Nestlé releases half-year results for 2024
Image: Nestlé
Swiss giant Nestlé reported that its Infant Nutrition sales grew at a low single-digit rate, based on continued momentum for NAN, Lactogen and human milk oligosaccharides (HMOs) products for the first half of 2024, while growth in Nestlé Health Science turned positive, with sales improvements across most segments in the second quarter. The integration plan is fully on track. However, Dairy posted close to flat growth, as dairy culinary solutions delivered robust growth, offsetting a sales decline in coffee creamers and ambient dairy. In culinary, Maggi delivered robust growth, which was offset by frozen food in North America.
Overall, organic growth of 2.1%, with positive real internal growth (RIG) of 0.1% for the first half and 2.2% for the second quarter improving in all zones and categories, was seen. Total reported sales dipped by 2.7% to CHF45 billion, with an impact from foreign exchange of -4.4% and net divestitures of -0.4%.
The full-year outlook has been updated, with the company expecting at least 3% organic sales growth. The underlying trading operating profit margin guidance remains unchanged with a moderate increase expected.
Mark Schneider, Nestlé CEO, comments, “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. 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%.”
Net divestitures impacted sales by -0.4%, largely related to the creation of a joint venture with PAI Partners for Nestlé’s frozen pizza business in Europe. The impact on sales from foreign exchange was negative at -4.4%. Total reported sales decreased by -2.7% to CHF 45.0 billion.
In North America, growth for the beverages category, including Starbucks at-home products, Coffee mate and Nescafé, was close to flat, as continued growth momentum for Starbucks and Nescafé was offset by Coffee mate. In the second quarter, sales of Coffee mate turned slightly positive. Infant Nutrition saw a sales decrease, with robust growth for Nido growing up milks more than offset by a category slowdown, which impacted Gerber baby food. Growth in frozen food was negative as the category remains under pressure, reflecting soft consumer demand and continued price competition. The business delivered improved trends in the second quarter for all segments through sharpened price points and affordable innovations such as DiGiorno Classic Crust.
In the Asian sector, the key growth drivers were Central and West Africa, South Asia and Thailand. The zone achieved market share gains in confectionery and coffee ready-to-drink, with losses in dairy. Coffee delivered mid single-digit growth, driven by Nescafé and supported by new product launches including the new espresso concentrate for cold coffee. Sales for Nestlé Professional grew at a high single-digit rate across most geographies and categories, underpinned by customer acquisition. Dairy posted positive growth, supported by affordable milks and dairy culinary solutions.
For South America, sales in dairy grew at a low single-digit rate, with strong growth for La Lechera and Carnation. Infant Nutrition posted positive growth, with robust demand for infant cereals.