Strong first-quarter sales, full-year outlook confirmed

   
Back to News archiveVevey, Switzerland,Apr 22, 2010


  • Group: sales of CHF 26.3 billion, 6.5% organic growth, 4.8% real internal growth
  • Food and Beverages: sales of CHF 24.3 billion, 6.1% organic growth, 4.5% real internal growth
  • Positive contributions from all regions and categories
  • Full-year outlook confirmed: Food and Beverages business’ organic growth higher than in 2009 combined with an EBIT margin improvement in constant currencies

Paul Bulcke, Nestlé CEO: “Our strong sales performance in the first quarter confirms we are capturing opportunities in our different growth pillars, both in emerging and developed markets, even in a global economic environment which remains challenging. By keeping the initiative and with appropriate pricing, we are building our market positions in different categories as part of our long-term, disciplined commitment to sustainable, profitable growth. We continue to increase investment in our brands, our innovation and new manufacturing and distribution capabilities, and will further drive our efficiency programmes across the world. I therefore reconfirm our outlook for 2010, both top and bottom line improvement.”

Vevey, 22 April 2010 – In the first quarter of 2010, the Group’s organic growth stood at 6.5%, including real internal growth of 4.8%. Foreign exchange impacted sales by -2.7%, while acquisitions, net of divestitures, added 0.6%. Overall, Group sales increased by 4.4%, to CHF 26.3 billion. Food and Beverages’ organic growth reached 6.1%, including real internal growth of 4.5%. Foreign exchange impacted Food and Beverages’ sales by -2.6%, while acquisitions, net of divestitures, added 0.7%. Overall, Food and Beverages’ sales were up 4.2%, to CHF 24.3 billion.

The organic growth of Nestlé Food and Beverages was 4.6% in the Americas, 5.1% in Europe and 11.2% in Asia, Oceania and Africa. This confirms the momentum gathered in the latter part of 2009, with all regions contributing. Western Europe and other developed markets’ growth accelerated, while the Group's emerging markets achieved over 10% organic growth, with a particularly strong performance in BRIC countries and a sustained contribution from our popularly positioned products, providing affordable, nutritious products for emerging consumers.

Sales by operating segment

  Jan.-March 2010
Sales
in CHF millions
Jan.-March 2009
Sales
in CHF millions
Jan.-March 2010
Organic Growth (%)
Jan.-March 2010
Real Internal
Growth (%)
Food & Beverages        
   - Zone Americas 7 634 7 487 +5.1% +2.4%
   - Zone Europe 5 336 5 241 + 3.4% +2.3%
   - Zone Asia, Oceania, Africa 4 120 3 744 +10.3% +8.9%
Nestlé Waters 2 036 2 068 +2.5% +2.7%
Nestlé Nutrition 2 512 2 420 +6.5% +5.6%
Other Food & Beverages 2 632 2 338 +11.4% +9.3%
Nestlé Food & Beverages 24 270 23 298 +6.1% +4.5%
Pharma (incl. Alcon) 2 008 1 876 +10.5% +8.9%
Total Group 26 278 25 174 +6.5% +4.8%
Nestlé Waters, Nestlé Nutrition and Other Food & Beverages (including Nestlé Professional) are not included in the Zones.


Zone Americas
Sales of CHF 7.6 billion, 5.1% organic growth, 2.4% real internal growth

In North America, Dreyer’s ice cream and Purina petcare started the year well, as did the pizza business acquired in March, while confectionery benefited from the extension of the Wonka brand into chocolate.

In Latin America, Brazil, Mexico, Central America and Dairy Partners Americas (DPA), our joint venture with Fonterra, all enjoyed very strong organic growth. Nescafé had good performances in all price categories, and the roll-out of Nescafé Dolce Gusto in the Zone started well. Chocolate grew double-digit in Brazil, partly due to the improved performance of seasonal products. Maggi went well across the region.

Zone Europe
Sales of CHF 5.3 billion, 3.4% organic growth, 2.3% real internal growth

Western Europe experienced positive real internal growth in all key markets. This performance reflects ongoing successful renovation and innovation combined with increased brand support, as well as our focus on building our market positions. The roll-out of Nescafé Dolce Gusto and Nescafé Green Blend continued, resulting in increased market share. There were good performances in other categories, including Maggi’s new Juicy Chicken range, Herta chilled products and doughs, Buitoni frozen pizzas, Nesquik, as well as Purina petcare.

