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Nestlé Outperforms Peers In FY 2020 Thanks To Pet Food, Health Products

Published on Feb 18 2021 7:59 AM in A-Brands tagged: Nestlé / pet food / Annual Report / health products

Nestlé Outperforms Peers In FY 2020 Thanks To Pet Food, Health Products

Food giant Nestlé plans to boost organic sales growth towards a mid-single-digit rate this year, after strong demand for pet food and health products helped its growth outshine peers last year.

Consumers have kept buying packaged food throughout the pandemic and Nestlé has fared better than some rivals by shedding underperforming businesses and investing in growth areas such as plant-based food, coffee and health science.

'Unprecedented Environment'

"In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability and return on invested capital," commented Nestlé chief executive Mark Schneider.

"The global pandemic did not slow us down. Our nutrition expertise, digital capabilities, decentralized structure and innovation engine allowed us to adapt quickly to changing consumer behaviours and trends. 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 said the Swiss group wanted to achieve sustained mid-single-digit growth in the medium term and also expected to keep doing acquisitions.

Full-Year Sales

Full-year organic sales, which strip out currency effects, acquisitions and divestitures, grew 3.6% in 2020, ahead of Nestlé's own guidance of "around 3%" and peer Unilever's 1.9% underlying sales growth.

France's Danone is due to post 2020 results on Feb. 19 with analysts expecting negative like-for-like growth.

Analysts in a consensus compiled by Nestlé were looking for 3.5% organic sales growth for the full year.

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Net profit fell 3% to CHF 12.2 billion, beating expectations for CHF 11.97 billion. The same period the previous year had benefited from a one-off gain linked to the sale of its skin health business.

The underlying operating margin improved to 17.7% last year, after reaching 17.6% and thus the group's mid-term profitability target range of 17.5-18.5% in 2019, a year earlier than planned.

Nestlé proposed hiking its dividend 5 cents to 2.75 francs per share for 2020, its 26th consecutive increase. It also has a share buyback programme under way.

Shares in Nestlé, down almost 4% this year, were indicated to open 1.1% lower.

News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.

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