.5%, reflecting the impact of cost inflation over the last two years.
• Real internal growth was -0.8%, with a negative impact of around 60 basis points from portfolio optimization actions.
• Growth was broad-based across most geographies and categories. In developed markets, organic growth was 8%, led by pricing with negative real internal growth. In emerging markets, organic growth was 9.6%, driven by pricing and flat real internal growth.
• By channel, organic growth in retail sales remained robust at 8%. 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 profit increased by 7.7% to CHF 5.6 billion ($6.45 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 ($2.45) on a reported basis.
• Underlying earnings per share increased by 11.1% in constant currency and by 4.1% on a reported basis to CHF 2.43 ($2.80). The increase was mainly the result of strong organic growth and improved underlying trading operating profit margin. Nestlé's share buyback program contributed 1.4% to the underlying earnings per share increase, net of finance costs.
• North America sales rose from 12.1 billion CHF to 12.6 billion CHF ($14.5 billion); organic growth was 10% while real internal growth fell 1%.
• Europe sales rose from 9.3 billion CHF ($10.7 billion) to 9.5 billion CHF ($10.93 billion) in the comparative quarters; organic growth was 8.9% while real internal growth fell 2.4%.
• Asia, Oceania and Africa sales fell from 9.3 billion CHF ($10.7 billion) to 9.1 billion CHF ($10.47 billion); organic growth was 9.3% while real internal growth was 0.1%.
• Latin America sales rose from 5.7 billion CHF ($6.56 billion) to 6.1 billion CHF ($7.02 billion); organic growth was 11.6% while real internal growth was -0.9%.
• China sales fell from 2.7 billion CHF ($3.11 billion) to 2.5 billion CHF ($2.88 billion); organic growth was 4.7% while real internal growth was 1.3%.
• Nespresso sales fell from 3.2 billion CHF ($3.68 billion) to 3.1 billion CHF ($3.57 billion); organic growth was 4.5% while real internal growth was 0.8%.

"Based on the strong performance in the first half of the year we upgrade our organic sales growth outlook for 2023," CEO Mark Schneider said in the press release. "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 full year 2023, the company raised organic sales growth guidance to a range of 7% to 8%.

The underlying trading operating profit margin is expected to be between 17% and 17.5%, and underlying earnings per share in constant currency is expected to increase between 6% and 10%.

The 8.7% organic sales growth beat analyst estimates of 8.1%, according to Reuters.