Press Release: Nestle: Nestlé reports full-year -2-

including expenses for bonuses paid to frontline workers, employee

safety protocols, donations and other staff and customer allowances.

Around CHF 260 million of these costs impacted underlying trading

operating profit, partially offset by savings such as travel expenses.

In addition, the Group absorbed costs of CHF 170 million related to

staff and facilities made idle due to lockdown measures. Overall

COVID-19-related costs decreased in the second half of the year, as

movement restrictions eased.

Underlying Trading Operating Profit

Underlying trading operating profit decreased by 8.3% to CHF 14.9

billion. The underlying trading operating profit margin reached 17.7%,

an increase of 20 basis points in constant currency and 10 basis points

on a reported basis.

Margin expansion was supported by structural cost reductions, portfolio

management and slightly lower consumer-facing marketing expenses(1)

which more than offset commodity inflation and COVID-19-related costs.

In the second half of the year, consumer-facing marketing expenses(1)

returned to a normalized level and increased versus the same period of

2019.

Restructuring expenses and net other trading items decreased by CHF 1

916 million to CHF 670 million, reflecting lower asset impairments and

COVID-19-related delays to restructuring programs. As a result, trading

operating profit increased by 4.1% to CHF 14.2 billion. The trading

operating profit margin reached 16.9%, an increase of 220 basis points

in constant currency and 210 basis points on a reported basis.

Net Financial Expenses and Income Tax

Net financial expenses decreased by 14.0% to CHF 874 million, reflecting

a reduction in average net debt and a lower cost of debt.

The Group reported tax rate increased by 320 basis points to 24.2%, due

to exceptional items in 2019, including the divestiture of Nestlé

Skin Health. The underlying tax rate decreased by 50 basis points to

21.1%, mainly due to the evolution of the geographic and business mix.

Net Profit and Earnings Per Share

Net profit decreased by 3.0% to CHF 12.2 billion. The net profit margin

increased by 90 basis points to 14.5%, due to one-off items related to

gains on disposals, asset impairments, restructuring costs and

revaluation of equity investments.

Underlying earnings per share increased by 3.5% in constant currency and

decreased by 4.5% on a reported basis to CHF 4.21. Earnings per share

was unchanged at CHF 4.30 on a reported basis. Divestitures had a

negative impact of 3.5%. Nestlé's share buyback program contributed

1.4% to the underlying earnings per share increase, net of finance

costs.

Cash Flow

Free cash flow decreased from CHF 11.9 billion to CHF 10.2 billion. The

reduction was mainly due to the appreciation of the Swiss franc against

most currencies and the impact of divestitures. Free cash flow margin

decreased by 80 basis points to 12.1%. Free cash flow is expected to

remain at around 12% of sales.

Working capital(2) decreased by 60 basis points to 0.0% of sales,

marking 9 consecutive years of improvement. This reduction came even as

the company increased inventory levels materially to meet

COVID-19-related demand.

_______

(1) Excluding the divestiture of Nestlé Skin Health

(2) Calculated on a 5-quarter rolling average

Dividend

At the Annual General Meeting on April 15, 2021, the Board of Directors

will propose a dividend of CHF 2.75 per share, an increase of 5

centimes. If approved, this will be the company's 26th consecutive

annual dividend increase. The company has maintained or increased its

dividend in Swiss francs over the last 61 years. Nestlé is

committed to maintaining this long-held practice to increase the

dividend in Swiss francs every year.

The last trading day with entitlement to receive the dividend will be

April 16, 2021. The net dividend will be payable as from April 21, 2021.

Shareholders entered in the share register with voting rights on April

8, 2021 at 12:00 noon (CEST) will be entitled to exercise their voting

rights.

Share Buyback Program

During 2020, the Group repurchased CHF 6.8 billion of Nestlé shares

as part of the three-year CHF 20 billion share buyback program that

began in January 2020.

Net Debt

Net debt increased to CHF 31.3 billion as at December 31, 2020, compared

to CHF 27.1 billion at the end of 2019. The increase largely reflected

share buybacks of CHF 6.8 billion completed during 2020.

Return on Invested Capital (ROIC)

The Group's ROIC increased by 240 basis points to 14.7%, as a result of

disciplined capital allocation and improved operating performance.

Portfolio Management

Nestlé completed acquisitions and divestments with a total value of

around CHF 8.4 billion in 2020.

