SWITZERLAND – Nestlé, the multinational coffee company, has reported a 2.7 percent decrease in sales to CHF 45.0 billion (US$50.95M) for the first half of 2024.
Despite this decline, the company achieved organic growth of 2.1 percent, with a slight positive real internal growth (RIG) of 0.1 percent for the first half and 2.2 percent for the second quarter.
This improvement was observed across all zones and categories, driven by a pricing increase of 2.0 percent and an enhancement in real internal growth.
Geographically, organic growth was boosted by strong performance in Europe and emerging markets. In developed markets, organic growth stood at 1.0 percent, primarily driven by pricing, though RIG was negative.
Emerging markets demonstrated more robust organic growth of 3.7 percent, propelled by pricing, with RIG remaining nearly flat.
Nestlé’s gross profit margin improved by 160 basis points to 47.2 percent, thanks to favorable pricing, reduced input costs, and strategic portfolio optimization.
Additionally, the underlying trading operating profit margin increased to 17.4 percent, reflecting an improvement of 30 basis points on a reported basis and 40 basis points in constant currency.
Coffee remained the largest contributor to Nestlé’s organic growth, showing mid-single-digit growth. This was supported by the strong performance of its leading global coffee brands, Nescafé, Nespresso, and Starbucks.
The confectionery sector also experienced high single-digit growth, driven by KitKat and key local brands. The water category saw mid-single-digit growth, sustained by continued momentum for S.Pellegrino and a rebound in Perrier.
Nestlé CEO Mark Schneider said, “Positive real internal growth is back. We delivered improved volume and mix growth across the Group in the second quarter. Nestlé Health Science is recovering as planned and is set for a strong second half.”
In the Asia, Oceania, and Africa (AOA) zone, Nestlé reported 3.5 percent organic growth, though sales decreased by 6.8 percent to CHF 8.4 billion (US$9.5M).
As of June 30, 2024, Nestlé’s net debt increased to CHF 59.5 billion (US$67.4M), up from CHF 49.6 billion (US$56.2M) at the end of December 2023.
For the full year 2024, the company expects organic sales growth of at least 3 percent, with earnings per share in constant currency projected to rise at a mid-single-digit rate.
“Looking ahead to the remainder of the year, we will continue to drive RIG by launching innovations that address consumer trends and growing our large iconic brands. At the same time, we have seen pricing come down faster than expected. Therefore, we consider it prudent to adjust our guidance for the year, with organic sales growth now expected to be at least 3%,” Schneider concluded.
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