Vevey, Switzerland,Oct 20, 2016—Paul Bulcke, Nestlé CEO : “In an environment marked by deflation and low raw material prices, we continued to privilege volume growth, resulting in real internal growth at the higher end of the industry in both emerging and developed markets. Pricing remained soft but increasing.
Our growth was broad-based across categories, allowing us to gain or maintain market share in most of our businesses. We are making progress in addressing our challenges and driving our different initiatives amidst a generally softer trading environment.
In line with our strategy we continue to invest for the future. We maintain a high level of brand support while building our innovation pipeline, both globally and locally. At the same time, we drive more operational and structural efficiencies by standardizing, sharing and scaling more activities above market.
For the full year 2016, considering the current softer environment, we expect organic growth of around 3.5%, improvements in margins and underlying earnings per share in constant currencies, and increased capital efficiency.”
Business Review
Sales of CHF 65.5 billion, with a foreign exchange impact of -1.7%. The net result of acquisitions and divestitures impacted sales growth by -0.6%.
Organic growth was 3.3%, composed of 2.5% real internal growth and 0.8% pricing. All geographies delivered positive growth in generally subdued trading environments.
- 4.8% in the Americas (AMS)
- 2.1% in Europe, Middle East and North Africa (EMENA)
- 2.5% in Asia, Oceania and sub-Saharan Africa (AOA)
Real internal growth was broad based across geographies and categories.
- 2.3% in AMS
- 2.4% in EMENA
- 3.0% in AOA
We continued to grow both in developed markets with organic growth of 1.9% (real internal growth of 2.5%) and in emerging markets with 5.3% (real internal growth of 2.5%).
Pricing showed some pick-up but remained soft.
We gained or maintained market share in close to 60% of our businesses.
Effective January 2017, Nestlé Professional is moving from a globally-managed business to regionally managed businesses integrated in the Zones and supported by a Nestlé Professional Strategic Business Unit. This will facilitate greater focus on customers and enhance alignment and execution in each region and market.
In early October we completed the transaction with R&R to create Froneri, a new joint venture in ice cream, frozen food and chilled dairy, combining activities in Europe, the Middle East (excluding Israel), Argentina, Australia, Brazil, the Philippines and South Africa.
Zone AMS
Sales of CHF 18.8 billion, 4.5% organic growth, 1.6% real internal growth
- In North America growth was driven by Coffee-mate and petcare as well as Lean Cuisine and Stouffer’s which continued to do well with ongoing product innovation and brand support, especially single-serve meals and the Fit Kitchen platform. Lean Cuisine and Stouffer’s as well as Nestlé USA overall continued to gain market share. Canada delivered solid growth with chocolate and ice cream the highlights.
- Overall Latin America delivered good growth driven by Mexico across dairy, Nescafé and confectionery. The Plata region as well as Colombia did well, and petcare remained a key growth contributor across Latin America. Growth in Brazil was resilient but affected by necessary price increases, particularly in dairy and confectionery.
Nestlé Waters
Sales of CHF 6.1 billion, 4.2% organic growth, 4.4% real internal growth
- Nestlé Waters maintained good momentum, driven by strong growth in emerging markets as well as in developed markets with good results in both the US and Europe.
- Across the business, international premium sparkling brands S.Pellegrino and Perrier continued to drive performance. There was sustained good growth in Nestlé Pure Life and strong contributions from iconic local brands such as Poland Spring in the US, Buxton in the UK, andSta.María in Mexico.
Other businesses
Sales of CHF 10.1 billion, 4.6% organic growth, 4.0% real internal growth
- Growth in Nestlé Professional was driven by emerging markets, particularly China, Russia and Mexico. The US maintained its solid performance despite pricing pressure, whilst Canada and Western European markets were more challenged.
- Nespresso maintained good growth with strong momentum in AMS and AOA and with a solid performance in EMENA. Following the success of the VertuoLine system in North America, it will be launched in France this month. Nespresso’s ongoing geographic expansion continued during the period with the opening of 21 new boutiques across the world.
