Nestlé Outperforms Its Peers on Pet Food and Health Products

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ZURICH, Feb.18 (Reuters) – Nestlé (NESN.S) aims to push organic sales growth to 4% this year, the food giant said Thursday, after strong demand for pet food and health products in the Americas has helped to surpass its growth. peers last year.

Consumers continued to buy packaged food throughout the pandemic, and Maggi soup and instant coffee maker Nescafé fared better than some competitors by shedding underperforming businesses and investing in areas of growth such as plant-based foods, coffee, and health sciences.

“We are seeing continued improvement in organic growth for the third year in a row now,” CEO Mark Schneider told reporters on a call.

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“There is a possibility of crossing the 4% mark (this year) which would be great, but given the uncertainties it is difficult to commit to it at this time.”

Schneider said pet food has had an exceptional year and offers great opportunities for growth organically and through one-off acquisitions.

He said he was not happy with the performance in China, where organic sales fell, and said the teams were working hard to improve this year, helping the recent divestiture of Yinlu.

CFO Francois-Xavier Roger said the group expects Asia, including China, to return to mid single-digit growth this year.

The Swiss group aims to achieve sustained mid-term single-digit growth after organic sales rose 3.6% in 2020, ahead of the consensus and underlying 1.9% sales growth of its Unilever counterpart ( ULVR.L). Read more

The company logo can be seen at a Nestlé factory in Konolfingen, Switzerland, September 28, 2020. REUTERS / Arnd Wiegmann

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French Danone (DANO.PA) is expected to post negative like-for-like growth on Friday.

Nestlé is aiming for a “moderate continuous” improvement in its underlying trading operating profit margin this year. This is no surprise, according to RBC analysts, but it could temper some more optimistic expectations for the broader consumer staples sector as well.

Nestlé improved its margin to 17.7% last year, within its medium-term target range of 17.5-18.5% that it already reached a year ago.

The company sold underperforming businesses and just sold its consumer water brands in North America to private equity firms for $ 4.3 billion. Read more

Schneider reaffirmed Nestlé’s commitment to the rest of the water portfolio and also to confectionery.

Net profit fell slightly to CHF 12.2 billion due to a non-recurring gain over the period of the previous year, but above expectations. Nestlé proposed its 26th consecutive dividend increase to 2.75 Swiss francs per share. It also has an ongoing share buyback program.

Nestlé shares were flat at 10:29 GMT, outperforming a slightly weaker European food sector index (.SX3P).

($ 1 = 0.8987 Swiss francs)

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Reporting by Silke Koltrowitz Editing by Riham Alkousaa and Michael Shields

Our standards: Thomson Reuters Trust Principles.

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