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Nestlé CEO Mark Schneider was interviewed by Bloomberg about the half-year results. In it, he said inflation will hit the company harder in 2022 and that the company needs to engage in ‘responsible pricing’, meaning price increases for the rest of us. The company said the need to implement strong price increases to offset rising input costs had strengthened turnover in the second quarter.

The Kit Kat maker said it was able to maintain a 17% margin and had yet to see a big drop in demand due to rising prices. The company raised its full-year growth forecast to 7-8%.

When he was asked when he thought it would become easier, Schneider said that he was optimistic mid-term on their operating margin, but for the next year he felt that there was a ‘temporary compression’ on margins, i.e. their profit margin will be lower as a result of cost increase. Interestingly Schneider said that the premium end of the market is always more resilient than other areas of the business.

Nestlé of course, is a business that sprawls across multiple market segments. Zooming in on chocolate and coffee related numbers, the results look better, with chocolate revenues increasing in the high single digits, especially Kitkat bars. Coffee did even better with double digit growth.


  • Organic growth reached 8.1%, with real internal growth (RIG) of 1.7% and pricing of 6.5%. Growth was broad-based across most geographies and categories, with increased pricing and resilient RIG.
  • Total reported sales increased by 9.2% to CHF 45.6 billion (6M-2021: CHF 41.8 billion). Net acquisitions had a positive impact of 1.0%. Foreign exchange increased sales by 0.1%.
  • The underlying trading operating profit (UTOP) margin was 16.9%, decreasing by 50 basis points. The trading operating profit (TOP) margin decreased by 200 basis points to 14.7%, mainly due to one-off items.
  • Underlying earnings per share increased by 8.1% in constant currency and increased by 7.3% on a reported basis to CHF 2.33. Earnings per share decreased by 9.5% to CHF 1.92 on a reported basis.
  • Free cash flow was CHF 1.5 billion, as working capital and capital expenditure increased temporarily in the context of supply chain constraints and high volume demand.
  • Continued portfolio management progress. In the second quarter, Nestlé Health Science agreed to acquire Puravida in Brazil and The Better Health Company in New Zealand.
  • Full-year 2022 outlook updated: we expect organic sales growth between 7% and 8%. The underlying trading operating profit margin is now expected around 17.0%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

In the first half of the year, we delivered strong organic growth and a significant increase in underlying earnings per share. Our local teams implemented price increases in a responsible manner. Volume and product mix were resilient, based on our strong brands, differentiated offerings and leading market positions.

We limited the impact of unprecedented inflationary pressures and supply chain constraints on our margin development through disciplined cost control and operational efficiencies. At the same time, investments behind capital expenditure, digitalization and sustainability increased significantly.

Mark Schneider, Nestlé CEO
 Total GroupZone North AmericaZone EuropeZone AOAZone Latin AmericaZone Greater ChinaNespressoNestlé Health ScienceOther Businesses
Sales 6M-2022 (CHF m)45 58012 1389 2839 3355 6592 6773 1903 167131
Sales 6M-2021 (CHF m)*41 75511 3649 0228 8784 7982 5243 1581 91497
Real internal growth (RIG)**1.7%– 0.2%2.1%2.1%4.2%1.6%– 1.6%4.4%31.1%
Organic growth**8.1%9.6%7.1%8.2%13.6%2.3%2.6%6.6%33.8%
Net M&A**1.0%– 7.1%1.6%– 0.1%0.1%0.0%0.1%57.2%0.0%
Foreign exchange0.1%4.3%– 5.7%– 3.0%4.3%3.8%– 1.7%1.7%0.3%
Reported sales growth9.2%6.8%2.9%5.2%17.9%6.0%1.0%65.5%34.1%
6M-2022 Underlying TOP Margin16.9%18.8%17.3%23.5%21.1%15.0%24.3%13.7%– 3.6%
6M-2021 Underlying TOP Margin*17.4%18.5%18.7%24.4%21.0%14.0%26.0%13.5%
Source: Nestlé press release

*2021 figures restated following the creation of Zone North America (NA) and Zone Greater China (GC) as of January 1, 2022. Zone AOA includes Middle East and North Africa (MENA) previously included in Zone EMENA
**RIG, pricing and organic growth figures exclude the Russia region, with a corresponding impact on the M&A and foreign exchange lines

Sales in coffee grew at a high single-digit rate, with broad-based growth across brands and geographies, supported by a strong recovery of out-of-home channels. Confectionery reported double-digit growth, reflecting particular strength for KitKat and seasonal products. Dairy reported mid single-digit growth, with strong sales developments for coffee creamers and affordable nutrition offerings

By channel, organic growth in retail sales remained robust at 6.7%. Within retail, e-commerce sales grew by 8.3%, building on growth of 19.2% in the first half of 2021. Organic growth in out-of-home channels reached 29.6%, with sales exceeding 2019 levels.

Net acquisitions increased sales by 1.0%, largely related to the acquisitions of the core brands of The Bountiful Company as well as Orgain. The impact on sales from foreign exchange was positive at 0.1%. Total reported sales increased by 9.2% to CHF 45.6 billion.

Financial Highlights

Net Financial Expenses and Income Tax

Net financial expenses increased by 4.5% to CHF 434 million, reflecting higher average net debt.

The Group reported tax rate increased by 680 basis points to 24.2% as a result of one-off items. The underlying tax rate increased by 70 basis points to 20.9%, mainly due to the geographic and business mix.

Net Profit and Earnings Per Share

Net profit decreased by 11.7% to CHF 5.2 billion. Net profit margin decreased by 270 basis points to 11.5% as a result of one-off items, including higher impairments and taxes. As a consequence, earnings per share decreased by 9.5% to CHF 1.92 on a reported basis.

Underlying earnings per share increased by 8.1% in constant currency and by 7.3% on a reported basis to CHF 2.33. The increase was mainly the result of strong organic growth. Nestlé’s share buyback program contributed 1.7% to the underlying earnings per share increase, net of finance costs.

Cash Flow

Cash generated from operations decreased from CHF 5.8 billion to CHF 5.7 billion mainly due to an increase in working capital. The Group increased its inventory levels temporarily, due to significant supply chain constraints. Excluding the increase in working capital, cash generated from operations increased from CHF 7.9 billion to CHF 8.8 billion, driven by strong organic growth. Free cash flow decreased from CHF 2.8 billion to CHF 1.5 billion reflecting higher taxes and a temporary increase in capital expenditure to meet strong volume demand, particularly for Purina PetCare and coffee.

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