In its full-year 2021 financial report, Nestlé SA said organic growth was 7.5%, with real internal growth (RIG) of 5.5%. Pricing increased to 2%, reaching 3.1% in the fourth quarter, to offset significant cost inflation.
Nestlé, the world's largest food company, said growth was broad-based across most geographies and categories. Organic growth reached 7.2% in developed markets, the highest level in more than a decade, based mostly on RIG with positive pricing. Organic growth in emerging markets was 7.8%, with robust RIG and positive pricing.
By product category, the largest contributor to organic growth was coffee, fueled by strong momentum for the three main brands Nescafé, Nespresso and Starbucks. Sales of Starbucks products grew by 17.1% to reach CHF (Swiss francs) 3.1 billion, generating over CHF 1 billion of incremental sales, compared with 2018.
Nestlé's net divestitures decreased sales by 2.9%, largely related to the Nestlé Waters North America, Yinlu and Herta transactions. Divestitures were partially offset by acquisitions, including the core brands of Bountiful Co. and Freshly. The negative impact on sales from foreign exchange moderated to 1.3%. Total reported sales increased by 3.3% to CHF 87.1 billion
Nestlé full-year financial highlights
- Organic growth reached 7.5%, with RIG of 5.5% and pricing of 2.0%. Growth was supported by continued momentum in retail sales, steady recovery of out-of-home channels, increased pricing and market share gains.
- Total reported sales increased by 3.3% to CHF 87.1 billion (2020: CHF 84.3 billion). Foreign exchange reduced sales by 1.3%. Net divestitures had a negative impact of 2.9%.
- The underlying trading operating profit (UTOP) margin was 17.4%, decreasing by 30 basis points. The trading operating profit (TOP) margin decreased by 290 basis points to 14.0% on a reported basis, largely reflecting impairments related to the Wyeth business.
- Underlying earnings per share increased by 5.8% in constant currency and by 5.1% on a reported basis to CHF 4.42. Earnings per share increased by 41.1% to CHF 6.06 on a reported basis, mainly reflecting the gain on the disposal of L’Oréal shares.
- Free cash flow decreased by 14.9% to CHF 8.7 billion, reflecting temporarily higher capital expenditure and inventory levels.
- Board proposes a dividend of CHF 2.80 per share, an increase of 5 centimes, marking 27 consecutive years of dividend growth. In total, CHF 13.9 billion were returned to shareholders in 2021 through a combination of dividend and share buybacks.
- Continued progress in portfolio management. Portfolio rotation since 2017 now amounts to around 20% of total 2017 sales.
- For its 2022 outlook, Nestlé expects organic sales growth around 5% and underlying trading operating profit margin between 17% and 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
- Midterm outlook is forecast to generate mid single-digit organic sales growth. Continued moderate underlying trading operating profit margin improvements. Continued prudent capital allocation and capital efficiency improvements.
