Nestlé reports 8% growth in first half, 1.3% price increases

The world's largest food company reported organic growth of 8.1%, with real internal growth (RIG) of 6.8%, for the first half of 2021. Nestlé said its pricing increased to 1.3%, reflecting input cost inflation during the period.

Nestlé's growth was broad based across most geographies. Organic growth was 6.7% in developed markets, based mostly on RIG. Organic growth in emerging markets was 10%, with strong RIG and positive pricing.

By product category, the largest contributor to organic growth was coffee, fueled by strong demand for three main brands; Nescafé, Nespresso and Starbucks. Starbucks products posted 16.7% growth, with sales reaching CHF 1.4 billion across 79 markets,

KEY POINTS

• Organic growth reached 8.1%, with real internal growth (RIG) of 6.8% and pricing of 1.3%. Growth was supported by continued momentum in retail sales, a return to growth in out-of-home channels, increased pricing and market share gains.
• Total reported sales increased by 1.5% to CHF 41.8 billion (6M-2020: CHF 41.2 billion). Foreign exchange reduced sales by 3.5%, reflecting appreciation of the Swiss franc against most currencies. Net divestitures had a negative impact of 3.1%.
• The underlying trading operating profit (UTOP) margin was 17.4%, unchanged versus the prior year. The trading operating profit (TOP) margin decreased by 20 basis points to 16.7%.
• Underlying earnings per share increased by 10.5% in constant currency and increased by 8.3% on a reported basis to CHF 2.17. Earnings per share increased by 3.2% to CHF 2.12 on a reported basis.
• Free cash flow was CHF 2.8 billion.
• Further progress in portfolio management. In April, Nestlé entered into an agreement to acquire core brands of The Bountiful Company. The transaction is expected to close in August. On July 26, 2021, Nestlé and Starbucks strengthened their collaboration to bring ready-to-drink coffee beverages to select markets across South-East Asia, Oceania and Latin America.
• Full-year 2021 outlook updated: we expect full-year organic sales growth between 5% and 6%. The underlying trading operating profit margin is now expected around 17.5%, reflecting initial time delays between input cost inflation and pricing as well as the one-off integration costs related to the acquisition of The Bountiful Company's core brands. Beyond 2021, our mid-term outlook for continued moderate margin improvement remains unchanged. Underlying earnings per share in constant currency and capital efficiency are expected to increase this year.

See Nestlé's full announcement at Globe Newswire.