- Strong real internal growth of 3.8% and price increases of 2% result in organic growth of 5.8%
- Core food and beverage business accelerates to real internal growth of 3.5% and organic growth of 5.6%
- Reported sales in Swiss francs up 4.8% to CHF 67.7 billion
- Savings programs are on track and play - together with price increases - a key role in compensating for the continuing rise of input costs
- 2005 share buy-back over 80% completed; a new program to be implemented subject to Board approval
- Nestlé reconfirms its full-year forecast for 5-6% organic growth and for a constant currency EBITA margin improvement.
Peter Brabeck-Letmathe, Chairman and CEO of Nestlé: "The acceleration in our
core food and beverage operations was broad-based and, together with the
excellent performance of Alcon, allows me to reconfirm that we will deliver
5-6% organic growth for 2005, combined with a sustainable improvement of the
EBITA margin in constant currencies. We can also announce a new share buy-back
program, subject to Board approval. Thanks to the depth and quality of our
management team, the necessary changes in the Executive Board will foster the
ongoing strategic transformation process."
Consolidated sales of the Nestlé Group reached CHF 67.7 billion during the first nine months of 2005. Real internal growth accelerated to 3.8%, while pricing, at 2.0%, was also higher than in the first half, resulting in organic growth of 5.8%. Foreign exchange fluctuations had a minimal negative impact of -0.2% on consolidated Swiss franc sales while divestitures, net of acquisitions, reduced Swiss franc sales by -0.8%.
Sales by Management Responsibilities and Geographic Area | ||||
Jan.-Sept. 2005 |
Jan.-Sept. 2004 |
Jan.-Sept. 2005 |
Jan.-sept. 2005 |
|
in CHF billion |
Organic Growth (%) |
Real Internal Growth (RIG)(%) |
||
Food | ||||
- Europe | 21.7 | 21.0 | 1.6 | -0.2 |
- Americas | 21.6 | 20.3 | 7.3 | 5.1 |
- Asia, Oceania and Africa | 11.5 | 10.9 | 7.0 | 3.4 |
Nestlé Waters | 6.9 | 6.4 | 8.4 | 9.0 |
Other activities (a) | 6.1 | 6.0 | 10.7 | 9.6 |
Total | 67.7 | 64.6 | 5.8 | 3.8 |
All calculations based on non-rounded sales figures
(a) Mainly Pharmaceutical products, Nespresso and Joint Ventures managed on a worldwide basis. The sales split in Other activities is approx. 75% Pharmaceutical products and 25% Food and Beverages. 2004 comparatives include Eismann, divested in September 2004.
(a) Mainly Pharmaceutical products, Nespresso and Joint Ventures managed on a worldwide basis. The sales split in Other activities is approx. 75% Pharmaceutical products and 25% Food and Beverages. 2004 comparatives include Eismann, divested in September 2004.
The 5.6% organic growth of the food and beverage business was achieved through a
continued emphasis in our markets on the successful extension of our
distribution beyond the traditional supermarket grocery channel. They are also
making effective use of consumer insight to build both a strong pipeline of
product innovation and dynamic, consumer-relevant communication.
Zone Europe delivered positive organic growth of 1.6%, a slight improvement on
the first half of the year. Western Europe's organic growth rose slightly, to
1.3%, in spite of continued challenging business conditions in some areas.
Nestlé Purina PetCare Europe and Great Britain did particularly well in Western
Europe. France accelerated to achieve positive organic growth. Eastern Europe
reached 4.6% organic growth, with Russia continuing to be held back by the
restructuring of the distribution network there. Russia is expected to return
to normal growth rates in 2006.
Zone Americas' organic growth remained impressive at 7.3%. There were good
performances in the US and Canada, with the Nestlé Prepared Food Company,
Nestlé Purina PetCare North America and Dreyer's Grand Ice Cream Holdings doing
particularly well. Latin America's organic growth rose to 8.9%, due to an
acceleration in Brazil. Mexico and the smaller regions continued to experience
strong organic growth.
Zone Asia, Oceania and Africa's organic growth accelerated to 7.0%. The recovery
measures taken in Greater China, following the product exchange earlier in the
year, are delivering sales growth again. Among many strong performances in
other parts of the zone, India and the Middle East both achieved double-digit
organic growth. Japan's real internal growth accelerated to be positive for the
year to date, although pricing pressure held back organic growth. There was
also improved organic growth in the Philippines and Africa.
Nestlé Waters' organic growth rose to 8.4%. Although Europe was flat, North
America and the rest of the world experienced strong organic growth.
