Nestle SA - Full-Year Results
This content has been sourced from: https://www.investegate.co.uk/nestle-sa/rns/nestl-...
Nestlé reports full-year results for 2019
- Organic growth of 3.5%, with real internal growth (RIG) of 2.9% and pricing of 0.6%. Growth was supported by strong momentum in the United States and Purina PetCare globally.
- Total reported sales increased by 1.2% to CHF 92.6 billion (2018: CHF 91.4 billion). Net acquisitions had a negative impact of 0.8% and foreign exchange reduced sales by 1.5%.
- One year ahead of Nestlé's medium-term plan, the company reached its 2020 profitability target range. The underlying trading operating profit (UTOP) margin increased by 60 basis points to 17.6%. The trading operating profit (TOP) margin decreased by 30 basis points to 14.8% due to increased restructuring and related expenses.
- Underlying earnings per share increased by 11.1% in constant currency and by 9.8% on a reported basis to CHF 4.41. Earnings per share increased by 28.0% to CHF 4.30 on a reported basis.
- Free cash flow increased by 10.9% to CHF 11.9 billion.
- Board proposes dividend increase of 25 centimes to CHF 2.70 per share, marking 25 consecutive years of dividend growth. In total, CHF 16.9 billion was returned to shareholders in 2019 through a combination of dividend and share buybacks. At the end of 2019, Nestlé completed the CHF 20 billion share buyback program initiated in July 2017. It started a new share buyback program of up to CHF 20 billion in January 2020.
- Nestlé divested Nestlé Skin Health in 2019 and announced the sale of its U.S. ice cream business for USD 4 billion to Froneri (transaction closed January 31, 2020). Nestlé also agreed to sell a 60% stake in its Herta charcuterie (cold cuts and meat-based products) business to Casa Tarradellas. Portfolio rotation over the past three years amounts to 12% of total 2017 sales.
- 2020 Outlook: continued increase in organic sales growth, expecting further acceleration in 2021/2022 towards sustainable mid single-digit growth. Underlying trading operating profit margin with continued improvement. Underlying earnings per share in constant currency and capital efficiency expected to increase. It is too early to quantify the financial impact of the coronavirus outbreak at this time.
Mark Schneider, Nestlé CEO, commented:
"We saw strong progress in 2019, with key operating and financial metrics improving significantly for the second consecutive year. Organic growth accelerated, fueled by strong momentum in the United States and Purina PetCare globally. Profitability improved again and reached our guided range one year ahead of plan. Cash flow was strong, while underlying earnings per share and returns to shareholders reached record levels. In 2020, we expect continued organic sales growth improvement as we take further steps to decisively address underperforming businesses.
In 2019, we made significant progress in our portfolio transformation. We did what we said we would do and more. We are not done yet. We will respond to rapid changes in the industry and fast-evolving consumer preferences to position our portfolio for higher growth.
Nestlé will continue to focus on fast innovation. The launch of our premium Starbucks products, for example, has been a great success. We are very pleased with the speed of the product rollout and the positive response by consumers. The company is fully embracing the need for speed, as the rapid expansion of our new plant-based food and beverage offerings has shown. We are getting to market faster with must-have products.
Our shareholders are seeing reliable, sustainable and increasing cash returns even in turbulent times. A key driver is our sustainable dividend practice. We are proud to propose the 25th consecutive annual dividend increase to our shareholders this year.
We have also reaffirmed our sustainability leadership at a time when society is increasingly looking to business for solutions to the major environmental problems we are facing. In addition, we have made significant progress in making our workplace even more diverse and inclusive. New initiatives, such as our enhanced parental leave policy, reaffirm Nestlé's status as an employer of choice around the world.
In the past few weeks, the spread of the coronavirus has required extraordinary effort from our team in China. We have focused on ensuring the safety of our people and their families and introducing protective measures for all our facilities. We are working closely with the Chinese authorities as they take measures to contain this epidemic, building on our significant experience and expertise on the ground. Our immediate thoughts are with the people directly impacted by this global health emergency. We stand in solidarity with the Chinese people and are working hard to ensure our nutritious food and beverages continue to be widely available, particularly those for the most vulnerable, the youngest and the oldest in society. The Greater China region is our second largest market, representing about 8% of global sales. It is too early to quantify the financial impact of this outbreak at the present time."