Nestlé verliert seinen CIO an Reckitt Benckiser
Filippo Catalano wird der neue CIO des britisch-niederländischen Unternehmens Reckitt Benckiser. Catalano kommt von Nestlé, wo er seit 2018 die gesamte IT leitet.
Der Schweizer Grosskonzern Nestlé muss sich einen neuen CIO suchen. Filippo Catalano, der die Position seit Anfang 2018 inne hatte, wechselt per 1. April 2021 zu Reckitt Benckiser (RB). Das britisch-niederländische Unternehmen stellt Reinigungs- und Pflegeprodukte her, darunter bekannte Marken wie Calgon, Vanish, Air Wick, Saint Marc, Clearasil, Intima und Durex. Bei RB bekleidet Catalano den Posten des Chief Information and Digitalisation Officer, wie es in einer Mitteilung heisst. (Quelle: netzwoche.ch)
Übernahme der amerikanischen Aimmune Therapeutics abgeschlossen
Der Lebensmittelmulti Nestlé (NESN 108.54 -0.97%) hat die Übernahme der amerikanischen Aimmune Therapeutics abgeschlossen, wie er mitgeteilt hat. Aimmune, die auf die Entwicklung und die Vermarktung von Medikamenten gegen Lebensmittelallergien spezialisiert ist, wird weiterhin aus Kalifornien geführt. Den Zukauf in der Höhe von rund 2 Mrd. $ hatte der Lebensmittelkonzern Ende August angekündigt.
Ausbau der Tierfuttermarke Purina
Der Konzern setzt den Ausbau der Tierfuttermarke Purina in den USA fort. In ein neues Werk in Eden im Bundesstaat North Carolina werden 450 Mio. $ investiert. Damit will Nestlé (NESN 110.16 0.75%) die steigende Nachfrage nach Tierfutter abdecken. Die Aufnahme des Betriebs der neuen Fabrik ist für 2022 geplant, bis 2024 sollen dort über 300 Mitarbeiter beschäftigt werden.
Nestlé soll Wassergeschäft in China verkaufen
Medienberichten zufolge prüft der Konzern Optionen für das Wassergeschäft in China, darunter auch den Verkauf.
Nestlé erwägt einem Pressebericht zufolge die Trennung von einigen lokalen Wassermarken in China. Dem Sender CNN habe der Konzern bestätigt, dass Optionen für das Wassergeschäft geprüft würden, darunter auch ein möglicher Verkauf. Neben den internationalen Marken wie Perrier, Acqua Panna und San Pellegrino gibt es in China auch eine lokale Version von Nestlé Pure Life sowie die Wassermarke Da Shan Yunnan Spring.
Einer Analyse von Guoayuan Securities zufolge habe der Marktanteil von Nestlé im chinesischen Wassermarkt 2019 bei nur 2% gelegen, so CNN weiter. Heimische Marken wie Nongfu Spring und Yibao dominierten den Markt.
Der Verkauf einiger lokaler Marken würde in die Strategie des Konzerns passen. Erst im Juni hatte Nestlé bekannt gegeben, dass der Verkauf einiger US-Wassermarken geprüft werde. Man wolle sich auf edles Mineralwasser mit den bekannten Premium-Marken konzentrieren, hiess es damals. Diese Prüfung solle 2021 abgeschlossen sein.
Nestlé sharpens water focus on international, premium mineral and functional brands while exploring strategic options for parts of North American business
Nestlé S.A.'s Board of Directors today approved a new strategic direction for its Waters business. The company will sharpen its focus on its iconic international brands, its leading premium mineral water brands, and invest in differentiated healthy hydration, such as functional water products. The Board also confirmed its intent to explore strategic acquisitions to grow in this category, while pledging to make its entire global water portfolio carbon neutral and replenish associated watersheds by 2025.
At the same time, the Board concluded that its regional spring water brands, purified water business and beverage delivery service at its Nestlé Waters North America unit lie outside this focus. As a result, the company has decided to explore strategic options, including a potential sale, for the majority of the Nestlé Waters business in North America (U.S. and Canada), excluding its International brands. This review is expected to be completed by early-2021.
Encompassing all brands, products and geographies of Nestlé Waters, the company's new sustainability commitments build on existing efforts to reach ambitious milestones across the category. With the aim to achieve all goals by 2025, Nestlé is driving action to:
Achieve Carbon Neutrality: Nestlé Waters will pursue high-quality offsets in addition to investing in projects that reduce or capture carbon across its portfolio. Further, the company is prioritizing International brands Perrier®, S.Pellegrino® and Acqua Panna® to achieve carbon neutrality by 2022.
