REG - Nestle SA Nestle Holdings Inc - Nestlé reports full-year results for 2023
22/02/2024 07:15
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RNS Number : 0747E Nestle SA 22 February 2024
Nestlé Press Release
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Reports published today
2023 Financial Statements:
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Corporate Governance Report:
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Annual Report:
https://www.nestle.com/sites/default/files/2024-02/2023-annual-review-en.pdf
(https://www.nestle.com/sites/default/files/2024-02/2023-annual-review-en.pdf)
Creating Shared Value & Sustainability Report:
https://www.nestle.com/sites/default/files/2024-02/creating-shared-value-sustainability-report-2023-en.pdf
(https://www.nestle.com/sites/default/files/2024-02/creating-shared-value-sustainability-report-2023-en.pdf)
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[Ad hoc announcement pursuant to art. 53 SIX Listing Rules]
Vevey, February 22, 2024
Nestlé reports full-year results for 2023
· Organic growth reached 7.2%, with pricing of 7.5% and real internal
growth (RIG) of -0.3%. Growth was broad-based across geographies and
categories.
· Total reported sales were CHF 93.0 billion, a decrease of 1.5%
(FY-2022: CHF 94.4 billion). Foreign exchange decreased sales by 7.8%. Net
divestitures had a negative impact of 0.9%.
· The underlying trading operating profit (UTOP) margin was 17.3%,
increasing by 20 basis points on a reported basis and by 40 basis points in
constant currency. The trading operating profit (TOP) margin was 15.6%,
increasing by 160 basis points.
· Underlying earnings per share increased by 8.4% in constant currency
and by 0.1% on a reported basis to CHF 4.80. Earnings per share increased by
23.7% to CHF 4.24 on a reported basis, mainly reflecting one-off items in the
prior year.
· Free cash flow was CHF 10.4 billion, an increase of CHF 3.8 billion
following a significant reduction in working capital.
· Board proposes a dividend of CHF 3.00 per share, an increase of 5
centimes, marking 29 consecutive years of dividend growth. In 2023, CHF 12.8
billion were returned to shareholders through a combination of dividend and
share buybacks.
· 2024 outlook: we expect organic sales growth around 4% and a moderate
increase in the underlying trading operating profit margin. Underlying
earnings per share in constant currency is expected to increase between 6% and
10%.
· 2025 mid-term targets fully confirmed: mid single-digit organic sales
growth and an underlying trading operating profit margin range of 17.5% to
18.5% by 2025. Underlying earnings per share in constant currency to increase
between 6% and 10%.
Mark Schneider, Nestlé CEO, commented: "Unprecedented inflation over the last
two years has increased pressure on many consumers and impacted demand for
food and beverage products. 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.
Looking to 2024, we are prioritizing volume- and mix-led growth with increased
brand support, as we enhance value for consumers through active innovation and
renovation, premiumization, affordability and more nutritious options. We will
continue to focus capital allocation on our fast-growing billionaire brands,
which enables us to deliver dependable growth while enhancing brand loyalty.
To drive market share gains, our key priorities are delighting consumers
through differentiated offerings and focusing on superior execution. We are
confident that we have the right strategy, portfolio and capabilities to
deliver on our 2025 targets."
Group Results
Total Group Zone North America Zone Europe Zone AOA Zone Latin America Zone Greater China Nestlé Nespresso Other Businesses
Health
Science
Sales FY-2023 (CHF m) 92 998 25 995 19 098 17 519 12 196 5 037 6 498 6 372 283
Sales FY-2022 (CHF m) 94 424 26 328 19 128 18 484 11 819 5 351 6 602 6 448 264
Real internal growth (RIG) -0.3% -0.3% -2.4% 0.3% 0.3% 2.5% -3.2% 2.0% 11.5%
Pricing 7.5% 7.6% 10.6% 8.0% 8.9% 1.7% 4.8% 3.3% 1.7%
Organic growth 7.2% 7.3% 8.2% 8.3% 9.2% 4.2% 1.6% 5.3% 13.2%
Net M&A -0.9% -1.7% -3.4% -0.1% -0.2% 0.1% 3.1% -0.5% -0.0%
Foreign exchange -7.8% -6.8% -4.9% -13.5% -5.8% -10.2% -6.2% -6.0% -5.7%
Reported sales growth -1.5% -1.3% -0.2% -5.2% 3.2% -5.9% -1.6% -1.2% 7.4%
FY-2023 Underlying TOP Margin 17.3% 22.2% 16.4% 23.5% 20.7% 16.5% 12.0% 20.3% -4.3%
FY-2022 Underlying TOP Margin 17.1% 21.0% 16.4% 22.9% 21.2% 16.1% 13.6% 21.5% -6.1%
Group sales
Organic growth was 7.2%. Pricing was 7.5%, reflecting cost inflation over the
last two years. RIG was -0.3%, impacted by soft consumer demand, capacity
constraints and a temporary supply disruption for vitamins, minerals and
supplements in the second half. As expected, RIG turned positive in both the
fourth quarter and the second half, supported by the benefits from portfolio
optimization, improving customer service levels and increased brand support.
