Nestle FY growth outshines peers thanks to pet food, health products

Nestle wants to keep growing organic sales towards a mid-single-digit rate this year, the food giant said on Thursday, after strong demand for pet food and health products in the Americas helped its growth outshine peers last year.

Consumers kept buying packaged food throughout the Covid-19 pandemic and Nestle fared better than some rivals as it kept shedding underperforming businesses and investing in growth areas like plant-based food, coffee and health science.

Full-year organic sales, which strip out currency swings, acquisitions and divestitures, grew 3.6 per cent in 2020, ahead of Nestle’s own guidance for “around 3 per cent” and peer Unilever’s 1.9 per cent underlying sales growth.

Analysts in a consensus compiled by Nestle were looking for 3.5 per cent organic sales growth for the full year.

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The company said it wanted to continue to increase its organic sales growth towards a mid-single-digit rate this year and sustain it over the mid-term.

Net profit fell 3 per cent to 12.2 billion Swiss francs ($13.58 billion), above a forecast for 11.97 billion francs. The year-ago period had benefited from a one-off gain linked to the sale of the skin health business.

The underlying operating margin improved to 17.7 per cent last year, after reaching 17.6 per cent and thus the group’s mid-term profitability target range of 17.5-18.5 per cent in 2019, a year earlier than planned.

The company proposed to increase the dividend to 2.75 francs per share for 2020, up from 2.70 francs last year. It also has a share buyback programme under way. – Reuters