Enhance Water Stewardship: As part of the new strategy, Nestlé Waters will support the environmental sustainability of watersheds by replenishing 100% of the water it uses. The company is already committed to certifying all of its water sites globally to the internationally respected Alliance for Water Stewardship (AWS) standard.
Tackle Plastic Waste: Nestlé Waters’ packaging is already 100% recyclable or reusable. As part of its broader efforts to drive a circular economy, Nestlé Waters is committing to halve its use of virgin plastic by using more recycled PET and supporting the roll out of alternative delivery systems.
Mark Schneider, Nestlé CEO, said, "The creation of a more focused business enables us to more aggressively pursue emerging consumer trends, such as functional water, while doubling down on our sustainability agenda. This strategy offers the best opportunity for long-term profitable growth in the category, while appealing to environmentally and health-conscious consumers. Nestlé is one of the pioneers in the global water business and remains committed to healthy hydration. We are working tirelessly to ensure that consumers can enjoy our beverages in an environmentally responsible way."
The Nestlé Waters business in North America, excluding International brands, had sales of around CHF 3.4 billion in 2019. Apart from the retained International brands it includes popular regional U.S. spring water brands such as Poland Spring® Brand 100% Natural Spring Water, Deer Park® Brand 100% Natural Spring Water, Ozarka® Brand 100% Natural Spring Water, Ice Mountain® Brand 100% Natural Spring Water, Zephyrhills® Brand 100% Natural Spring Water, and Arrowhead® Brand Mountain Spring Water. It also comprises the direct-to-consumer and office beverage delivery service ReadyRefresh® by Nestlé®, and the Nestlé® Pure Life® brand.
Nestlé remains fully committed to growing its iconic International brands in the U.S. and globally, including Perrier, S.Pellegrino and Acqua Panna. Celebrated the world over for exceptional sophistication and taste, these brands have been timeless performers in the Waters portfolio. Additionally, the company will further build its leading premium mineral water brands around the world and invest in differentiated products under the Nestlé Pure Life brand, such as functional water with health-enhancing ingredients.
Nestlé's global Waters sales amounted to CHF 7.8 billion in 2019. The portfolio encompasses 48 water brands and one tea brand on five continents, including internationally renowned brands such as Perrier, S.Pellegrino and Acqua Panna, as well as regional premium brands like Erikli® in Turkey, Sohat® in Lebanon and Buxton® in the UK.
Nestlé Health Science agrees to acquire majority stake in Vital Proteins
Nestlé Health Science (NHSc), a global leader in the field of nutritional science, has agreed to acquire a majority stake in Vital Proteins, America’s leading collagen brand and a lifestyle and wellness platform offering supplements, beverages, and food products. The acquisition is subject to regulatory approval.
Vital Proteins will continue to operate as a standalone business – remaining committed to its founding mission of helping people live healthier lives through high quality, sustainably-sourced collagen nutrition. Becoming a part of the Nestlé Health Science portfolio will equip Vital Proteins with a variety of resources to scale their reach and innovation in pursuit of global wellness.
"This is an exciting opportunity for Nestlé Health Science to enter a growing area of nutrition with a successful brand," said Greg Behar, CEO of NHSc. "Our companies share the belief that nothing is more important than health, and everything we do is focused on that belief. In combining our efforts to optimize health through nutrition, we can achieve even more to help our consumers live fuller, more vibrant lives."
"We at Vital Proteins, alongside Nestlé Health Science, are committed to expanding our wellness platform to the world. We are partnering together to continue the evolution of the functional nutrition space through premium products and innovation that meet customers where they are in their wellness journey," said Kurt Seidensticker, Founder and CEO of Vital Proteins. "Joining NHSc allows us to take Vital Proteins to the next level by leveraging resources, scale and capabilities, and moving toward a future with an expanded offering of science-backed products."
Seidensticker will continue to lead Vital Proteins with the same entrepreneurial spirit that has made it so successful, remaining as CEO based at its headquarters in Chicago, IL. Financial details of the sale are not being released.
Vital Proteins complements NHSc’s other vitamin, mineral, supplement and wellness brands, including Atrium Innovations, Garden of Life, Pure Encapsulations and Persona, each with a unique area of specialty and focus.
