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Letter to our shareholders

Chairman and CEO


The turbulent operating environment of the past year has only reinforced our commitment to Nestlé's longer-term objectives. Good for You, Good for the Planet is at the heart of our strategy. Our strong brands, our impactful innovation capabilities and our operational execution have helped us continue to deliver.



During a challenging year, we stayed true to our values and remained dependably on track.

We stayed focused on:

Read our full letter to shareholders below.



True to our values

At the start of 2022, the extreme challenges of the COVID-19 pandemic seemed to be waning. There were some supply chain challenges as well as inflationary pressures but those appeared to be manageable. The unexpected invasion of Ukraine at the end of February changed the course of the year. Global supply chain issues proliferated, inflation became rampant, concerns over energy shortages took hold and food insecurity grew.

We faced a choice this past year in how to react to these challenges. There was little handwringing as it was clear to us that we could not lose sight of our long-term strategy: we continued to invest in R&D, our brands and sustainability initiatives. Increased food insecurity only strengthened Nestlé's commitments to maintaining essential food supplies, providing affordable nutrition and advancing regenerative food systems.

To stay on course required a constant rebalancing between growth, affordability, and meeting our commitments to shareholders and other stakeholders. There were no easy solutions, but we did not waver in our resolve to deliver on short-term expectations, progress on our long-term ambitions and remain true to the core of our strategy: Good for You, Good for the Planet. Nestlé's decentralized five-zone structure allowed us to be close to our consumers and respond to shifts in their needs, while our global, balanced and diversified portfolio helped us weather inflation and supply chain challenges.

Increased food insecurity only strengthened Nestlé's commitments to maintaining essential food supplies, providing affordable nutrition and advancing regenerative food systems.



Dependably on track

Even in a year as challenging as 2022, we continued to deliver. We stayed focused on bringing fast-paced innovations to market, enhancing our digital capabilities, investing in our brands and managing our portfolio. Our real internal growth remained robust under challenging conditions.

We adjusted prices to reflect our own growing costs due to inflation. However, we did so responsibly, seeking internal efficiencies and cost-saving measures to try to limit price increases. Nestlé's role has always been to make nutritious food affordable and accessible to people everywhere, and we stay committed to that even in times of economic headwinds. Highlights from 2022 include the following:

  • Organic growth reached 8.3%, with pricing of 8.2% and real internal growth of 0.1%.
  • Foreign exchange reduced sales by 0.9%. Net acquisitions had a positive impact of 1.1%. As a result, total reported sales increased by CHF 7.3 billion or 8.4% to CHF 94.4 billion.
  • Underlying trading operating profit (UTOP) margin reached 17.1%. The trading operating profit (TOP) margin was unchanged versus the prior year at 14.0% on a reported basis. As announced at our investor seminar, we expect our underlying trading operating profit margin to return to a range of 17.5% to 18.5% by 2025, following the impact of cost inflation on our margin in 2021 and 2022.
  • Underlying earnings per share (EPS) increased by 9.4% in constant currency and by 8.4% on a reported basis to CHF 4.80. We expect to deliver an underlying EPS growth target range of 6% to 10% in constant currency. Earnings per share decreased by 43.5% to CHF 3.42 on a reported basis, mainly reflecting the gain on the disposal of L'Oréal shares in 2021.
  • Free cash flow was CHF 6.6 billion, as working capital increased temporarily in the context of supply chain constraints and capital expenditure remained at an elevated level. We expect to trend toward free cash flow of 12% of sales and ROIC of 15% by 2025.


Strategic portfolio management

In 2022, we continued to invest in high-growth categories that contribute to our Nutrition, Health and Wellness strategy. Nestlé remains disciplined in its approach to portfolio management, looking for strategic and cultural fit, as well as attractive financial returns.

We remain focused on driving sustained profitable growth in the coffee category with the announced acquisition of Seattle's Best Coffee brand from Starbucks. In addition to Starbucks packaged coffees sold by Nestlé under the Global Coffee Alliance, Seattle's Best Coffee will join Nestlé's roster of beloved coffee brands in the United States including Nescafé, Nespresso and Blue Bottle.

We continue to develop Nestlé Health Science's leadership position in nutrition and health, sharpening the focus on Consumer Care and Medical Nutrition. In 2022, we acquired a majority stake in Orgain as well as the businesses of Puravida and The Better Health Company. The new brands expand our markets in the vitamins, minerals and supplements segment in the United States, Latin America and Oceania. At the same time, we decided to explore strategic options for Palforzia, the peanut allergy treatment, following slower than expected adoption by patients and healthcare professionals.


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Innovating to unlock the power of food

Building a pipeline of highly differentiated innovations, while rapidly testing and launching new ideas, fuels our growth. Our focus is on delivering tasty, nutritious, affordable and sustainable products by anticipating growing trends and meeting people's diverse evolving needs and preferences, while investing in solutions with an improved environmental footprint. In 2022, we were able to maintain the same time-to-market speed as in 2021, despite the challenging environment.