Within Other activities, Alcon, with 9.8% organic growth, once again enjoyed an
excellent performance, as did Nespresso, with about 30% organic growth.
Sales by Product Groups | ||||
Jan.-Sept. 2005 |
Jan.-Sept. 2004 |
Jan.-Sept. 2005 |
Jan.-sept. 2005 |
|
in CHF billion |
Organic Growth (%) |
Real Internal Growth (RIG)(%) |
||
Beverages | 17.6 | 16.4 | 7.8 | 6.4 |
Milk products, Nutrition and Ice cream | 18.9 | 18.0 | 5.5 | 2.4 |
Prepared dishes and cooking aids | 11.8 | 11.6 | 4.2 | 2.6 |
PetCare | 7.7 | 7.4 | 5.2 | 4.1 |
Chocolate, confectionery and biscuits | 7.3 | 7.1 | 2.7 | 0.2 |
Pharmaceutical products | 4.4 | 4.1 | 9.4 | 8.9 |
Total | 67.7 | 64.6 | 5.8 | 3.8 |
All calculations based on non-rounded sales figures
The organic growth of all product categories accelerated as compared to the
first half, except for PetCare, which remained practically unchanged at 5.2%.
Beverages enjoyed 7.8% organic growth largely due to the strong performance of
water and soluble coffee. Milk products, Nutrition and Ice cream grew by 5.5%
with shelf-stable dairy nearing double-digit organic growth, and Prepared
dishes and cooking aids saw organic growth of 4.2%. The chocolate business did
well in the Americas and in AOA, but was held back by Russia.
Management Changs
Mr. Ed Marra, Executive Vice President in charge of the SBUs and of the
Strategic Demand Generating Unit had informed the Board some time ago that his
health required additional treatment and that he would not be in a position to
fully discharge his responsibilities over the months to come. He therefore
asked the Board to grant him an early retirement for the end of December 2005.
During his regrettably short tenure, Mr. Marra led the Strategic Business Units
to play an ever increasing strategic role, especially in their interface with
the markets by creating and taking leadership of the business clusters. Under
his dynamic guidance, the Group was able to foster and accelerate product
innovation and also develop a series of far-reaching initiatives and concepts
in the area of strategic demand generation. Nestlé thanks Mr. Marra for his
important contribution and is happy to be able to call on his experience in
marketing and in advertising in a consulting capacity.
He will be replaced on December 1st, 2005, by Mr. Lars Olofsson, Executive Vice
President and presently Head of Zone Europe. Mr. Olofsson's broad marketing
experience, spanning several product categories and countries, make him the
ideal candidate to continue and broaden the momentum created by Mr. Marra in
the marketing area.
Zone Europe will be led by Mr. Luis Cantarell, presently Head of Nestlé
Nutrition. Mr. Cantarell, after a career of 30 years with Nestlé in Spain,
Portugal and at the Center, will be promoted Executive Vice President and
assume responsibility for the region on November 15th, 2005.
Nestlé Nutrition, a fully autonomous worldwide business, is entrusted to Mr.
Richard T. Laube, Deputy Executive Vice President, who joined the Nestlé Group
in 2005 after a distinguished career in Procter & Gamble and in Roche. Mr.
Laube, currently in charge of Corporate Business Development, will take over
Nestlé Nutrition on November 1st, 2005.
Furthermore, the Group announces that it has created the position of Corporate
Governance and Compliance Manager. Mr. David P. Frick, former General Counsel
of Credit Suisse Group, has been named to that position. Mr. Frick will assume
his new responsibilities on January 1st, 2006. He will report directly to the
Chairman and CEO and will ex officio be a member of the Executive Board.
Other Information and Outlook
The GLOBE program remains within time frame and budget, with systems
implementations to be slightly ahead of the 30% target for the full year. The
savings programs, Operation Excellence 2007 and Project FitNes, are on track
and will, together with price increases, play a key role in compensating for
the continuing rise of input costs in many of the affected categories and
markets.
The share buy-back program is now over 80% complete and is likely to be brought
to a close in the coming weeks. In line with the Group's policy to manage its
capital structure in an optimal manner, a second program will be proposed to
the Board of Directors.
Turning to the outlook for the full year 2005, the Nestlé model of strong
organic growth combined with sustainable margin improvement remains secure.
Nestlé is confident of achieving its target of between 5 and 6% organic growth
for 2005 as a whole, combined with an improvement in constant currency margins.
- Contacts:
- Media: Francois-Xavier Perroud, Tel.: +41-21-924 2596
- Investors: Roddy Child-Villiers, Tel.: +41-21-924 3622