Collagen is the most abundant protein found in the body, representing nearly 30 percent of all human protein content and 70 percent of the protein content found in the skin. It is a key component of connective tissues, supporting the health of skin, hair, nails, bones and joints. Collagen production in the body starts to decline at about age 25, thus making collagen supplementation fundamental to wellness and longevity.*
Vital Proteins has 150 SKUs across 35,000 retail doors in North America and Europe, including Whole Foods, Costco, Target, Walgreens and Kroger. This will be the first acquisition of a collagen-based wellness company to date, proving that consumer mindsets are shifting toward bettering one’s personal well-being.
Nestlé reports three-month sales for 2020, provides COVID-19 update
The COVID-19 crisis is having an extraordinary and far-reaching impact on all our lives. Since the earliest stages of the pandemic, we have been working closely with local authorities and business partners to respond to the challenge. We have three key priorities: safeguarding the health and wellbeing of our people, ensuring business continuity to meet consumer needs and supporting communities all over the world with local relief efforts.
In these difficult times, many of our business partners are facing serious challenges, which create enormous uncertainty for their employees and families. We will continue to be a dependable business partner and make every possible effort to adapt to the evolving situation.
For our out-of-home and food service customers, who have been severely affected, we are offering prompt and pragmatic assistance to weather the crisis and help them restart their businesses. For example, under our "Always open for You" initiative, we are extending payment terms, suspending rental fees for coffee machines and offering free products. The total value of this initiative is expected to be around CHF 500 million.
Another example is our dairy supply chain. We are directly working with more than 200 000 dairy farmers globally. Dairy is highly perishable, and many farmers are now facing significant demand disruptions. We are fully meeting our commitments to buy agreed volumes in order to help sustain their livelihoods.
Since the beginning of this pandemic, we have engaged in numerous projects around the world as a reliable employer and business partner as well as a trusted neighbor and citizen in the 187 countries where we operate. Our commitment is certain and unwavering.
During the first quarter, our company remained resilient:
- Organic growth reached 4.3%, with real internal growth (RIG) of 4.7% and pricing of -0.4%. Growth was supported by strong momentum in the Americas and Zone EMENA. Zone AOA saw a sharp sales decline.
- Total reported sales decreased by 6.2% to CHF 20.8 billion (3M-2019: CHF 22.2 billion). Acquisitions net of divestitures reduced sales by 4.7%, foreign exchange reduced sales by 5.8%.
- Portfolio management is on track. The divestment of the U.S. ice cream business for USD 4 billion to Froneri was completed on January 31, 2020. The sale of a 60% stake in the Herta charcuterie (cold cuts and meat-based products) business to Casa Tarradellas is expected to close in the first half of 2020.
- Nestlé has decided to explore strategic options, including a potential sale, for its Yinlu peanut milk and canned rice porridge businesses in China. Nestlé will retain and develop its existing Nescafé ready-to-drink coffee business.
- As it is still too early to assess the full impact of COVID-19, we maintain our original full-year 2020 guidance for the time being. We expect continued improvement in organic sales growth and underlying trading operating profit margin. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
Mark Schneider, Nestlé CEO, commented: “The COVID-19 crisis continues to impact all our lives in powerful and sometimes tragic ways. Our thoughts are with all those who have been affected and we extend our deepest sympathies to those who have lost loved ones.
Nestlé has a special responsibility at this time. Our food and beverage products help keep people healthy, provide comfort and support recovery.
Our people, in particular our frontline workers, have shown extraordinary commitment in keeping our business running and meeting consumer needs. We will continue to work hard to provide food and beverages to people across the world, every day.
Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries. However, this crisis is far from over and we will face many uncertainties in the coming quarters. We will continue to adapt quickly to changing consumer needs and to challenges in our global supply chains. As a reliable employer and business partner we are meeting our commitments. As a good citizen and trusted neighbor, we continue to offer our help, in particular to the most vulnerable in society. Over the last 154 years, Nestlé has successfully overcome many challenges. We are confident that - together with all those who are fighting against the pandemic and its consequences - we will also overcome this one.”
Organic growth reached 4.3%, with RIG of 4.7%. Pricing temporarily decreased by 0.4%, mainly reflecting timing of promotions in North America.
Organic growth was supported by strong momentum in the Americas and Zone EMENA. Zone AOA posted negative growth, mainly due to a double-digit sales decline in China. Organic growth was 7.4% in developed markets, based entirely on RIG. Growth in emerging markets was 0.5%.
By product category, the largest growth contributor was Purina PetCare and its premium brands Purina Pro Plan and Purina ONE. Prepared dishes and cooking aids grew at a high single-digit rate, with improved growth across all brands. Coffee saw good momentum, fueled by the demand for Starbucks products, Nespresso and Nescafé. Nestlé Health Science posted double-digit growth, reflecting elevated demand for consumer and medical nutrition products.