Growth was broad-based across most geographies and categories. In developed
markets, organic growth was 6.4%, led by pricing with negative RIG. In
emerging markets, organic growth was 8.4%, driven by pricing and positive RIG.
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. 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. Nestlé Health Science recorded low single-digit
growth, as continued strong momentum for Medical Nutrition was partly offset
by temporary supply constraints in vitamins, minerals and supplements.
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%.
Net divestitures decreased sales by 0.9%, largely related to the divestment of
a majority stake in Freshly as well as the disposal of the Gerber Good Start
infant formula brand in 2022. The impact on sales from foreign exchange was
negative at 7.8%, following significant and broad-based appreciation of the
Swiss franc. Total reported sales decreased by 1.5% to CHF 93.0 billion.
Underlying Trading Operating Profit
The underlying trading operating profit margin increased by 20 basis points to
17.3% on a reported basis and by 40 basis points in constant currency.
Underlying trading operating profit decreased by 0.3% to CHF 16.1 billion, due
to currency appreciation.
Gross profit margin increased by 70 basis points to 45.9%. Pricing, cost
efficiencies and portfolio optimization more than offset significant cost
inflation.
Distribution costs as a percentage of sales decreased by 60 basis points to
8.3% of sales, mainly as a result of lower freight and energy costs.
Marketing and administration expenses as a percentage of sales were 18.9%.
Within this line item, advertising and marketing expenses were 7.7% of sales,
an increase of 80 basis points compared to the prior year.
Restructuring and net other trading items decreased from CHF 2.9 billion to
CHF 1.5 billion, reflecting one-off items in the prior year, particularly
asset impairments. As a result, trading operating profit increased by 10.0% to
CHF 14.5 billion. The trading operating profit margin reached 15.6%, an
increase of 160 basis points on a reported basis and 190 basis points in
constant currency.
Net Financial Expenses and Income Tax
Net financial expenses increased to CHF 1.4 billion, reflecting an increase in
interest rates and a higher level of average net debt. The average cost of net
debt was 2.5% compared to 2.2% in 2022.
The Group reported tax rate decreased by 600 basis points to 18.2% as a result
of one-off items. The underlying tax rate increased by 30 basis points to
21.2%, mainly due to the geographic and business mix.
Net Profit and Earnings Per Share
Net profit increased by 20.9% to CHF 11.2 billion. Net profit margin increased
by 230 basis points to 12.1% on a reported basis and by 240 basis points in
constant currency. The increase was mainly due to lower asset impairments, a
decrease in reported taxes and higher income from associates. As a result,
earnings per share increased by 23.7% to CHF 4.24 on a reported basis.
Underlying earnings per share increased by 8.4% in constant currency and by
0.1% on a reported basis to CHF 4.80. The increase was mainly the result of
strong organic growth and improved underlying trading operating profit margin.
Nestlé's share buyback program contributed 1.2% to the underlying earnings
per share increase, net of finance costs.
Cash Flow
Free cash flow increased to CHF 10.4 billion from CHF 6.6 billion, mainly due
to lower inventory levels.
Dividend
At the Annual General Meeting on April 18, 2024, the Board of Directors will
propose a dividend of CHF 3.00 per share, an increase of 5 centimes. If
approved, this will be the company's 29th consecutive annual dividend
increase. The company has maintained or increased its dividend in Swiss francs
over the last 64 years. Nestlé is committed to maintaining this long-held
practice of increasing the dividend in Swiss francs every year.