In Eastern Europe, Poland and Ukraine grew strongly, while the more impulse-driven categories in Russia, such as chocolate, were still recovering. Maggi and Nescafé performed well.

Zone Asia, Oceania and Africa
Sales of CHF 4.1 billion, 10.3% organic growth, 8.9 % real internal growth

The Zone's emerging markets continued to build on momentum gathered in 2009, delivering double-digit organic growth in markets such as China, South Asia, Indonesia, Africa and the Middle East, thanks to deeper product distribution, accelerated roll-out of popularly positioned products, as well as increased product innovation and brand support. By category, Nido powdered milk, Maggi culinary products, Nescafé and Milo both powdered and ready-to-drink, as well as chocolate all performed well.

In Japan and Oceania, Nescafé, Milo and Maggi culinary products all showed strong growth.

Nestlé Waters
Sales of CHF 2.0 billion, 2.5% organic growth, 2.7% real internal growth

Bottled water returned to growth in many important markets in Europe. High levels of growth led to market share gains, with strong performances from S. Pellegrino, Perrier and Contrex. Emerging markets continued to deliver double-digit growth under the Nestlé Pure Life brand. Nestlé Pure Life also continued to grow in the US, while regional brands there were impacted by price-led competition.

Nestlé Nutrition
Sales of CHF 2.5 billion, 6.5% organic growth, 5.6% real internal growth

All Nestlé Nutrition businesses (Infant Nutrition, Performance Nutrition, Healthcare Nutrition and Weight Management) achieved positive real internal growth.

Infant Nutrition achieved high single-digit organic growth, with double-digit organic growth in the US and many emerging markets. Infant formula and baby food grew particularly strongly in the US and emerging markets, while infant cereals achieved double-digit organic growth. Key European markets such as France and Germany also improved, while Russia and central Europe continued to deliver strong growth.

Healthcare Nutrition began to see the benefits of the 2009 streamlining of its product portfolio with good growth in many markets. Performance Nutrition continued to perform well in all Zones.

Jenny Craig, impacted by lower consumer spend in the US last year, was back to growth in the first quarter, benefiting from a rise in new customers. The roll-out of Jenny Craig in Europe started with France and the UK this spring, and first signs are promising.

Other Food and Beverages
Sales of CHF 2.6 billion, 11.4% organic growth, 9.3% real internal growth

Nespresso’s success, based on total excellence from coffee bean to cup, continued with over 20% organic growth. With about 40 new boutiques expected to open in 2010 and an intensive innovation and customer communication pipeline, the world's leading premium coffee business is set to build another year of strong growth.

Nestlé Professional, our out-of-home business, is recovering ahead of the category in developed markets and enjoyed double-digit organic growth in emerging markets.

Cereal Partners Worldwide achieved mid single-digit organic growth with a strong performance in emerging markets, especially in Russia, the Middle East, South Africa and Latin America.

Sales by product

 

  Jan.-March 2010
Sales
in CHF millions
Jan.-March 2009
Sales
in CHF millions
Jan.-March 2010
Organic Growth (%)
Jan.-March 2010
Real Internal
Growth (%)
Powdered and liquid beverages 4 867 4 437 +9.4% +7.2%
Water 2 037 2 069 +2.5% +2.7%
Milk products and ice cream 4 511 4 285 +7.1% +6.0%
Nutrition 2 513 2 421 +6.5% +5.6%
Prepared dishes and cooking aids 4 165 4 119 +2.3% +1.6%
Confectionery 2 968 2 747 +9.2% +4.7%
PetCare 3 209 3 220 +4.6% +2.3%
Nestlé Food & Beverages 24 270 23 298 +6.1% +4.5%
Pharmaceutical Products (incl. Alcon) 2 008 1 876 +10.5% +8.9%
Total Group 26 278 25 174 +6.5% +4.8%
The slight difference in the figures for water and nutrition between the “Sales by operating segment” and “Sales by product” tables is due to the fact that some water and nutrition products are also sold by operating segments other than Nestlé Waters and Nestlé Nutrition.