Acquisitions net of divestitures decreased sales by 4.7%, largely related to the divestment of Nestlé Skin Health and the U.S. ice cream business. Foreign exchange reduced sales by 5.8%, reflecting appreciation of the Swiss franc versus most currencies. Total reported sales decreased by 6.2% to CHF 20.8 billion.
Business impact of the COVID-19 crisis
Nestlé has responded quickly and taken necessary measures to minimize the impacts of this global crisis. To date, the Group has been able to effectively serve its retail partners and consumers despite some local disruptions in the supply chain and temporary staffing shortages. Nestlé’s frontline workers have been instrumental in overcoming these challenges.
The effect of COVID-19 varied materially by geography, product category and sales channel, depending on the timing of the outbreak, the scope of restrictions and consumer behavior:
Geographies: A majority of markets, particularly in North America and Europe, saw significantly increased growth in March, partially supported by consumer stockpiling. China posted a sharp sales decline, due to movement restrictions in place for almost the full quarter, limited consumer stockpiling and relatively higher exposure to out-of-home channels.
Product categories: Essential products saw increased demand. Prepared dishes and cooking aids, Purina PetCare, coffee and Nestlé Health Science products reported increased growth. Confectionery and ice cream posted a sales decline, reflecting reduced gifting and impulse buying.
Sales channels: All markets saw a significant shift from out-of-home to in-home consumption. Out-of-home channels posted negative growth, with significant sales declines for Nestlé Professional, water and Nespresso boutiques. E-commerce sales grew by 29.4%, exceeding 10% of total Group sales for the first time.
The financial impact of COVID-19 remains difficult to quantify and will depend on the duration and the economic consequences of this crisis. Nestlé continues to adapt quickly to supply chain challenges and changing consumer behavior. The Group remains resilient given its diversified portfolio of products and presence across the globe.
In January 2020, Nestlé completed the sale of its U.S. ice cream business for USD 4 billion to Froneri, the successful global joint venture with PAI Partners. The Group expects to close the sale of a 60% stake in its Herta charcuterie (cold cuts and meat-based products) business to Casa Tarradellas in the first half of 2020.
In January 2020, the Group announced an asset purchase agreement with Allergan to acquire the gastrointestinal medication Zenpep. With this move, Nestlé aims to expand its medical nutrition business and complement its portfolio of therapeutic products. The purchase of Zenpep is expected to be completed during the second quarter of this year.
In April 2020, Nestlé also announced and completed the acquisition of Lily’s Kitchen, a premium natural pet food business.
The Board of Directors has decided to explore strategic options, including a potential sale, for its Yinlu peanut milk and canned rice porridge businesses in China. The intention is to ensure the long-term growth and success of these Yinlu businesses, which had sales of CHF 700 million in 2019. Nestlé will retain its ready-to-drink Nescafé coffee business, currently filled and distributed by Yinlu. Nescafé is a strategic growth driver, and Nestlé will continue to invest heavily in the brand in China.
The Board of Directors has also reaffirmed and emphasized the strategic importance of the Chinese market for the Group. Nestlé currently operates 31 factories, three R&D centers and four product innovation centers in the Greater China Region. The Group has made significant capital expenditure investments in the Region and continues to see significant opportunities for further investments and sustainable growth.
Zone Americas (AMS)
7.4% organic growth: 7.9% RIG; -0.5% pricing.
North America saw high single-digit organic growth, with strong RIG and negative pricing.
Latin America reported mid single-digit organic growth, with positive RIG and pricing.
Organic growth increased to 7.4%, supported by higher RIG of 7.9%. Pricing decreased by 0.5%, mainly reflecting timing of promotions in North America. Acquisitions net of divestitures reduced sales by 4.0%, largely related to the divestment of the U.S. ice cream business. Foreign exchange had a negative impact of 6.1%. Reported sales in Zone AMS decreased by 2.7% to CHF 8.3 billion.
North America grew at a high single-digit rate, supported by strong RIG in most product categories. The largest growth contributor was Purina PetCare, which saw sustained momentum in e-commerce and premium brands. Purina Pro Plan, Fancy Feast and veterinary products grew at a double-digit rate. Beverages, including Starbucks products, Nescafé and Coffee mate, grew at a high single-digit rate. Frozen food posted high single-digit growth, with positive contribution from all brands, particularly DiGiorno, Stouffer’s and Hot Pockets. Baking products, including Toll House and Carnation, saw elevated consumer demand. Gerber baby food reported mid single-digit growth, supported by its organic range and healthy snacking. Water posted positive growth, based on strong momentum for S.Pellegrino and a positive sales development for regional brands outside of the out-of-home channel. Nestlé Professional reported a sales decline, as out-of-home channels closed or cut back services in March.