The last trading day with entitlement to receive the dividend will be April
19, 2024. The net dividend will be payable as from April 24, 2024.
Shareholders entered in the share register with voting rights on April 11,
2024, at 12:00 noon (CEST) will be entitled to exercise their voting rights.
Share Buyback Program
In 2023, the Group repurchased CHF 5.0 billion of Nestlé shares as part of
the three-year CHF 20 billion share buyback program, which began in January
2022. At the upcoming Annual General Meeting, the Board of Directors will
propose a reduction of the share capital by 50 million shares from CHF 267
million to CHF 262 million, through the cancellation of shares purchased as
part of the share buyback program.
Net Debt
Net debt was CHF 49.6 billion as at December 31, 2023, compared to CHF 48.2
billion at December 31, 2022. The increase largely reflected the dividend
payment of CHF 7.8 billion and share buybacks of CHF 5.1 billion.
Return on Invested Capital (ROIC)
The Group's ROIC was 13.9%, up by 170 basis points.
Portfolio Management
Effective September 1, 2023, Nestlé and private equity firm PAI Partners
completed the transaction to create a joint venture for Nestlé's frozen pizza
business in Europe. Nestlé retains a non-controlling stake with equal voting
rights alongside PAI Partners, remaining invested in this business and
participating in future growth and value creation in the category.
On September 4, 2023, Nestlé divested Palforzia, its peanut allergy treatment
business, to Stallergenes Greer, a biopharmaceutical company that specializes
in the diagnosis and treatment of allergies. The transaction was closed upon
signing.
On September 7, 2023, Nestlé announced an agreement with Advent International
to acquire a majority stake in Grupo CRM, a premium chocolate player in
Brazil. The transaction is expected to close in 2024, subject to customary
regulatory approvals.
Nestlé Waters Operations
Following a transformation plan in France, Nestlé is reviewing operating
practices in its natural mineral water operations in several countries. With
food safety as a primary goal, practices at some of its production sites may
not be in line with the applicable regulatory framework. Nestlé regrets the
situation and is currently engaging with the relevant authorities to ensure
that its operating practices are fully compliant. The company emphasizes that
its water products have always been, and remain, safe to drink. In addition,
the unique mineral composition of its natural mineral water brands has always
been consistent with the label.
Zone North America
· 7.3% organic growth: -0.3% RIG; 7.6% pricing.
· The Zone's underlying trading operating profit margin increased by
120 basis points to 22.2%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Zone North America CHF 26.0 bn CHF 26.3 bn -0.3% 7.6% 7.3% CHF 5.8 bn CHF 5.5 bn 22.2% 21.0%
Organic growth was 7.3%, with pricing of 7.6%. RIG was -0.3%, reflecting soft
consumer demand, capacity constraints and the winding down of the frozen meals
and pizza business in Canada. RIG turned positive in the fourth quarter. Net
divestitures reduced sales by 1.7%, as a result of the divestment of a
majority stake in Freshly as well as the disposal of the Gerber Good Start
infant formula brand in 2022. Foreign exchange had a negative impact of 6.8%.
Reported sales in Zone North America decreased by 1.3% to CHF 26.0 billion.
Growth in Zone North America was broad-based, driven by pricing as well as
continued strong momentum for e-commerce and out-of-home channels. The Zone
saw market share gains in pet food, coffee and frozen meals.
By product category, Purina PetCare was the largest growth contributor, with
broad-based demand across segments, channels and brands, particularly Purina
ONE, Purina Pro Plan and Friskies. Sales for Nestlé Professional and
Starbucks out-of-home continued to grow at a double-digit rate, led by new
customer acquisition. The beverages category, including Starbucks products,
Coffee mate and Nescafé, posted mid single-digit growth. Nido growing-up
milks posted strong double-digit growth. Confectionery in Canada recorded high
single-digit growth, driven by KitKat and Aero. Water saw low single-digit
growth, based on a strong sales development in the fourth quarter.
S.Pellegrino and Acqua Panna posted double-digit growth, which more than
offset the impact of capacity constraints for Perrier. Growth in frozen food
was negative, impacted by soft consumer demand and the winding down of the
frozen meals and pizza business in Canada. In the U.S., growth in frozen food
was close to flat, supported by Stouffer's, Jack's and Tombstone.
