Nestlé reports 2.1% organic growth with a strong second quarter for 2024
The Nestlé Group announced earlier today its financial results for the first half of 2024, showing signs of improvement for the global company across various market fronts,
According to its released financial statement, Nestlé Group for the first half of this year showed 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 across all zones and categories.
Total declared sales were down to 45 billion Swiss francs (-2.7%), with a foreign exchange impact of -4.4% and net disposals of -0.4%.
Mark Schneider, Nestlé CEO, wrote upon the release of the results that, “positive real internal growth is back. 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%.”
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Later in an analysts call, Schneider added that the rebound was broad-based across Zones and categories, with priority being given to driving volume, mix and market share as consumers, particularly in North American, look for value from their purchases.
“Growth was driven by coffee and PetCare. In addition, the swing in RIG from the first to the second quarter reflected our delivering on the areas that we had highlighted for turnaround. These include North America in general, frozen food in particular and Nestlé Health Science. Gross profit margins in the first half were up, providing fuel to invest in our return to volume and mix-led growth.”
Anna Manz, Nestlé chief financial officer added that in North America positive growth was driven “larger-than-usual orders from some retailers ahead of key July promotional campaigns. Growth was driven by PetCare and coffee. Purina PetCare continues to be the largest growth contributor, gaining RIG momentum and market share despite ongoing category normalization post-COVID and the recent inflation spikes.
“In addition, Zone North America progressed on the turnaround of frozen food, which swung from negative growth in first quarter to positive in second quarter. New product launches in this business included expanded offerings for DiGiorno’s Ultra-Thin Crust pizzas and Stouffers Classic Single Serve. These innovations are aimed at catching those consumers who are seeking more affordable price points. Overall, in Zone North America, we are seeing improving market share trends, largely driven by high-growth channels . . . I want to take a minute on this point as I know it is an area of focus for some of you and is a dynamic which will increase in significance. 80% of the Zone’s sales growth in the second quarter was driven through e-commerce, club and pet specialty stores.”
Another significant area of growth was coffee, with the popular Nespresso brand delivering delivered positive growth for the half, with a significant RIG improvement in the second quarter.
“Vertuo continues to be the key growth driver,” said Manz. “Vertuo is attracting new consumers to the segment and retaining them, and we are doing this through cold formats, which resonate well with younger consumers, as well as limited editions and exciting collaborations such as our recent one with Pantone. Once consumers enter the franchise it is the range and new news, which keep them engaged.”
Manz also highlighted that while “milk products and ice cream delivered close to flat growth, as a robust performance for dairy culinary solutions was offset by a sales decline in coffee creamers and ambient dairy. Growth in Confectionery was high single-digit with sustained broad-based growth for KitKat and key local brands. And finally, sales in Water delivered mid single-digit growth, underpinned by continued momentum for S. Pellegrino and a rebound in Perrier helped by the rollout of Maison Perrier.”
