Mark Schneider, Nestlé CEO:“We are encouraged by the progress on our path of accelerated value creation. The nine-month sales show solid growth across most geographies and product categories. We are starting to see improved momentum in North America and in our infant nutrition category globally. Our business in China continued to grow at a mid single-digit pace. Our growth was supported by disciplined execution and faster innovation. We have reached significant milestones in portfolio management and are particularly pleased with the early closing of the Starbucks transaction. We have also made good progress on our various cost reduction programs. Our growth and efficiency initiatives put us on track to meet our full-year 2018 guidance and 2020 targets.”
* Effective as from January 1, 2018, Nestlé Nutrition is reported in the Zones as a regionally managed business, with the Gerber Life Insurance business reported in Other Businesses. 2017 sales comparables have been restated mainly to reflect this change of management responsibility and the new accounting standards for revenue measurement following the implementation of IFRS 15. Group sales Organic growth was 2.8%, reaching 2.9% in the third quarter despite high comparables. RIG was 2.3% and continued to be at the high end of the food and beverage industry. Pricing increased by 0.5% with improvements in the Americas. In the third quarter, organic growth continued to improve in North America and for infant nutrition globally. Growth in China remained at a mid single-digit pace. Zone EMENA saw slower growth, largely due to high comparables. All categories had positive growth led by coffee, Purina petcare, infant nutrition and Nestlé Health Science. Net acquisitions increased sales by 0.1% as the acquisition of Atrium Innovations, the Starbucks license and other transactions were offset by divestments, mainly the U.S. confectionery business. Foreign exchange had a negative impact of 0.9%, largely due to the devaluation of several emerging market currencies against the Swiss Franc. Total reported sales increased by 2.0% to CHF 66.4 billion. Zone Americas (AMS)
Organic growth was 1.4%, with RIG of 0.8% and pricing of 0.6%. Net acquisitions reduced sales by 1.1%, largely related to the divestment of the U.S. confectionery business. Foreign exchange had a further negative impact on sales of 3.2%. Reported sales in Zone AMS decreased by 2.9% to CHF 21.9 billion. North America had positive organic growth in the nine-month period. Pricing increased in the third quarter, reflecting inflation in commodity and freight costs. We saw continued solid growth in Purina petcare, Coffee-mate creamers and coffee, particularly in e-commerce. Ice cream grew at a mid-single digit pace in the third quarter, supported by Häagen-Dazs and Outshine. Latin America saw positive organic growth and accelerated to a mid single-digit pace in the third quarter. Despite the challenging trading environment, Brazil returned to positive growth in the third quarter. Mexico saw mid single-digit organic growth, with contributions from most categories, in particular Nescafé. There was continued strong momentum for Purina petcare, confectionery and professional across the region. Zone Europe, Middle-East and North Africa (EMENA)
Organic growth was 1.6%, with solid RIG of 2.3%. Pricing declined by 0.7% as deflationary trends in Western Europe persisted. Net acquisitions reduced sales by 0.1%. Foreign exchange increased sales by 2.2%. Reported sales in Zone EMENA rose by 3.7% to CHF 13.7 billion. Zone EMENA posted resilient RIG in the context of a low-growth environment, particularly in Western Europe.Nescafé growth was positive in a competitive market and in spite of difficult comparables. The Purina petcare, infant nutrition and professional businesses were the main contributors to growth across the Zone. Premium products had strong momentum in these categories, especially Gourmet cat food and NAN infant formula with Human Milk Oligosaccharides (HMOs). Confectionery posted positive growth with a strong performance from KitKat. Zone Asia, Oceania and sub-Saharan Africa (AOA)
Organic growth was 4.4%, with RIG of 3.7% and pricing of 0.7%. There was no impact on sales from acquisitions and divestments. Foreign exchange reduced sales by 1.3%. Reported sales in Zone AOA increased by 3.1% to CHF 15.8 billion. Zone AOA delivered consistent mid single-digit organic growth, supported by all geographies and categories. China saw mid single-digit growth, driven by innovations in infant nutrition, coffee and culinary. South-East Asia saw solid growth, led by Vietnam and Indonesia with Milo and Bear Brand. The South Asian region also delivered mid single-digit growth, with strong momentum in Maggi, Nescafé and KitKat. Growth in sub-Saharan Africa was based on strong contributions from Maggi and Milo in the Central and West Africa region. Japan and Oceania had positive growth despite difficult trading environments, helped by the launches of Nescafé Gold and KitKat Gold in Australia. Overall for the Zone, infant nutrition and Purina petcare accelerated in the third quarter, posting high single-digit growth.
Nestlé Waters
Organic growth was 2.1%, reaching 4.1% in the third quarter. Pricing increased by 2.3% and RIG declined by 0.2%. Net acquisitions and foreign exchange reduced sales by 0.8% and 0.7%, respectively. Reported sales in Nestlé Waters increased by 0.6% to CHF 6.1 billion. In the United States, price increases were implemented in June to reflect significant inflation in packaging and distribution costs. The recently launched sparkling range under our regional spring water brands continued to see encouraging consumer demand, particularly for Poland Spring, Ice Mountain and Ozarka. Europe returned to positive growth, helped by innovations such as Perrier & Juice and Levissima+. The international premium brands, S.Pellegrino and Perrier, continued to deliver high single-digit growth globally.
Other Businesses
Organic growth of 6.0% was driven by strong RIG of 5.7% and pricing of 0.3%. Net acquisitions increased sales by 5.4%, mainly due to the consolidation of Atrium Innovations in Nestlé Health Science. Foreign exchange increased sales by 0.7%. Reported sales in Other Businesses increased by 12.1% to CHF 8.9 billion. Nespresso maintained a mid single-digit organic growth rate with strong growth in the Americas and Asia. Europe was resilient in a competitive environment. Growth was supported by the launch of the Vertuo system in six new markets in the third quarter. Vertuo, a versatile coffee system with three capsule sizes, is now available in fourteen markets. Nestlé Health Science continued to deliver mid single-digit growth supported by medical nutrition and consumer care products. The distribution of Atrium Innovation’s brands in mass retail provided additional growth momentum. Nestlé Skin Health posted high single-digit growth. Outlook Full-year guidance for 2018 confirmed, with organic sales growth expected to be around 3%; underlying trading operating profit margin improvement in line with our 2020 target. Restructuring costs 1 are expected to be around CHF 700 million. Underlying earnings per share in constant currency and capital efficiency are expected to increase. 1Not including impairment of fixed assets, litigation and onerous contracts Annex Three-month sales overview by operating segment
* Effective as from January 1, 2018, Nestlé Nutrition is reported in the Zones as a regionally managed business, with the Gerber Life Insurance business reported in Other Businesses. 2017 sales comparables have been restated mainly to reflect this change of management responsibility and the new accounting standards for revenue measurement following the implementation of IFRS 15. Nine-month sales overview by product
* Effective as from January 1, 2018, Nestlé Nutrition is reported in the Zones as a regionally managed business, with the Gerber Life Insurance business reported in Other Businesses. 2017 sales comparables have been restated mainly to reflect this change of management responsibility and the new accounting standards for revenue measurement following the implementation of IFRS 15. |
Vevey, October 18, 2018 Nestlé reports nine-month sales for 2018
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