Latin America saw mid single-digit growth, supported by most geographies and product categories. Sales in Brazil grew at a high single-digit rate, with significant growth in infant nutrition, ambient dairy and coffee. Mexico saw mid single-digit growth, based on increased sales for Nescafé and Coffee mate. Chile posted high single-digit growth. Latin America recorded double-digit growth for Purina PetCare and culinary products. KitKat continued to grow, partially offsetting a sales decline in other confectionery products.
Zone Europe, Middle-East and North Africa (EMENA)
-7.1% organic growth: 8.2% RIG; -1.1% pricing.
-Western Europe saw mid single-digit organic growth. Strong RIG was partially offset by negative pricing.
-Central and Eastern Europe had high single-digit organic growth, with strong RIG. Pricing was negative.
-Middle East and North Africa posted high single-digit organic growth, based on strong RIG and slightly positive pricing.
Organic growth was 7.1%, with increased RIG of 8.2%. Pricing decreased by 1.1%, as deflationary trends continued to affect the food and retail sectors across most European markets. Acquisitions net of divestitures reduced sales by 0.5%. Foreign exchange negatively impacted sales by 6.2%. Reported sales in Zone EMENA increased by 0.4% to CHF 5.3 billion.
Zone EMENA reported high single-digit organic growth, with broad-based market share gains across most product categories and geographies. Germany, Russia, Israel and Spain saw particularly strong growth.
Prepared dishes and cooking aids, coffee, Purina PetCare and infant nutrition reported double-digit growth. Culinary products saw elevated consumer demand across all segments, particularly Maggi and Garden Gourmet vegetarian and plant-based food products. Coffee posted increased growth, supported by Starbucks products and Nescafé. Purina PetCare reported continued strong momentum, led by Felix, Purina ONE and Tails.com. Infant nutrition saw increased consumer demand across most geographies, particularly for products with Human Milk Oligosaccharides (HMOs). Water posted negative growth, impacted by sales declines in the out-of-home channel. Nestlé Professional recorded a double-digit decline in sales.
Zone Asia, Oceania and sub-Saharan Africa (AOA)
- -4.6% organic growth: -4.6% RIG; 0.0% pricing.
- China posted a double-digit decline in organic growth, mainly due to negative RIG. Pricing was negative.
- South-East Asia maintained mid single-digit organic growth, led by RIG. Pricing was slightly positive.
- South Asia reported high single-digit organic growth, with solid RIG.
- Sub-Saharan Africa saw double-digit organic growth, based on strong RIG.
- Japan and Oceania had low single-digit organic growth. Solid RIG was partially offset by negative pricing.
Organic growth was -4.6%, with RIG of -4.6%. Pricing was flat. Acquisitions net of divestitures had no impact on sales. Foreign exchange reduced sales by 5.1%. Reported sales in Zone AOA decreased by 9.7% to CHF 5.0 billion.
Zone AOA reported negative organic growth, mainly due to a sales decline in China. Other sub-regions saw mid single-digit growth.
China posted double-digit negative growth, due to a significant sales decline for the out-of-home channel and the timing of Chinese New Year. Examples include Nestlé Professional, Yinlu peanut milk and canned rice porridge, Hsu Fu Chi confectionery, ready-to-drink products and ice cream. Wyeth infant formula sales decreased, particularly the S-26 range. Infant cereals and Purina PetCare posted double-digit growth. E-commerce sales saw double-digit growth, supported by Nescafé and Starbucks products.
South-East Asia posted solid growth, supported by strong momentum in Indonesia and improved growth in the Philippines and Thailand. Bear Brand and Maggi grew at a double-digit rate. South Asia recorded high single-digit growth. India continued to perform well, with continued momentum for NAN, Maggi and KitKat. Pakistan returned to positive growth, based on improved sales development for ambient dairy. Sub-Saharan Africa accelerated to a double-digit growth rate, supported by Nido, Milo and coffee. Japan and Oceania saw low single-digit growth. Oceania posted strong growth across all product categories, particularly Purina PetCare, confectionery and Nescafé. Japan saw a decline in sales, with KitKat impacted by a reduced number of inbound tourists.