The Zone's underlying trading operating profit margin increased by 120 basis
points, mainly as a result of the divestment of a majority stake in Freshly
and portfolio optimization actions. Pricing and mix also helped to offset cost
inflation and a significant increase in advertising and marketing expenses.
Zone Europe
· 8.2% organic growth: -2.4% RIG; 10.6% pricing.
· The Zone's underlying trading operating profit margin was unchanged
at 16.4%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Zone Europe CHF 19.1 bn CHF 19.1 bn -2.4% 10.6% 8.2% CHF 3.1 bn CHF 3.1 bn 16.4% 16.4%
Organic growth was 8.2%, with pricing of 10.6%. RIG was -2.4%, reflecting
demand elasticity and capacity constraints. Foreign exchange negatively
impacted sales by 4.9%. Net divestitures reduced sales by 3.4%. Reported sales
in Zone Europe decreased by 0.2% to CHF 19.1 billion.
Growth in Zone Europe was supported by pricing, strong sales development for
e-commerce and continued momentum for out-of-home channels. The Zone saw
market share gains in pet food and Infant Nutrition.
By product category, the key contributor to growth was Purina PetCare, driven
by differentiated offerings across premium brands Felix, Gourmet and Purina
ONE. Coffee saw mid single-digit growth, led by Nescafé soluble and
ready-to-drink products. Confectionery reported high single-digit growth, with
continued market share gains for KitKat. Nestlé Professional posted
double-digit growth, led by beverages. Infant Nutrition recorded high
single-digit growth, based on continued momentum for premium infant formula,
particularly NAN. Culinary posted mid single-digit growth, with robust sales
developments for Maggi and Thomy. Water saw low single-digit growth, as strong
momentum for S.Pellegrino and Acqua Panna was largely offset by the impact of
temporary capacity constraints for Perrier.
The Zone's underlying trading operating profit margin was unchanged versus the
prior year. Significant cost inflation and higher advertising and marketing
expenses offset pricing and portfolio optimization actions.
Zone Asia, Oceania and Africa (AOA)
· 8.3% organic growth: 0.3% RIG; 8.0% pricing.
· The Zone's underlying trading operating profit margin increased by 60
basis points to 23.5%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Zone AOA CHF 17.5 bn CHF 18.5 bn 0.3% 8.0% 8.3% CHF 4.1 bn CHF 4.2 bn 23.5% 22.9%
Organic growth was 8.3%, with 0.3% RIG. Pricing increased to 8.0%, with
broad-based contributions from all geographies and categories. Foreign
exchange reduced sales by 13.5%, impacted by significant currency
depreciation. Reported sales in Zone AOA decreased by 5.2% to CHF 17.5
billion.
Growth in Zone AOA was supported by pricing as well as continued momentum of
e-commerce and out-of-home channels. The Zone saw market share gains in
confectionery and coffee.
South-East Asia posted mid single-digit growth, led by the Philippines, with
strong sales developments for Nescafé and Maggi. South Asia recorded strong
double-digit growth across most categories. Growth in India was based on
continued distribution expansion and new product launches, with strong
momentum for Maggi, KitKat and Nescafé. Middle East and Africa saw
double-digit growth, with particular strength for affordable offerings in
Maggi, NAN and Milo. Japan reported mid single-digit growth, led by Purina
PetCare, KitKat and ready-to-drink Nescafé. South Korea posted high
single-digit growth, fueled by Starbucks products. The new Starbucks soluble
coffee offering resonated strongly with consumers. Oceania recorded high
single-digit growth, supported by innovation for KitKat, Purina PetCare and
Nescafé.
By product category, Infant Nutrition was the largest growth contributor, led
by NAN, Lactogen and Cerelac. Culinary recorded double-digit growth, with
continued strength for Maggi. Coffee saw high single-digit growth, with robust
demand for Nescafé and Starbucks products, particularly for ready-to-drink
offerings. Ambient dairy posted mid single-digit growth, based on increased
focus on products with functional benefits. Sales for Nestlé Professional
grew at a strong double-digit rate across most geographies and categories,
supported by channel penetration and customer acquisition. Confectionery
reported high single-digit growth, fueled by strong momentum for KitKat.
