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Nestlé delivers strong sales and earnings per share growth
Sales:
- At comparable structure and constant exchange rates sales up
- 10.1 percent
- Consolidated sales up 6.3 percent
- Real internal growth (RIG) of 4.6 percent
Earnings:
- Earnings per share up 12.1 percent to CHF 8.15
Half Year Figures at a Glance | ||||||||||||||
| Margins | ||||||||||||||
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Sales | CHF 41.2 bio. | CHF 38.8 bio. | + 6.3 % | |||||||||||
EBITA | CHF 4577 mio. | CHF 4500 mio. | + 1.7 % | 11.1 % | 11.6 % | |||||||||
| Trading Profit (EBIT) | CHF 4315 mio. | CHF 4296 mio. | + 0.4 % | 10.5 % | 11.1 % | |||||||||
| Net Profit | CHF 3152 mio. | CHF 2798 mio. | + 12.7 % | 7.6 % | 7.2 % | |||||||||
| EPS | CHF 8.15 | CHF 7.27 | + 12.1 % | |||||||||||
Real Internal Growth (RIG) | 4.6 % | 4.5 % | ||||||||||||
During the first six months of 2001, the Nestlé Group continued the excellent performance achieved last year. Consolidated sales growth accelerated to 6.3 percent, with sales reaching CHF 41.2 billion. Real internal growth (RIG) amounted to 4.6 percent, continuing the positive trend established in the first quarter of the year. Net profit of CHF 3152 million, up 12.7 percent over the comparable period of last year, represented a record margin of 7.6 percent (7.2 percent in H1 2000). Earnings per share increased by 12.1 percent from CHF 7.27 to CHF 8.15.
A good performance across the Group fuelled the strong RIG of 4.6 percent, exceeding its target of four percent. Asia, Oceania and Africa reached 7.2 percent, the Americas 2.9 percent (with renewed growth in some Latin American countries compensating for the somewhat slower pace of the US market) and Europe 2.6 percent, with strong progress in Eastern Europe and a good performance of several key Western European markets. Other activities, primarily the water and the pharmaceutical businesses, achieved a RIG of 8.0 percent.
Sales and Results by Management Responsibilities and Geographic Area | ||||||||||||||||||||||||
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| Sales in CHF millions | % | % | Results in CHF millions | % | ||||||||||||||||||||
Food · Europe · Americas · Asia, Oceania and Africa | 13 198 12 290 7 688 | 12 965 11 439 7 515 | 1.8 7.4 2.3 | 2.6 2.9 7.2 | 1 355 1 403 1 336 | 1 312 1361 1326 | 3.3 3.1 0.8 | |||||||||||||||||
Other Activities (a) | 8 065 | 6 865 | 17.5 | 8.0 | 1 128 | 1 033 | 9.2 | |||||||||||||||||
TOTAL | 41 241 | 38 784 | 6.3 | 4.6 | 5 222 | 5 032 | 3.8 | |||||||||||||||||
| Unallocated items (b) | (907) | (736) | ||||||||||||||||||||||
Trading Profit | 4 315 | 4296 | 0.4 | |||||||||||||||||||||
(a) Mainly Pharmaceutical Products and Water, managed on a worldwide basis.
(b) Mainly corporate expenses, research and development costs, as well as amortization of Goodwill.
Sales by Product Group | ||||||||||||||||
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| Beverages | 11.8 | 11.0 | 7.5 | 6.3 | ||||||||||||
| Milk Products, Nutrition and Ice Cream | 11.4 | 10.7 | 7.1 | 4.1 | ||||||||||||
| Prepared Dishes, Cooking Aids and Pet Care | 10.3 | 10.0 | 3.2 | 2.2 | ||||||||||||
| Chocolate, Confectionery and Biscuits | 5.0 | 4.7 | 5.2 | 4.8 | ||||||||||||
| Pharmaceutical Products | 2.6 | 2.4 | 10.7 | 7.7 | ||||||||||||
| TOTAL | 41.2 | 38.8 | 6.3 | 4.6 | ||||||||||||
Changes in selling prices and other items increased sales by 5.5 percent. Price adjustments accounted for 2.2 percent; in addition, nominal net sales benefited from the one time 3.3 percent positive effect of the trade spend and rebates review which will not influence the absolute level of profits. This review was announced in the press release accompanying the first quarter sales figures and is a consequence of a Group-wide initiative to increase the efficiency of the Group’s trade spend.
Exchange rates had a negative impact of 2.7 percent, mainly as a result of the strength of the Swiss franc against most currencies, save the US dollar. Divestitures, net of acquisitions, reduced sales by 1.1 percent.
At comparable structure (excluding acquisitions and divestitures) and at constant exchange rates, sales rose by 10.1 percent.
Trading profit rose by 0.4 percent to CHF 4315 million in the first half of 2001. Trading profit margin was nearly unchanged before the one-time impact of the trade spend review and the cost of the GLOBE project. The reported results show a trading profit margin of 10.5 percent. GLOBE, a major Group-wide undertaking aimed at increasing Nestlé’s operational efficiency and performance, is likely to have average costs of about CHF 250 million per year until 2005, and will yield benefits that will reach CHF 3 billion by 2006. Marketing expenditures also rose as a result of brand investments as well as the launch of new products.
Macroeconomic trends call for some restraint in forecasting results for the second half of 2001. Nevertheless, barring unforeseen events, Nestlé remains confident in its capability to deliver higher sales and profits for 2001 than in 2000 and looks forward to closing the Ralston Purina acquisition before the year end.
To view related research reports, please follow the links below:- The World Market for Dairy Products The World Market for Ice Cream, Yoghurts and Chilled Desserts The 2000-2005 World Outlook for Take-home/dessert Ice Cream Unleashing Opportunities in Global Pet Food: Strategies to 2010 |