By product category, Purina PetCare, Milo and Maggi delivered positive growth. Within coffee, Starbucks products continued to see strong consumer demand. Outside of China, infant nutrition saw good sales momentum. Nestlé Professional recorded a double-digit decline in sales.
- 8.5% organic growth: 8.0% RIG; 0.5% pricing.
- Nespresso reported mid single-digit organic growth, with positive RIG and pricing.
- Nestlé Health Science saw double-digit organic growth, entirely driven by RIG.
Organic growth of 8.5% was supported by RIG of 8.0% and pricing of 0.5%. Acquisitions net of divestitures reduced sales by 25.4%, due to the divestment of Nestlé Skin Health. Foreign exchange had a negative impact of 5.5%. Reported sales in Other Businesses decreased by 22.4% to CHF 2.2 billion.
Nespresso saw mid single-digit organic growth. The Americas and AOA grew at a double-digit rate, with continued market share gains in the United States and Canada. Sales in Europe decreased, reflecting boutique closures and significantly reduced demand in the out-of-home channel, particularly in the latter part of the quarter.
Nestlé Health Science accelerated to a double-digit growth rate, supported by strong momentum for consumer and medical nutrition products. Garden of Life and Pure Encapsulations saw increased growth, based on high demand for quality supplements that support overall health and the immune system.
Our business as a force for good during COVID-19: Coming together globally, working locally
Companies around the world are called upon to support the fight against the spread of the virus, to provide urgently needed goods and to safeguard livelihoods. We are joining all our stakeholders to provide a helping hand to the communities around us and to the most vulnerable around the globe.
Our people are fully committed and are working hard to ensure that supply is maintained. As employees rise to these new challenges, we are providing extra support to ensure their health, safety and wellbeing. This includes guaranteeing 12 weeks of regular wages for all hourly and salaried staff affected by temporary stoppages.
Since the very beginning of this crisis, we have led local relief efforts all over the globe. We have provided support to charities, medical institutions and other frontline organizations fighting this pandemic. In addition to local efforts, we are increasing our support to partners to support emergency relief and vulnerable populations. The following are just two of many examples of how our businesses and people are supporting the communities in which they operate.
Partnering with IFRC to help strengthen its emergency response. Building on a long-standing global partnership, we announced in March that we were joining forces with the International Federation of Red Cross and Red Crescent Societies (IFRC) to provide urgent help for emergency services and caregivers. We will exceed our initial contribution of CHF 10 million and have already identified projects in almost 40 countries for immediate support on the ground. We will continue to match donations to the IFRC made by our employees.
Partnering with physicians treating COVID-19 patients. Providing nutrition to patients who are critically ill with COVID-19 is an additional challenge for health care professionals. COVID-19 patients in intensive care often experience acute respiratory failure and need to be tube fed with high-protein and high-energy nutrition. Our Nestlé Health Science team has long-standing expertise in supporting patients with specially developed medical nutrition products. Our experts have been working with physicians to create a simplified algorithm and feeding protocol based on updated international guidelines. This approach, which does not require Nestlé products, is being shared with healthcare providers around the world to help improve patient outcomes and reduce the strain on the healthcare system. In addition, Nestlé Health Science has donated medical nutrition products to support patient recovery and help medical staff keep up their strength in many markets including China and Italy.
As it is still too early to assess the full impact of COVID-19, we maintain our original full-year 2020 guidance for the time being. We expect continued improvement in organic sales growth and underlying trading operating profit margin. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
Nestlé S.A. maintains date of Annual General Meeting, changes format in light of coronavirus
The Board of Directors of Nestlé S.A. has confirmed that the Nestlé Annual General Meeting will take place as planned on April 23, 2020. This is to ensure the continued smooth functioning of the Group and will allow for the timely payment of the dividend.
Out of concern for people’s health and in accordance with article 6a of COVID-19 Ordinance 2 of the Federal Council of March 16, 2020, shareholders will not be allowed to attend in person.
Shareholders remain fully able to exercise their voting rights through the Independent Representative Hartmann Dreyer, Attorneys-at-law. Voting instructions can be given to the Independent Representative in writing or via the electronic shareholder portal.
The Board regrets the unusual circumstances of the meeting in these extraordinary times.
Find more information on the AGM.
Nestlé reports full-year results for 2019
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."
Organic growth reached 3.5% in 2019, fully in line with our guidance. RIG accelerated to 2.9% for the full year, the highest level in the last six years. Growth was supported in particular by innovation and portfolio management. Pricing contributed 0.6% and returned to positive territory in the fourth quarter.
