|
Profil
& News NESTLE
Nestlé: Strong
2005 First-Half Performance – Organic Growth, EBITA Margins and Net Profit
All Up
Vevey, August 17, 2005
Strong organic growth
of 5.2% (RIG 3.4%, pricing 1.8%)
Sales in Swiss francs
up 2.4%, despite negative currency impact of -1.8% and divestitures of
-1.0%
EBITA margin improvement
of 10 bps, 30 bps on an underlying constant currency base
Net profit up 32.4% (underlying
EPS up 11.2%)
Net debt fell to CHF
12.4 billion and a net debt-equity ratio of 27%, allowing start of the
share buy-back program in July 2005
Peter Brabeck-Letmathe,
Chairman and Chief Executive Officer of Nestlé S.A.: "Nestlé's
results for the first half of 2005 are in line with our forecasts and underscore
the Nestlé Model of combining a good level of organic growth with
a sustainable improvement in operating performance. These results have
been achieved despite continuing input cost pressures and difficult trading
environments in a number of markets. As such, they demonstrate the strength
and depth of Nestlé's brand portfolio around the world, as well
as the effectiveness of our long-term strategy. The first half results
allow us to be confident in achieving our organic growth target in 2005
as well as improving our margins in constant currencies."
Half-year figures at a
glance Margins
January-June
2005 January-June
2004 January-June
2005 January-June
2004
Sales CHF 43 474m CHF
42 454m
EBITA(a) CHF 5 212m CHF
5 042m 12.0% 11.9%
Net profit (a)(b) CHF
3 683m CHF 2 782m 8.5% 6.6%
EPS (a)(c) CHF 9.48 CHF
7.16
Operating cash flow CHF
3 369m CHF 3 347
Real Internal growth
3.4% 2.8%
Organic growth
5.2% 4.6%
(a)
2004 restated following first application of IFRS 2 Share-based Payments
(b) Profit for the period
attributable to the Group
(c) Based on the profit
for the period attributable to the Group
During the first half
of 2005, the Nestlé Group's consolidated sales grew to CHF 43 474
million, an increase of 2.4% over January-June 2004, despite the negative
impacts of currencies of -1.8% and divestitures, net of acquisitions, of
-1%. The key growth driver was organic growth of 5.2%. This was within
the Nestlé long-term trend target of 5-6% and comprised 3.4% real
internal growth (RIG) and 1.8% pricing.
The trading environment
has continued to be challenging throughout the first half of the year.
Raw and packaging material costs have remained volatile, with some reaching
recent highs, and consumer demand has remained fragile in some European
countries.
Sales performance
Zone Europe achieved
an improvement in organic growth to 1.5%, compared to the corresponding
period in 2004. That improvement was the result of a better performance
in Western Europe and, in particular, from the European PetCare business,
Great Britain, the Iberian region and a number of the smaller markets.
France, Germany as well as Italy remained difficult, even though there
were signs of improvement. Organic growth in Eastern Europe amounted to
6.2%. The EBITA margin for the Zone decreased from 11.3% to 10.8%, as the
Zone continued to focus on defending or improving its market share positions.
Zone Americas had a very
good start to the year, with organic growth of 7.2%. There were excellent
performances across North America, especially in the Nestlé Prepared
Foods Company, as well as in the recently acquired businesses such as Nestlé
Purina PetCare Company and Dreyer’s Grand Ice Cream Holdings. Canada and
the two key Latin American markets, Brazil and Mexico, delivered strong
real internal growth. The EBITA margin for the Zone increased from 12.8%
to 13.6%, with the USA particularly strong
Zone Asia, Oceania and
Africa achieved organic growth of 6.0% in the first half of the year. Growth
in Greater China was held back by a large-scale product exchange due to
a local regulatory compliance issue, which reduced consumer demand across
all Nestlé-branded product categories in that market. The situation
has been addressed and a recovery plan implemented to rebuild consumer
confidence and demand during the second half. Japan, Africa and the Philippines,
which started the year slowly, are accelerating. There were good performances
from a number of Asian markets, as well as the Middle East. The EBITA margin
for the Zone fell from 17.8% to 15.9%, reflecting the costs of the product
exchange in China, a tough competitive environment for soluble coffee in
Japan and higher raw material costs, especially milk.
Nestlé Waters achieved
organic growth of 5.9%. The North American business continued its recent
trend of very strong growth, whilst the European business recovered from
the poor growth levels in 2004. There was good growth also in the emerging
market businesses. The EBITA margin for Nestlé Waters decreased
from 9.4% to 8.2%, as a result of a substantial increase in the price of
PET and a very competitive global trading environment.
In "Other activities",
there were excellent performances from Alcon and Nespresso in particular.
Organic growth was 10.2%, whilst the EBITA margin increased 410 basis points
to 26.8%.
Among the product categories
Beverages grew organically 6.4%, Milk products, Nutrition and Ice cream
5.2% and PetCare 5.3%. Pharmaceutical products delivered 9.2% organic growth.
Prepared dishes and cooking aids was slightly slower at 3.8%, whilst the
Chocolate, confectionery and biscuits product group did well in general,
but is still suffering in Russia. Both the Prepared dishes and cooking
aids and Chocolate, confectionery and biscuits product groups improved
their margins by over 100 basis points, whilst Pharmaceutical products
increased by 190 basis points. PetCare achieved a 30 basis point improvement,
whilst the margins of the Beverages and Milk products, Nutrition and Ice
cream product groups decreased by over 100 basis points, reflecting higher
input costs in particular PET and milk, as well as the product exchange
in China.
|
