MILAN – Nestlé reported today results for the half of 2023 showing better-than-expected organic sales as the world’s biggest packaged food company again raised prices to cope with higher input costs. Organic sales during the period rose 8.7%, beating average estimate 8.1% growth, coming from a company-provided analyst consensus.
Total reported sales increased by 1.6% to CHF 46.3 billion (6M-2022: CHF 45.6 billion). Foreign exchange decreased sales by 6.7%. Net acquisitions had a negative impact of 0.4%.
The underlying trading operating profit (UTOP) margin was 17.1%, up 20 basis points on a reported basis and 30 basis points in constant currency. The trading operating profit (TOP) margin increased by 120 basis points to 15.9% on a reported basis, reflecting one-off items in the prior year.
Underlying earnings per share increased by 11.1% in constant currency and increased by 4.1% on a reported basis to CHF 2.43. Earnings per share increased by 10.6% to CHF 2.13 on a reported basis.
Free cash flow increased by CHF 1.9 billion to CHF 3.4 billion, mainly reflecting lower inventory levels.
Nestlé: Full-year 2023 outlook updated
The company is increasing organic sales growth guidance to a range of 7% to 8%. The underlying trading operating profit margin is expected to be between 17.0% and 17.5%. Underlying earnings per share in constant currency is expected to increase between 6% and 10%.
Coffee saw high single-digit growth, with positive sales developments across brands and a continued recovery for out-of-home channels.
In Zone North America, the beverages category, including Starbucks products, Coffee mate and Nescafé, posted high single-digit growth. Sales for Nestlé Professional and Starbucks out-of-home solutions grew at a strong double-digit rate, led by distribution expansion.
In Zone Europe, coffee saw mid-single-digit growth, with particular strength for Nescafé soluble coffee and Starbucks products.
For Zone Asia, Oceania and Africa coffee saw high single-digit growth, with continued robust demand for Nescafé and Starbucks products. The recently launched Starbucks ready-to-drink products resonated strongly with consumers.
In Zone Latin America, coffee reported broad-based double-digit growth, supported by Nescafé soluble coffee.
In Zone Greater China, coffee reported low single-digit growth, supported by soluble coffee and Starbucks products. Ready-to-drink coffee saw positive growth, with a strong recovery in the second quarter.
Nespresso
Reported sales in Nespresso decreased by 1.9% to CHF 3.1 billion. Organic growth was 4.5%, with pricing of 3.7%. RIG was 0.8%. Foreign exchange negatively impacted sales by 5.6%.
The key growth contributor was the Vertuo system, which continued to see broad-based momentum. Growth in out-of-home channels was also strong, with further adoption for the Momento system, particularly in the office segment.
Innovation continued to resonate with consumers, including the roll-out of Vertuo Pop, a new compact machine, as well as the launch of home compostable coffee capsules in France in June.
By geography, North America posted double-digit growth, with continued market share gains. Europe reported slightly positive growth. Other regions combined saw low single-digit growth.
The underlying trading operating profit margin of Nespresso decreased by 260 basis points. Significant coffee cost inflation and the appreciation of the Swiss Franc more than offset pricing actions. The business continued to invest in the rollout of the Vertuo system as well as in media advertising.