Year-on-year organic growth acceleration was supported by strong growth in the United States and Brazil, as well as improved momentum in Western Europe. Our Zone AOA saw solid growth despite softness in some categories in China and Pakistan. Organic growth accelerated to 2.6% in developed markets and remained largely unchanged in emerging markets at 4.7%.
All product categories saw positive organic growth. The largest contribution came from Purina PetCare and its premium brands Purina Pro Plan and Purina ONE. Coffee had good momentum, helped by strong demand for Starbucks products, which by now have been rolled out in more than 40 countries. In total, Starbucks products generated more than CHF 300 million of incremental sales in 2019. Nestlé Health Science made good progress, based on strong sales development for medical nutrition and Atrium products. Water was subdued, reflecting pricing pressure in the mainstream segment and soft demand in Europe. Vegetarian and plant-based food products, including the Sweet Earth Awesome Burger and the Garden Gourmet Incredible Burger, saw strong double-digit organic growth, reaching sales of close to CHF 200 million.
Net acquisitions had a negative impact of 0.8%, largely related to the divestment of Nestlé Skin Health and Gerber Life Insurance. Foreign exchange reduced sales by 1.5%. Total reported sales increased by 1.2% to CHF 92.6 billion.
Underlying Trading Operating Profit
Underlying trading operating profit increased by 4.8% to CHF 16.3 billion. The underlying trading operating profit margin reached 17.6%, an increase of 60 basis points in constant currency and on a reported basis.
Margin expansion was supported by structural cost reductions, portfolio management, pricing and improved mix, which more than offset input cost inflation. Consumer-facing marketing expenses increased by 3.4% in constant currency.
Restructuring expenses and net other trading items increased by CHF 854 million to CHF 2.6 billion, largely reflecting increased impairments of assets related to the Yinlu business. As a result, trading operating profit decreased by 0.8% to CHF 13.7 billion and the trading operating profit margin decreased by 30 basis points on a reported basis to 14.8%.
Net Financial Expenses and Income Tax
Net financial expenses grew by 33.5% to CHF 1.0 billion, largely reflecting an increase in average net debt during the year.
The Group reported tax rate decreased by 550 basis points to 21.0% due to exceptional items including the sale of Nestlé Skin Health. The underlying tax rate declined by 220 basis points to 21.6%, mainly due to the evolution of the geographic and business mix.
Net Profit and Earnings Per Share
Net profit increased by 24.4% to CHF 12.6 billion, and earnings per share increased by 28.0% to CHF 4.30. Net profit benefited from the sale of Nestlé Skin Health.
Underlying earnings per share increased by 11.1% in constant currency and by 9.8% on a reported basis to CHF 4.41. The increase was mainly the result of improved operating performance. Nestlé’s share buyback program contributed 1.9% to the underlying earnings per share increase, net of finance costs.
Free cash flow grew by 10.9% to CHF 11.9 billion. The increase resulted from stronger operating performance and improved capital discipline. Cash flow is expected to remain at around 12% of sales, with working capital trending to zero.
At the Annual General Meeting on April 23, 2020, the Board of Directors will propose a dividend of CHF 2.70 per share, an increase of 25 centimes. If approved, this will be the company's 25th consecutive annual dividend increase. The company has maintained or increased its dividend in Swiss francs over the last 60 years. Nestlé is committed to maintaining this long-held practice to increase the dividend in Swiss francs every year.
Share Buyback Program
During 2019, the Group repurchased CHF 9.7 billion of Nestlé shares. On December 30, 2019, Nestlé completed the CHF 20 billion share buyback program initiated in July 2017 at an average price per share of CHF 88.82. On the same day, Nestlé announced that it will start a new share buyback program of up to CHF 20 billion. Share repurchases under this program are foreseen over a three-year period and commenced on January 3, 2020. Should any extraordinary dividend payments or sizeable acquisitions take place during this period, the amount of the share buyback will be reduced accordingly.
Net debt decreased to CHF 27.1 billion as at December 31, 2019, compared to CHF 30.3 billion at the end of 2018. The decrease in net debt largely reflected strong free cash flow generation and a net cash inflow from acquisitions and divestments, mainly the disposal of Nestlé Skin Health. This more than offset the CHF 16.9 billion returned to shareholders through dividends and share buybacks.
Return on Invested Capital (ROIC)
The Group's ROIC increased by 20 basis points to 12.3%. The improvement was the result of improved operating performance and disciplined capital allocation. ROIC will trend towards 15% over time, including the impact of any future mid-sized acquisitions.
