Dairy down slightly as Nestlé profits drop

By Jim Cornall contact

- Last updated on GMT

Nestlé has released its 2015 financial report, which shows some positives in dairy and Nestlé Nutrition
Nestlé has released its 2015 financial report, which shows some positives in dairy and Nestlé Nutrition

Related tags: Organic growth, Milk

In its 2015 financial report issued today, Nestlé announced sales of $89.5bn (CHF 88.8bn), stating that this equated to 4.2% organic growth and 2.2% real internal growth.

This compares to $92.3bn (CHF 91.6bn) in sales for 2014. The sales figure is the lowest since 2011, when the company sales were $84.3bn (CHF 83.6bn).

Consequently, Nestlé noted that net profit was $9.2bn (CHF 9.1bn), down by 37% on the previous year ($14.6bn/CHF 14.5bn), and lower than in 2011, 2012 and 2013.

It said that the reduction of $5.4bn (CHF 5.4bn) compared to last year was mostly due to the one-off impact from the disposal in 2014 of part of the L’Oréal stake, combined with the revaluation of the Galderma stake.

It added that there was also some effect from foreign exchange.

Share earnings fall

Basic earnings per share fell from $4.58 (CHF 4.54) to $2.92 (CHF 2.90).

Paul Bulcke, Nestlé CEO, said, “In 2015 we delivered profitable growth at the higher end of the industry in what is still a challenging environment.

“Our organic growth of 4.2% was supported by increased momentum in real internal growth combined with continued margin improvement. Additionally, we grew or maintained market share in the majority of our categories and markets.

“We kept up the focus on portfolio management, turning around our frozen food business in the United States, disposing of non-core businesses and forging a new partnership to create a leading player in ice cream.”

Bulcke said that for 2016, organic growth would be in line with 2015.

“We anticipate that our trading environment in 2016 will be similar to previous years with even softer pricing. As such we expect to deliver organic growth in line with 2015, with improvements in margins and underlying earnings per share in constant currencies, and capital efficiency,” he said.

Dairy highlights

For the milk products and ice cream sector, Nestlé announced sales of $14.8bn (CHF 14.6bn) compared to $15.3bn (CHF 15.2bn) in 2014, a reduction of 3.95%.

Nestlé noted that in North America growth accelerated, led by the turnaround in the frozen meals business. In ice cream, Häagen-Dazs and snacks continued to drive growth with new product launches.

The company stated that Coffee-mate maintained its good momentum through constant innovation and renovation of flavours and packaging as well as new distribution.

In Mexico, Nestlé said that there was good growth helped by strong performances in creamers, Nescafé Dolce Gusto, Nescafé soluble coffee and ambient culinary.

Other highlights were Chile, driven by ice cream and biscuits, Colombia with ambient culinary, Peru with Nescafé, and the Plata Region and Ecuador with growth across their portfolios.

Nestlé noted that in the Middle East and North Africa there was a solid performance despite the unstable environment. It said that good growth in Nescafé soluble coffee, confectionery and petcare was partially offset by softer trading in ambient dairy.

Nestlé Nutrition

The company announced Nestlé Nutrition sales at $10.6bn (CHF 10.5bn), down from $10.99bn (CHF 10.9bn) the previous year.

It said that infant formula, including growing-up milks, delivered good growth. Wyeth Infant Nutrition remained the key driver with its premium brand illume, it added.

Nestlé stated that there was a positive contribution from the emerging markets, in particular China and Mexico. In the developed markets, Spain and Germany were the highlights, helped by successful innovation in NAN.

The company said that tough comparisons and softer pricing due to lower input costs and moderating category growth across Asia had an impact.

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