-- Divestments: In January, Nestlé completed the sale of its U.S. ice

cream business for USD 4 billion to Froneri. In June, the Group closed

the sale of a 60% stake in its Herta charcuterie business to Casa

Tarradellas. On December 31, 2020, Nestlé completed the sale of the

Yinlu peanut milk and canned rice porridge businesses in China to Food

Wise Co., Ltd.

-- Acquisitions: In April, Nestlé completed the acquisition of Lily's

Kitchen, a premium natural pet food business. Nestlé also expanded

its presence in direct-to-consumer meal delivery services through the

acquisition of Freshly in the United States in November and the purchase

of a majority stake in Mindful Chef in the United Kingdom in December.

Nestlé Health Science continues to build its presence and leadership

in the field of nutritional science. The Group completed the purchase of

the Zenpep business in May, the acquisition of a majority stake in Vital

Proteins in July and the purchase of Aimmune Therapeutics in October.

On February 17, 2021, Nestlé announced that it had reached an

agreement to sell its regional spring water brands, purified water

business and beverage delivery service in the U.S. and Canada to One

Rock Capital Partners, in partnership with Metropoulos & Co. for USD 4.3

billion. The transaction is expected to close in spring 2021.

Zone Americas (AMS)

-- 4.8% organic growth: 4.1% RIG; 0.7% pricing.

-- North America saw mid single-digit organic growth, with strong RIG and

negative pricing.

-- Latin America reached high single-digit organic growth, with positive RIG

and pricing.

-- The underlying trading operating profit margin increased by 40 basis

points to 20.5%.

Sales Sales Organic UTOP UTOP Margin Margin

2020 2019 RIG Pricing growth 2020 2019 2020 2019

CHF CHF CHF CHF

Zone 34.0 37.8 7.0 7.6

AMS bn bn 4.1% 0.7% 4.8% bn bn 20.5% 20.1%

Organic growth was 4.8%, with robust RIG of 4.1% and pricing of 0.7%.

Divestitures reduced sales by 5.0%, largely related to the divestment of

the U.S. ice cream business. Foreign exchange had a negative impact of

9.9%, reflecting broad-based currency depreciations against the Swiss

franc. Reported sales in Zone AMS decreased by 10.1% to CHF 34.0

billion.

North America posted mid single-digit organic growth, with strong RIG

across most product categories. The largest growth contributor was

Purina PetCare, which saw strong momentum in e-commerce. Its

science-based and premium brands Purina Pro Plan, Purina ONE and Fancy

Feast all grew at a double-digit rate. Beverages, including Starbucks

products, Coffee mate and Nescafé, posted double-digit growth,

supported by a strong innovation pipeline. Frozen food reported high

single-digit growth, led by Stouffer's, DiGiorno and Hot Pockets.

Home-baking products, including Toll House and Carnation, saw elevated

consumer demand. Gerber baby food posted positive growth, based on

strong sales development in e-commerce and for the organic range. Water

and Nestlé Professional reported a sales decrease, reflecting

reduced demand in out-of-home channels during lockdowns.

Latin America reported high single-digit organic growth, with positive

contributions across geographies and most product categories. Brazil

posted double-digit growth, with strong broad-based demand, particularly

for Ninho, NAN and Nescafé. Growth in Chile reached a double-digit

rate, led by dairy, confectionery and ice cream. Mexico saw mid

single-digit growth, supported by La Lechera and Nescafé. By

product category, dairy, Purina PetCare, coffee and culinary all posted

double-digit growth. Led by Brazil, confectionery reported positive

growth reaching a high single-digit rate in the second half. Sales in

Nestlé Professional decreased, with growth turning almost flat in

the fourth quarter led by delivery businesses and on-the-go products.

The Zone's underlying trading operating profit margin increased by 40

basis points. Operating leverage, portfolio management and structural

cost reductions more than offset commodity inflation and

COVID-19-related costs.

Zone Europe, Middle East and North Africa (EMENA)

-- 2.9% organic growth: 3.3% RIG; -0.4% pricing.

-- Western Europe saw low single-digit organic growth with solid RIG,

partially offset by negative pricing.

-- Central and Eastern Europe reported mid single-digit organic growth, with

strong RIG and negative pricing.

-- Middle East and North Africa posted low single-digit organic growth,

entirely driven by pricing.

-- The underlying trading operating profit margin grew by 50 basis points to

18.6%.

Sales Sales Organic UTOP UTOP Margin Margin

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February 18, 2021 01:15 ET (06:15 GMT)