Purina PetCare saw mid single-digit growth, led by Purina ONE, Supercoat and
Felix.
The Zone's underlying trading operating profit margin increased by 60 basis
points. Pricing, disciplined cost control and portfolio optimization more than
offset the impact of input cost inflation and higher advertising and marketing
expenses.
Zone Latin America
· 9.2% organic growth: 0.3% RIG; 8.9% pricing.
· The Zone's underlying trading operating profit margin decreased by 50
basis points to 20.7%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Zone Latin America CHF 12.2 bn CHF 11.8 bn 0.3% 8.9% 9.2% CHF 2.5 bn CHF 2.5 bn 20.7% 21.2%
Organic growth was 9.2%, with pricing of 8.9%. RIG was 0.3%, turning positive
in the second half. Foreign exchange had a negative impact of 5.8%. Reported
sales in Zone Latin America increased by 3.2% to CHF 12.2 billion.
Zone Latin America recorded strong growth across all geographies and product
categories. Growth was supported by pricing, strong operational execution and
continued momentum for out-of-home channels. The Zone saw market share gains
in pet food, Infant Nutrition and culinary.
Brazil posted strong double-digit growth, with continued momentum for
confectionery, Infant Nutrition and beverages. Within beverages, Nescafé
posted strong sales growth driven by portioned coffee. Mexico reported high
single-digit growth, with strong sales developments for dairy, coffee and
Nestlé Professional.
By product category, confectionery was the largest growth contributor,
reflecting strong demand for KitKat and key local brands. In this category,
Chocobiscuits saw particularly strong growth. Coffee reported high
single-digit growth, led by Nescafé soluble and ready-to-drink coffee. Dairy
posted high single-digit growth, supported by dairy culinary solutions and
fortified milks. Infant Nutrition saw high single-digit growth, based on solid
momentum for NAN infant formula, Mucilon infant cereal and Materna products.
Sales for Nestlé Professional grew at a strong double-digit rate, with
continued customer expansion for branded coffee solutions. Culinary posted
high single-digit growth, based on new product launches and further traction
for Recetas Nestlé, the largest online recipe platform in Latin America.
Purina PetCare saw mid single-digit growth, following a high base of
comparison in 2022.
The Zone's underlying trading operating profit margin decreased by 50 basis
points. One-off items in the prior year more than offset pricing and cost
efficiencies.
Zone Greater China
· 4.2% organic growth: 2.5% RIG; 1.7% pricing.
· The Zone's underlying trading operating profit margin increased by 40
basis points to 16.5%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Zone Greater China CHF 5.0 bn CHF 5.4 bn 2.5% 1.7% 4.2% CHF 0.8 bn CHF 0.9 bn 16.5% 16.1%
Organic growth was 4.2%, with RIG of 2.5% and pricing of 1.7%. Foreign
exchange had a negative impact of 10.2%. Reported sales in Zone Greater China
decreased by 5.9% to CHF 5.0 billion.
Growth in Zone Greater China was supported by strong sales developments for
out-of-home businesses and e-commerce momentum. The Zone saw market share
gains in soluble coffee, pet food and confectionery.
By product category, Nestlé Professional was the largest growth contributor,
supported by innovation and distribution expansion. Culinary posted high
single-digit growth, with increased demand for Totole in out-of-home channels
and new product launches. Confectionery recorded mid single-digit growth, led
by Shark wafer and Hsu Fu Chi. Infant Nutrition saw positive growth, led by
NAN hypoallergenic and specialty offerings. In the fourth quarter, the Zone
launched a growing-up milk solution for illuma containing human milk
oligosaccharides (HMOs). Sales of healthy aging products grew at a
double-digit rate, supported by the launch of N3 milk, a unique science-based
innovation that is as nutritious as milk and low in lactose. Coffee reported
low single-digit growth, supported by ready-to-drink offerings. Sales for
Purina PetCare grew at a double-digit rate, based on new product launches and
strong e-commerce momentum.
The Zone's underlying trading operating profit margin increased by 40 basis
points, supported by favorable mix and disciplined cost control.
Nestlé Health Science
· 1.6% organic growth: -3.2% RIG; 4.8% pricing.