Nestlé completed acquisitions and divestments with a total value of around CHF 10.4 billion in 2019. The most significant transaction was the divestment of Nestlé Skin Health for CHF 10.2 billion.
In December 2019, an agreement was reached to sell Nestlé's U.S. ice cream business for USD 4 billion to the Froneri ice cream joint venture with PAI Partners. The transaction was closed on 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 and create a new joint venture for Herta with the respective equity stakes of 40% and 60%. The total business has been valued at EUR 690 million. Closing is expected to take place in the first half of 2020.
In May 2019, Nestlé announced the transition of the U.S. pizza and ice cream businesses from a Direct-Store-Delivery network to a warehouse distribution model. The transition was successfully completed at the end of 2019, six months ahead of schedule.
In October 2019, Nestlé announced the integration of its Waters business into the Group's three geographical Zones, effective January 1, 2020. This move will help utilize the company’s strong local expertise, better respond to rapidly-changing consumer preferences and create synergies. Nestlé will take further steps to improve profitable growth in Waters and to address underperformance in certain segments of this business.
Nestlé proposes Hanne Jimenez de Mora as a new independent member of the Board of Directors
Nestlé today announced that it proposes Hanne Jimenez de Mora, Co-founder and Chairperson of management consulting company a-connect (group) AG and formerly a partner with McKinsey & Company, for election to its Board of Directors. The elections will take place at the company's Annual General Meeting (AGM) on April 23, 2020.
At the AGM, Beat Hess will retire from the Board after twelve years of dedicated service. The Board will propose the individual re-election of all other current members of the Board and the Chairman.
"Let me first and foremost thank Beat Hess for his trusted advice and highly appreciated services for many years. At the same time, I am happy with the proposal of Hanne Jimenez de Mora. As an experienced top-level consultant, she will enrich the Board with her strategic management expertise across multiple industries. I value her experience as a successful entrepreneur and as a long-standing non-executive Board member of AB Volvo," said Paul Bulcke.
With the proposed nominee, the Nestlé Board will comprise 14 members, of which twelve are independent directors. Including the proposed new nominee, Nestlé has added ten new independent directors over the last five years. The continuous refreshment of the Board enhances its diversity and adds new perspectives and experience in the different areas relevant to Nestlé.
Hanne Jimenez de Mora, a Swiss citizen, is Co-founder and Chairperson of a-connect (group) AG, a management consultant firm helping global businesses implementing critical projects. Prior to a-connect (group) AG, she was a partner at McKinsey & Company based in Switzerland. She started her career as a credit analyst with Den Norske Creditbank in Luxembourg, and subsequently held brand manager and controller roles at Procter & Gamble in Sweden and Switzerland. She holds a Bachelor’s degree in Business from HEC Lausanne as well as a Master’s degree in Business Administration from IESE Business School in Barcelona. She is a member of the Board of AB Volvo in Sweden and Outotec Oyi in Finland. She also serves as Vice-chair and Supervisory Board member of IMD Business School, Switzerland.-election of all other current members of the Board and the Chairman.
Nestlé acquires Zenpep, expanding its medical nutrition business
Nestlé today announced that it has entered into an asset purchase agreement with Allergan to acquire the gastrointestinal medication Zenpep. This move aims to expand the company's medical nutrition business and complement its portfolio of therapeutic products.
Zenpep, available in the United States, is a medication for people who cannot digest food properly because their pancreas does not provide enough enzymes to break down fat, protein, and carbohydrates. Zenpep's 2018 net sales were USD 237 million.
"Nestlé's acquisition of Zenpep is a strategic decision that will enhance our growing medical nutrition portfolio," said Greg Behar, CEO of Nestlé Health Science. "This is a significant opportunity for our business in the United States to add a complementary product to our existing range of nutrition products that support food ingestion, digestion and absorption. We have extensive experience in Zenpep's therapeutic areas of digestive diseases through our medical nutrition business and will leverage those capabilities as we grow this new business."
The deal is expected to be finalized concurrent with the merger of Allergan and AbbVie. Financial details of this acquisition are not being disclosed.
Nestlé will take ownership of Zenpep upon closing the transaction, with customary transition support from the seller.
"Within our medical nutrition business, we work directly with healthcare professionals to educate them about our products that are used in hospitals, home healthcare, and clinics," said Anna Mohl, Business Executive Officer of Nestlé Health Science USA. "We are excited to leverage our broad capabilities and expand our team to drive rapid growth of this new acquisition. We look forward to welcoming all Zenpep employees who will join our team."