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Nestle S.A.



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


  • Peter Brabeck, CEO of Nestlé: “Based on the half-year results, with strong top-line and bottom-line growth, I am confident that Nestlé will close 2001 with higher sales and profits than the ones reached in record 2000.


  • With GLOBE now under full development and the Ralston Purina negotiations with the regulatory authorities on track for a closing before year end, 2001 should be another successful year for Nestlé.”


























































    • Half Year Figures at a Glance
            Margins

     








    January-June
    January-June

    2001
    2000




    Change








    January-June
    January-June

    2001
    2000

    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

     


     











    January-
    January-
    June June

    2001
    2000




    Change








    Real Internal

    Growth

    Jan.-June 2001









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    January-
    January-
    June June

    2001
    2000




    Change
      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
       










    January-June
    January-June

    2001
    2000

    in CHF billion








    Change

     

    %








    Real Internal Growth

    January-June 2001

    %
    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.






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