Powdered and liquid beverages
Sales of CHF 4.9 billion, 9.4% organic growth, 7.2% real internal growth

The soluble coffee business benefited from the continued successful roll-out and market share gains of Nescafé Dolce Gusto and Nescafé Green Blend, as well as very strong growth in its popularly positioned products and ready-to-drink ranges. Milo and Nesquik drove growth in both powdered and liquid beverages.

Milk products and ice cream
Sales of CHF 4.5 billion, 7.1% organic growth, 6.0% real internal growth

In milk products, strong volumes were driven by the successful popularly positioned product strategy in emerging markets, as well as benefit-specific milks under the Nido and Ninho brands. In the developed world, CoffeeMate also experienced double-digit growth with its continued international roll-out.

The ice cream business gained market share, particularly with Häagen Dazs, Skinny Cow and Drumstick in the US. In Europe, the first quarter saw an improvement over the same period last year.

Prepared dishes and cooking aids
Sales of CHF 4.2 billion, 2.3% organic growth, 1.6% real internal growth

Maggi culinary products experienced double-digit organic growth in Africa, Asia, Latin America and Russia. Western Europe also accelerated compared to 2009, with successful innovations such as Juicy Roast spice mixes in a bag.

Nestlé’s business in value frozen food in Europe and the US saw strong organic growth, particularly with pizzas, family-packs and multi-pack offerings. Single-serve, premium and nutrition-focused frozen prepared meals such as Lean Cuisine experienced a contraction in a weak overall market.

Herta chilled products and doughs enjoyed good growth in Europe, while Buitoni performed well in the US.

Confectionery
Sales of CHF 3.0 billion, 9.2% organic growth, 4.7% real internal growth

The category benefited from US launches of new Raisinets and Butterfinger variants, as well as the chocolate extension of the Wonka brand. We achieved double-digit organic growth in emerging markets, particularly in Asia, the Middle East and Latin America. Munch in India and the Nestlé wafer in China are two good examples of our successful popularly positioned strategy in this category. We gained market share in Russia in a contracting market. Western Europe improved, building on momentum gathered in the latter part of 2009. KitKat continued to perform well around the world.

PetCare
Sales of CHF 3.2 billion, 4.6% organic growth, 2.3% real internal growth

The petcare business achieved positive growth in Europe and the US, building on double-digit organic growth in last year’s first quarter. This was achieved while optimising ranges in a number of markets to increase the focus on higher value products. Key brands such as Pro Plan, Purina ONE, Friskies, Beneful, Purina Dog Chow and Fancy Feast continued to perform well, enhanced by innovations such as Felix Sensations and Purina ONE Actilea, a product which reinforces cats’ immune systems.

Pharmaceutical products
Sales of CHF 2.0 billion, 10.5% organic growth, 8.9% real internal growth

Alcon and Galderma, which continued to benefit from a successful innovation pipeline, enjoyed good performances. We continue to expect the sale of our remaining holding in Alcon to be completed in the second half of 2010.

Other events
In February, we acquired Ukraine’s market leader in instant noodles and dehydrated seasonings under the Mivina brand, consolidating our successful, fast-growing culinary business in that country. That same month, our water business entered into a joint venture with Dashan, the bottled water market leader in China’s Yunnan province, enabling us to expand our home-and-office delivery franchise there. In March, we started integrating Kraft’s pizza business into Nestlé’s US frozen food division, a process which is going very well.

Share Buy-Back
The Nestlé share buy-back, originally announced in 2007, is on target to be completed before the end of the first half. The new CHF 10 billion share buy-back, announced in January 2010, will start thereafter. We expect to buy back around CHF 5 billion in shares in the second half of 2010, making about CHF 10 billion in total for the year.

Full-year outlook confirmed
Our strong first-quarter sales are in line with our expectations. They confirm we are capturing opportunities in our different growth pillars, both in emerging and developed markets, even in a global economic environment which remains challenging. By keeping the initiative and with appropriate pricing, we are building our market positions in different categories as part of our long-term, disciplined commitment to sustainable, profitable growth. We continue to increase investment in our brands, our innovation and new manufacturing and distribution capabilities, and will further drive our efficiency programmes across the world. For 2010 as a whole, we expect our Food and Beverages business to achieve higher organic growth than in 2009 as well as a further EBIT margin improvement in constant currencies.


Contact
Media: Robin Tickle Tel.: +41 21 924 22 00
Investors: Roddy Child-Villiers Tel.: +41 21 924 36 22