SWITZERLAND – Global food and drink giant, Nestle has reported 2.1% increase in sales to US$90.89 billion in the year 2018 (compared to US$89.11 billion in 2017) with the acceleration helped by China and North America.
During the period, the company saw strong internal growth, resulting to organic growth of 3%, thanks to strong performance in infant nutrition.
Operating profit surged 35.4% to US$13.64 billion while earnings per share increased by 45.5% to CHF 3.36 on a reported basis.
Nestle, like any other packaged foods company, has been grappling with lower sales due to constrained consumer spending and has said it will focus on continued improvement in organic sales growth and underlying trading operating profit margin towards 2020 targets.
The maker of KitKat chocolate bars said the Nespresso coffee category staged an outstanding performance, maintaining mid-single-digit growth, with “very strong momentum” in North America.
Moved by innovation and strong demand, Nespresso launched its new Master Origin range.
Asia, Oceania and Sub-Saharan Africa business also performed well, with a reported net sales increase of 2.2%, while China saw improved growth compared to 2017 supported by infant nutrition, coffee and culinary.
Speaking to CNBC, Nestle Chief Executive Mark Schneider said: “We’ve seen slowing GDP (in China), but that has not translated into slowing consumer interest.
“We’ve seen very solid progress coming out of 2017 and 2018 so I think there’s generally a lot of confidence in the market that we’ll make that (2020) target.”
Vietnam and Indonesia recorded double-digit growth led by Milo and Bear Brand in particular.
According to Nestle, in zone Americas, the company’s largest area by revenue, sales shrank 0.9% compared to 2017.
In zone Americas, the company’s largest area by revenue, sales shrank 0.9% compared to 2017.
Nestle Waters experienced 2.1% organic growth led by international premium brands S.Pellegrino and Perrier while North America saw increased pricing and declining RIG.
Board to consider sale of cold cuts and meat business
Nestle’s board of directors are considering strategic options for the Herta charcuterie business, including a potential sale.
The strategic review covers Herta charcuterie (cold cuts and meat-based products) in France, Germany, Belgium, Luxembourg, the United Kingdom and Ireland, with 2018 sales of about US$676.32 million.
As part of the transaction, Nestle said it retain and develop its existing Herta branded dough and vegetarian businesses.
According to the company, the strategic review underscores its increased focus on high-growth plant-based offerings including the Garden Gourmet range in Europe and plant-based food products under the Sweet Earth brand in the U.S.
“We made significant progress with our portfolio transformation and sharpened our Group’s strategic focus, strengthening key growth categories and geographies in the process.
Our unique Nutrition, Health & Wellness strategy, with food, beverage and nutritional health products at its core, has become much clearer as we completed a sizeable number of transactions and announced strategic reviews for Nestlé Skin Health and Herta,” said Nestle Chief Executive Mark Schneider.
“We reaffirmed our sustainability leadership at a time when consumers and regulators around the world are increasingly looking for solutions to today’s environmental and societal problems.
Our decisive action and strong commitments to tackle the global packaging waste problem are a case in point.
We are on our way to meeting our 2020 targets and positioning Nestlé for sustained and sustainable growth in the years beyond.”