· The underlying trading operating profit margin decreased by 160 basis
points to 12.0%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Nestlé Health Science CHF 6.5 bn CHF 6.6 bn -3.2% 4.8% 1.6% CHF 0.8 bn CHF 0.9 bn 12.0% 13.6%
Organic growth was 1.6%, with pricing of 4.8%. RIG was -3.2%, impacted by a
temporary supply constraint for the vitamins, minerals and supplements
business. Net acquisitions increased sales by 3.1%, largely related to the
consolidation of Orgain from April 2022. Foreign exchange negatively impacted
sales by 6.2%. Reported sales in Nestlé Health Science decreased by 1.6% to
CHF 6.5 billion.
Vitamins, minerals and supplements saw negative growth. Sales in the second
half decreased following an IT integration issue encountered during the
consolidation of U.S. packaging sites. The recovery is taking longer than
expected as the extent of the issue was deeper and more complex than initially
thought. The resulting supply constraints are expected to be fully resolved by
the end of the first half of 2024, with an acceleration of growth expected in
the second half of the year. Vitamins, minerals and supplements brand Pure
Encapsulations was not affected by the supply issue and saw double-digit
growth.
Active Nutrition reported mid single-digit growth, with robust sales
developments for Orgain and Vital Proteins.
Medical Nutrition recorded strong double-digit growth, with market share gains
across all segments. Growth was led by adult medical care products, pediatric
products and Vitaflo. The gastrointestinal portfolio, including Vowst and
Zenpep, saw strong double-digit growth.
By geography, North America saw a sales decrease. Europe reported mid
single-digit growth. Other regions combined posted high single-digit growth.
The underlying trading operating profit margin of Nestlé Health Science
decreased by 160 basis points, as a result of the impact of temporary supply
constraints.
Nespresso
· 5.3% organic growth: 2.0% RIG; 3.3% pricing.
· The underlying trading operating profit margin of Nespresso decreased
by 120 basis points to 20.3%.
Sales Sales RIG Pricing Organic growth UTOP UTOP Margin Margin
2023 2022 2023 2022 2023 2022
Nespresso CHF 6.4 bn CHF 6.4 bn 2.0% 3.3% 5.3% CHF 1.3 bn CHF 1.4 bn 20.3% 21.5%
Organic growth was 5.3%, with pricing of 3.3%. RIG was 2.0%. Foreign exchange
negatively impacted sales by 6.0%. Reported sales in Nespresso decreased by
1.2% to CHF 6.4 billion.
The key growth contributor was the Vertuo system, which continued to see
broad-based momentum. Growth in out-of-home channels was also strong, with
further adoption of the Momento system, particularly in the office segment.
Innovation continued to resonate with consumers, including the launch of home
compostable coffee capsules and the ultra-premium Nº 20 limited edition, a
unique arabica variety. In 2023, Nespresso was recognized as one of the top
100 most valuable brands in the world 1 (#_ftn1) .
By geography, North America posted double-digit growth, with continued market
share gains. Europe reported low single-digit growth. Other regions combined
saw mid single-digit growth.
The underlying trading operating profit margin of Nespresso decreased by 120
basis points. Significant cost inflation and the appreciation of the Swiss
franc more than offset pricing actions and cost efficiencies. The business
continued to invest in the rollout of the Vertuo system as well as in brand
marketing.
Business as a force for good: Net Zero plan on track
Nestlé has achieved a net reduction of 13.5% of its greenhouse gas (GHG)
emissions versus its 2018 baseline, while continuing on its growth path over
the same period. Advancing towards Net Zero, the company moved past peak
carbon in 2019 and has successfully decoupled its growth from emissions.
Nestlé is on track to reach a 20% reduction of GHG emissions by 2025.
For the first time, the company now also provides transparency on the
reductions of specific gases. For example, it has achieved a reduction of
15.3% of methane versus the 2018 baseline. This significant reduction was
possible due to Nestlé's focus on dairy, as its single largest source of
methane emissions.
Nestlé is making its own operations more energy efficient and is increasing
its use of renewable electricity. As of the end of 2023, 91.9% of the
electricity in its global manufacturing sites was from renewable sources. The
goal is to reach 100%.
The company is additionally continuing to reduce its value chain emissions
(Scope 3). It works with its suppliers and the farmers it sources from to help
them tackle their emissions and transition to regenerative agriculture. At the
end of last year, 15.2% of Nestlé's raw materials were sourced from farmers
adopting such practices. The company's ambition is to get to 20% by 2025. It
has also reduced the use of fossil fuels in areas such as product packaging
and distribution.