Infant nutrition. We continue to develop science-based nutritional solutions for infants. The newly launched infant formula with Nutrilearn Connect, a unique nutrient blend to increase brain myelination, and rollout of our infant formulas with five human milk oligosaccharides (HMOs) to support gut health and immunity exemplify this focus. In 2022, infant formula with HMOs had CHF 1.3 billion in sales with double-digit growth.

Coffee. We are innovating novel systems that bring the perfect cup of coffee to consumers in a sustainable way. Nescafé Dolce Gusto Neo gives coffee lovers the best coffee-shop-at-home experience with three brewing methods and compostable paper-based pods. Nespresso will also roll out a new range of compostable paper-based capsules that are retro-compatible with Nespresso Original machines, while Nespresso Vertuo Pop offers the smartest, smallest, most optimized and accessible coffee machine ever, made from 35% recycled plastic.

Plant-based. Market demand for plant-based products continues to create opportunities for new offerings across the entire food and beverage portfolio, which contribute to our sustainability goals. An early focus into a wide variety of plant-based alternatives and a retail focus on ready-made meals has proven to be a winning strategy. Recent launches include Gerber Plant-tastic, soy-based Milo, KitKat V, Garden Gourmet Voie Gras and Malher Huevo Más. Plant-based products generated sales of around CHF 1 billion in 2022, posting high single-digit organic growth.


Accelerated digitalization

Data and technology are an essential source of competitive advantage and Nestlé continues its data-driven digital transformation. We are building a seamless consumer experience and channel-less commerce system, unlocking value via consumer data across geographies and categories. E-commerce sales grew by 9.2% to account for 15.8% of total Group sales. We remain on track to hit 25% by 2025.

Artificial intelligence and remote assistance are allowing us to be more agile and flexible in our manufacturing sites and supply chains – more important now than ever.


For decades, our activities and products have aimed to make a positive difference to society in order to foster Nestlé's ongoing success. We have not wavered in that commitment in the face of short-term challenges this year.



Creating Shared Value

Creating Shared Value has always been fundamental to the way we do business at Nestlé. We have long believed that our company can only be successful in the long term by creating value for both our shareholders and society. For decades, our activities and products have aimed to make a positive difference to society in order to foster Nestlé's ongoing success. We have not wavered in that commitment in the face of short-term challenges this year.

Net Zero Roadmap. We have made good progress on our Net Zero Roadmap, which was strongly supported by our shareholders at the 2021 Annual General Meeting. We have already passed peak carbon, with greenhouse gas emissions below the 2018 baseline. From 2024, we will vote annually on a comprehensive report on our non-financial performance, including our climate-related agenda. Our commitment to advancing regenerative food systems supports this agenda. We are supporting farmers in their transition to regeneration through the Nescafé Plan 2030 and our income accelerator program for cocoa-farming families.

Affordable nutrition. Our offering of affordable and accessible products aims to provide lower-income consumers with high-quality food products that deliver nutritional value at an affordable cost and in an appropriate format. Most of our affordable and accessible offering is fortified with at least one of the 'big four' micronutrients: iron, iodine, vitamin A and zinc. In 2022, we provided 129.2 billion fortified servings of affordable nutrition products.

Good for You. In 2022, we made a commitment to increase the transparency of the nutritional value of our global portfolio. For the first time, we benchmarked our entire global portfolio against the Health Star Rating (HSR) system - a nutrient profiling system used by the Access to Nutrition Initiative - and have given an overview of our wide range of specialized nutrition products, which are not covered by the HSR system. Nestlé is the first company to disclose the nutritional value of its entire portfolio.

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Refined Board oversight

Our Board of Directors continued to provide valuable guidance on our strategy, business performance and sustainability agenda. We maintained our practice of adding diverse experience and expertise through the appointment of two new independent directors. In recent years we have, in particular, strengthened the Board's expertise on food systems, food and beverage, digitalization, marketing, sustainability and other topics.

During 2022, the Board further refined the governance framework related to our sustainability agenda, including the annual work plan of the dedicated Sustainability Committee, which advises on all aspects of the Group's environmental and social sustainability, including our efforts on climate change, human rights, and diversity and inclusion.


Consistently committed to our purpose

We are committed to creating shared value for our shareholders and all stakeholders connected to our business by unlocking the power of food to enhance quality of life. We could not do this without the loyalty of our employees, business partners and investors. In this challenging year, we thank our employees for their admirable dedication in keeping us on track while rebalancing. We are also grateful for the support of our business partners, our consumers and the communities where we operate. We thank you, our shareholders, for your continued trust in us to stay the course.



The Annual Report contains our Annual Review including Creating Shared Value highlights, the Corporate Governance & Compensation Reports and our Financial Statements