Nestlé has surpassed its full-year organic sales expectations with 3.6% growth, driven by strong demand for its pet food and health products in the Americas.
In its third-quarter, the company raised its full-year organic sales growth guidance to around 3%; however with 3.6% growth, Nestlé records the highest level in the last five years. Main growth contributors include the Americas, Purina PetCare, at-home coffee and Nestlé Health Science.
Full-year total reported sales decreased by 8.9% to CHF 84.3 billion ($94.1 billion), compared to CHF 92.57 billion ($103.3 billion) in 2019. Nestlé’s net profit declined by 3.0% to CHF 12.2 billion ($13.6 billion).
The Swiss giant witnessed high retails sales growth throughout 2020 due to increased at-home consumption, whereas out-of-home channel sales fell significantly.
For 2020, Nestlé recorded sales of CHF 34 billion ($37.9 billion) in the Americas, representing 4.8% organic growth. Coffee, frozen food and home-baking products saw elevated consumer demand, while its Gerber baby food benefitted from strong sales development in ecommerce and for the organic range.
The company witnessed 2.9% organic growth in the EMENA zone to CHF 20.23 billion ($22.57 billion), led by strong performances by pet food, portioned and soluble coffee, as well as vegetarian and plant-based food products. Each region recorded positive growth, with particularly strong momentum in Russia, Germany, the UK and Israel.
Sales in AOA grew organically by 0.5%, with declines in China more than offset by mid-single-digit organic growth in the other regions. Nestlé Health Science saw 12.2% organic growth as consumers turned to products with nutritional benefits.
“The global pandemic did not slow us down,” said Mark Schneider, Nestlé CEO. “In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability and return on invested capital.”
“We advanced our portfolio transformation, continued to build Nestlé Health Science into a nutrition powerhouse and expanded our presence in direct-to-consumer businesses,” he added.
Dairy saw high single-digit growth, based on increased demand for home-baking products and fortified affordable milks; while Nespresso posted 7% organic sales growth – the highest level in the last six years – to CHF 5.9 billion ($6.58 billion).
Sales in confectionery and water decreased due to high exposure in out-of-home channels and on-the-go consumption. Yesterday, Nestlé announced that it had agreed to offload its North American water business to One Rock Capital Partners, in partnership with Metropoulos & Co. for $4.3 billion.
In 2020, Nestlé expects continued increase towards a mid-single-digit organic sales growth.