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Price hikes boost Nestlé S.A. 2021 sales

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February 17, 2022

Nestlé S.A. boosted sales in 2021, largely on price increases, according to an earnings report.

• Sales increased 3.3% from CHF 84.3 billion ($91.68 billion) in 2020 to CHF 87.1 billion ($94.73 billion) in 2021, while organic growth was 7.5% as pricing increased to 2%, reaching 3.1% in the fourth quarter, to offset significant cost inflation.
• Net profit grew by 38.2% to CHF 16.9 billion ($18.38 billion).
• Underlying earnings per share increased by 5.8% in constant currency and by 5.1% on a reported basis to CHF 4.42 ($4.81), with sales growth as the main contributor to the increase. Earnings per share increased by 41.1% to CHF 6.06 ($6.59) on a reported basis.
• Growth was broad-based across most geographies and categories. Organic growth reached 7.2% in developed markets, the highest level in more than a decade, based mostly on real internal growth with positive pricing. Organic growth in emerging markets was 7.8%, with robust real internal growth and positive pricing.
• By product category, the largest contributor to organic growth was coffee, fueled by strong momentum for the three main brands Nescafé, Nespresso and Starbucks.
• Sales of Starbucks products grew by 17.1% to CHF 3.1 billion ($3.37 billion), generating over CHF 1 billion ($1.09 billion) of incremental sales compared with 2018.
• Nespresso sales increased by 9.1% to CHF 6.4 billion ($6.96 billion). Nespresso organic growth reached 8.8%, based on strong real internal growth of 8.2% and pricing of 0.6%.
• Prepared dishes and cooking aids reported high single-digit growth, based on strong sales developments for Maggi, Stouffer's and Lean Cuisine.
• Sales of vegetarian and plant-based food grew at a double-digit rate, reaching around CHF 800 million ($870.06 million).
• Nestlé Health Science recorded double-digit growth, reflecting strong demand for vitamins, minerals and supplements, as well as healthy-aging products.
• Dairy saw mid single-digit growth, based on strong demand for premium and fortified milks, coffee creamers and ice cream.
• Sales in confectionery grew at a high single-digit rate, supported by a strong sales development for KitKat and gifting products.
• Water posted high single-digit growth, driven by premium brands and a recovery in out-of-home channels.
• Infant nutrition reported negative growth, impacted by a sales decline in China and lower birth rates globally. Sales of human milk oligosaccharides products continued to see robust growth, reaching CHF 1.2 billion ($1.31 billion).
• By channel, organic growth in retail sales was 6.4%, while c-commerce sales grew by 15.1%, reaching 14.3% of total group sales, with strong momentum in most categories. Organic growth in out-of-home channels reached 24.5%, helped by a low base of comparison due to the pandemic.
• North America organic growth was 8.5%, with strong real internal growth of 4.8%. Pricing increased to 3.7%, reaching 5.2% in the fourth quarter. Net divestitures reduced sales by 6.6%, as the divestment of the Nestlé Waters North America brands more than offset the acquisitions of Freshly and Essentia Water.
• Latin America posted double-digit growth, with broad-based contributions across geographies and product categories. Sales in Mexico grew at a double-digit rate, led by coffee, Purina PetCare and confectionery. Brazil reported double-digit growth, reflecting strong demand for confectionery, particularly KitKat, as well as Purina PetCare and Nescafé.
• Europe, Middle East and North Africa organic growth reached 7.2%, with strong real internal growth of 6% supported by volume and mix.
• Asia organic growth was 4.2%, with real internal growth of 3.5%.

Shares traded today at $127.68 against a 52-week range $104.50-$141.95.

"We limited the impact of exceptional cost inflation through diligent cost management and responsible pricing," CEO Mark Schneider said in the press release. "Our robust underlying earnings per share growth shows the resilience of our value creation model."

For 2022, the company expects organic sales growth around 5% and underlying trading operating profit margin between 17% and 17.5%, while underlying earnings per share in constant currency and capital efficiency are expected to increase.