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Nestlé grows in 2020 on an organic basis

Turnover and profits down due divestitures and exchange rates

Divestitures weigh heavily on Nestlé, but the multinational in 2020 recorded a net increase in sales on an organic basis (net of acquisitions, divestitures and currency effects), driven above all by those of pet products, whose growth to 3.6 % - according to Vevey - records "the highest level in the last five years". A +3.4% is due to the increase in sales volumes and the other +0.2% is due to price increases. The business was driven above all by strong dynamism in North and South America, pet food and health products. 

Returning to the results, the Swiss food group saw profits down 3% in 2020, to 12.2 CHF billion (11.2 billion Euros), due to declining sales and negative currency effects. In fact, sales fell by 8.9% compared to the previous year, to 84.3 CHF billion. This, explains the group, also due to the sale of parts of the company, which reduced the turnover by 4.6%, and the strengthening of the franc (exchange rates accounted for 7.9%). Nestlé in recent months has sold, for example, its businesses related to skin care, ice cream in the United States and Herta cured meats.

By product category, the largest contributor to growth was Purina PetCare and its premium brands Purina Pro Plan, Purina ONE and Felix. Dairy saw high single-digit growth, based on increased demand for home-baking products and fortified affordable milks. Coffee reported mid single-digit growth, boosted by strong consumer demand for Starbucks products, Nespresso and Nescafé. Sales of Starbucks products reached CHF 2.7 billion, generating incremental sales of over CHF 400 million in 2020. Prepared dishes and cooking aids posted mid single-digit growth, with robust momentum across most categories during lockdowns. Vegetarian and plant-based food offerings continued to see strong double-digit growth, despite reduced demand in out-of-home channels due to the pandemic. Sales in Nestlé Health Science grew at a double-digit rate, reflecting higher demand for products that support health and the immune system. Growth in confectionery was slightly negative, with reduced demand for impulse and gifting products. Water reported a decrease in sales due to its high exposure to out-of-home channels.

E-commerce sales grew by 48.4%, reaching 12.8% of total Group sales. Coffee, Purina PetCare and Nutrition & Health Science were the main growth contributors, with strong momentum in all other categories.

Mark Schneider, Nestlé CEO, commented: "2020 was a year of hardship for so many, yet I am inspired by the way it has brought all of us closer together. I want to thank our employees and our partners - from farmers to retailers - who worked with us to ensure the supply of food and beverages to communities globally. In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability and return on invested capital. The global pandemic did not slow us down. Our nutrition expertise, digital capabilities, decentralized structure and innovation engine allowed us to adapt quickly to changing consumer behaviors and trends. We advanced our portfolio transformation, continued to build Nestlé Health Science into a nutrition powerhouse and expanded our presence in direct-to-consumer businesses. At the same time, we remained focused on sustainability and set out our path to achieve net zero greenhouse gas emissions by 2050. This journey is expected to support future growth and be earnings neutral – it will generate value for society and our shareholders. Looking to 2021, we expect continued improvement in organic growth, profitability and capital efficiency in line with our value creation model".

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EFA News - European Food Agency
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