Nestle Slightly Lifts Full-Year Outlook as Sales Rise

Organic growth of 7.3% for the nine months constitutes broad-based outperformance against the growth rates in our categories and markets. The organic growth was 5.8% in the Americas, 5.0% in Europe and 13.1% in Asia, Oceania and Africa.

Oct 20 2011 --- In the first nine months of 2011, the Nestlé Group’s organic growth was 7.3%, including 4.1% real internal growth and pricing of 3.2%. Foreign exchange decreased sales by 15.1%, and divestitures (mainly Alcon) net of acquisitions by 5.7%.

Organic growth of 7.3% for the nine months constitutes broad-based outperformance against the growth rates in our categories and markets. The organic growth was 5.8% in the Americas, 5.0% in Europe and 13.1% in Asia, Oceania and Africa. Developed markets grew 4.0%, while emerging markets achieved around 13.1% organic growth.

For Zone Americas sales of CHF 19.1 billion were achieved with 5.6% organic growth and 0.8% real internal growth. In North America the tough economic conditions and increased pricing led to a decline in consumption in several categories, but new lines like DiGiorno Pizza Combos, Lean Cuisine snacks, and Dreyer’s Smoothies helped mitigate the effects of the slowdown. PetCare saw accelerated growth and market share gains as did frozen pizza. Coffee-mate enjoyed strong growth thanks to new varieties of Café Collections and a successful launch of Coffee-mate Natural Bliss. Nescafé also performed well. In Latin America the business continued to deliver strong growth. “We pushed distribution deeper into the markets across the continent and introduced new product lines. Most categories benefited, recording double-digit growth. Among market launches were Nescafé Molienda, a new soluble coffee product with micro-granules in Mexico, and KitKat in Brazil.”

In Zone Europe, sales of CHF 11.1 billion were reported with, 3.8% organic growth and 2.2% real internal growth. In a challenging environment Nestlé outgrew the European market. In Western Europe there were market share gains in two thirds of the categories. This was achieved by the continued roll-out of innovations like Nescafé Dolce Gusto and Maggi Juicy Roasting across Europe. France was a particular highlight but there was also good growth across most of Western Europe including Italy, Switzerland and the Benelux countries. Despite the economic crisis, Greece and the Iberian region did well. In Central and Eastern Europe, Russia continued to be a tough market, although culinary performed well. Elsewhere in Eastern Europe growth was stronger with Ukraine achieving good results and the Adriatic region growing more than 10%. PetCare performed strongly, with innovations like single serve pouches from Felix helping the business build market share. Across the Zone, soluble coffee, chilled culinary, ambient culinary, frozen pizza, sugar confectionery and PetCare all delivered good levels of growth thanks to the added value created by innovations. The ice cream category had a poor season and as a result performance was below expectations. Strong brand performances included Nescafé, pursuing a clear segmentation strategy with products like Nescafé Green Blend and Nescafé 3-in-1, and also Maggi, Herta and Purina ONE.

In Zone Asia, Oceania and Africa, sales of CHF 11.1 billion were reported with 11.7% organic growth and 8.2% real internal growth. The Zone’s emerging markets delivered double digit growth, and most categories were high single or double digit. “We continued to deepen our involvement in the development of Africa, making new investments and expanding our distribution networks to support popularly positioned product rollouts for categories including culinary, dairy, powdered beverages and soluble coffee. In Greater China, South Asia and Indochina we continued to achieve double-digit growth.” The Zone’s developed markets recorded positive growth. In Japan there were market share gains for soluble coffee, chocolate and ready-to-drink beverages. Our Nescafé coffee systems, Dolce Gusto and Barista continued to perform well there and we launched successfully the new KitKat Black. In Australia the confectionery, ice cream and PetCare businesses all added market share. Across the Zone as a whole, growth was broad-based with pricing increasing over the course of the year. In particular, there was strong growth in ambient dairy with the Nestlé Nido brand. Nescafé, Maggi, Milo, ice cream and ready-to-drink beverages also grew rapidly.

Paul Bulcke, Nestlé CEO saud: “In a tough environment, we continued to build our capabilities and positions for the future while maintaining strong growth across regions and categories. The constant renovation of our existing product portfolio together with our strong pipeline of game-changing innovations resulted in many market share gains. A high rate of innovation also requires significant consumer-facing marketing support. For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6% and continue to strive for a margin improvement in constant currencies”.