Press Release: Nestle: Nestlé reports full-year results for 2021

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Vevey, February 17, 2022

Nestlé reports full-year results for 2021

-- Organic growth reached 7.5%, with real internal growth (RIG) of 5.5% and

pricing of 2.0%. Growth was supported by continued momentum in retail

sales, steady recovery of out-of-home channels, increased pricing and

market share gains.

-- Total reported sales increased by 3.3% to CHF 87.1 billion (2020: CHF

84.3 billion). Foreign exchange reduced sales by 1.3%. Net divestitures

had a negative impact of 2.9%.

-- The underlying trading operating profit (UTOP) margin was 17.4%,

decreasing by 30 basis points. The trading operating profit (TOP) margin

decreased by 290 basis points to 14.0% on a reported basis, largely

reflecting impairments related to the Wyeth business.

-- Underlying earnings per share increased by 5.8% in constant currency and

by 5.1% on a reported basis to CHF 4.42. Earnings per share increased by

41.1% to CHF 6.06 on a reported basis, mainly reflecting the gain on the

disposal of L'Oréal shares.

-- Free cash flow decreased by 14.9% to CHF 8.7 billion, reflecting

temporarily higher capital expenditure and inventory levels.

-- Board proposes a dividend of CHF 2.80 per share, an increase of 5

centimes, marking 27 consecutive years of dividend growth. In total, CHF

13.9 billion were returned to shareholders in 2021 through a combination

of dividend and share buybacks.

-- Continued progress in portfolio management. Portfolio rotation since 2017

now amounts to around 20% of total 2017 sales.

-- 2022 outlook: we expect organic sales growth around 5% and underlying

trading operating profit margin between 17.0% and 17.5%. Underlying

earnings per share in constant currency and capital efficiency are

expected to increase.

-- Mid-term outlook: sustained mid single-digit organic sales growth.

Continued moderate underlying trading operating profit margin

improvements. Continued prudent capital allocation and capital efficiency

improvements.

Mark Schneider, Nestlé CEO, commented:"In 2021, we remained focused on executing our long-term strategy and stepping up growth investments, while at the same time navigating global supply chain challenges. Our organic growth was strong, with broad-based market share gains, following disciplined execution, rapid innovation and increased digitalization. We limited the impact of exceptional cost inflation through diligent cost management and responsible pricing. Our robust underlying earnings per share growth shows the resilience of our value creation model. The entire Nestlé team demonstrated exemplary perseverance and agility in a challenging environment.

The evolution of our portfolio continued, focusing on categories with attractive growth opportunities and differentiated offerings. Recent examples include the acquisition of the core brands of The Bountiful Company and the divestiture of the mainstream water brands in North America.

Our sustainability agenda further progressed as we enhance the well-being of our consumers, help regenerate the environment and strengthen the farming communities in our supply chains.

We continued to create value for our shareholders through disciplined capital allocation, steadily increasing dividends and significant share buybacks. Going forward, we are confident in the strength of our value creation model."

Group Results

Nestlé

Total Zone Zone Zone Health Other

Group AMS EMENA AOA Nespresso Science Businesses

Sales

FY-2021

(CHF m) 87 088 33 779 21 128 20 735 6 418 4 822 206

Sales

FY-2020

(CHF m)* 84 343 34 010 20 226 20 730 5 885 3 326 166

Real

internal

growth

(RIG) 5.5% 4.8% 6.0% 3.5% 8.2% 13.4% 25.1%

Pricing 2.0% 3.7% 1.2% 0.8% 0.6% 0.1% 1.2%

Organic

growth 7.5% 8.5% 7.2% 4.2% 8.8% 13.5% 26.3%

Net M&A - 2.9% - 6.6% - 2.2% - 3.9% 0.0% 33.2% 0.0%

Foreign

exchange - 1.3% - 2.5% - 0.6% - 0.4% 0.3% - 1.8% - 1.8%

Reported

sales

growth 3.3% - 0.7% 4.5% 0.0% 9.1% 45.0% 24.5%

FY-2021

Underlying

TOP

Margin 17.4% 20.8% 18.5% 21.8% 23.0% 13.6% - 15.6%

FY-2020

Underlying

TOP

Margin* 17.7% 20.5% 18.6% 22.2% 23.6% 16.5% - 43.9%

* 2020 figures restated following the disclosure of Nestlé Health Science and Nespresso as standalone segments from 2021 onwards (previously combined and presented in Other businesses).

Group sales

Organic growth was 7.5%, with RIG of 5.5%. Pricing increased to 2.0%, reaching 3.1% in the fourth quarter, to offset significant cost inflation.

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 RIG with positive pricing. Organic growth in emerging markets was 7.8%, with robust RIG 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 reach CHF 3.1 billion, generating over CHF 1 billion of incremental sales compared with 2018. Purina PetCare posted double-digit growth, led by science-based and premium brands Purina Pro Plan, Fancy Feast and Purina ONE, as well as veterinary products. Prepared dishes and cooking aids reported high single-digit growth, based on strong sales developments for Maggi, Stouffer's and Lean Cuisine. Sales in vegetarian and plant-based food grew at a double-digit rate, reaching around CHF 800 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 (HMOs) products continued to see robust growth, reaching CHF 1.2 billion.

By channel, organic growth in retail sales was 6.4%. E-commerce sales grew by 15.1%, reaching 14.3% of total Group sales, with strong momentum in most categories, particularly Purina PetCare, coffee and Nestlé Health Science. Organic growth in out-of-home channels reached 24.5%, helped by a low base of comparison due to the pandemic.

Net divestitures decreased sales by 2.9%, largely related to the Nestlé Waters North America, Yinlu and Herta transactions. Divestitures were partially offset by acquisitions, including the core brands of The Bountiful Company and Freshly. The negative impact on sales from foreign exchange moderated to 1.3%. Total reported sales increased by 3.3% to CHF 87.1 billion.

Underlying Trading Operating Profit

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February 17, 2022 01:15 ET (06:15 GMT)