More details can be found in Nestlé's Creating Shared Value and
Sustainability Report
(https://www.nestle.com/sites/default/files/2024-02/creating-shared-value-sustainability-report-2023-en.pdf)
, which was published today.
Outlook
2024 outlook: we expect organic sales growth around 4% and a moderate increase
in the underlying trading operating profit margin. Underlying earnings per
share in constant currency is expected to increase between 6% and 10%.
2025 mid-term targets fully confirmed: mid single-digit organic sales growth
and an underlying trading operating profit margin range of 17.5% to 18.5% by
2025. Underlying earnings per share in constant currency to increase between
6% and 10%.
Contacts:
Media Christoph Meier Tel.: +41 21 924 2200 mediarelations@nestle.com
Investors Luca Borlini Tel.: +41 21 924 3509 ir@nestle.com
Annex
Full-year sales and underlying trading operating profit (UTOP) overview by
operating segment
Total Group Zone North America Zone Europe Zone AOA Zone Latin America Zone Greater China Nestlé Nespresso Other Businesses
Health
Science
Sales FY-2023 (CHF m) 92 998 25 995 19 098 17 519 12 196 5 037 6 498 6 372 283
Sales FY-2022 (CHF m) 94 424 26 328 19 128 18 484 11 819 5 351 6 602 6 448 264
Real internal growth (RIG) -0.3% -0.3% -2.4% 0.3% 0.3% 2.5% -3.2% 2.0% 11.5%
Pricing 7.5% 7.6% 10.6% 8.0% 8.9% 1.7% 4.8% 3.3% 1.7%
Organic growth 7.2% 7.3% 8.2% 8.3% 9.2% 4.2% 1.6% 5.3% 13.2%
Net M&A -0.9% -1.7% -3.4% -0.1% -0.2% 0.1% 3.1% -0.5% -0.0%
Foreign exchange -7.8% -6.8% -4.9% -13.5% -5.8% -10.2% -6.2% -6.0% -5.7%
Reported sales growth -1.5% -1.3% -0.2% -5.2% 3.2% -5.9% -1.6% -1.2% 7.4%
FY-2023 Underlying TOP (CHF m) 16 053 5 768 3 127 4 109 2 520 832 777 1 291 -12
FY-2022 Underlying TOP (CHF m) 16 103 5 528 3 138 4 237 2 501 862 899 1 388 -17
FY-2023 Underlying TOP Margin 17.3% 22.2% 16.4% 23.5% 20.7% 16.5% 12.0% 20.3% -4.3%
FY-2022 Underlying TOP Margin 17.1% 21.0% 16.4% 22.9% 21.2% 16.1% 13.6% 21.5% -6.1%
Full-year sales and underlying trading operating profit (UTOP) overview by
product
Total Group Powdered & liquid beverages Water Milk products & ice cream Nutrition & Health Science Prepared dishes & cooking aids Confec-tionery PetCare
Sales FY-2023 (CHF m) 92 998 24 786 3 320 10 981 15 278 11 666 8 107 18 860
Sales FY-2022 (CHF m) 94 424 25 218 3 536 11 289 15 678 12 484 8 118 18 101
Real internal growth (RIG) -0.3% 0.0% -5.1% -1.6% -1.6% -2.5% 1.5% 2.8%
Pricing 7.5% 6.4% 10.0% 7.7% 7.0% 7.4% 7.0% 9.3%
Organic growth 7.2% 6.4% 4.9% 6.1% 5.4% 4.9% 8.5% 12.1%
FY-2023 Underlying TOP (CHF m) 16 053 5 130 351 2 688 2 831 2 136 1 364 3 912
FY-2022 Underlying TOP (CHF m) 16 103 5 593 277 2 568 2 990 2 038 1 364 3 706
FY-2023 Underlying TOP Margin 17.3% 20.7% 10.6% 24.5% 18.5% 18.3% 16.8% 20.7%
FY-2022 Underlying TOP Margin 17.1% 22.2% 7.8% 22.7% 19.1% 16.3% 16.8% 20.5%
1 Interbrand annual ranking
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