Nestlé reports three-month sales for 2020

The COVID-19 update

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Covid-19
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The COVID-19 crisis is having an extraordinary and far-reaching impact on all our lives. Since the earliest stages of the pandemic, Nestle have been working closely with local authorities and business partners to respond to the challenge. The company mentions in a press release that it has three key priorities – safeguarding the health and wellbeing of its people, ensuring business continuity to meet consumer needs and supporting communities all over the world with local relief efforts.

In these difficult times, many of Nestle’s business partners are facing serious challenges, which create enormous uncertainty for their employees and families. In response to that Nestle states that it will continue to be a dependable business partner and make every possible effort to adapt to the evolving situation.

For our out-of-home and foodservice customers, who have been severely affected, Nestle is offering prompt and pragmatic assistance to weather the crisis and help them restart their businesses. For example, under its “Always open for You” initiative, it is extending payment terms, suspending rental fees for coffee machines and offering free products. The total value of this initiative is expected to be around CHF 500 million.

According to Nestle, during the first quarter, the company remained resilient

  • Organic growth reached 4.3%, with real internal growth (RIG) of 4.7% and pricing of -0.4%. Growth was supported by strong momentum in the Americas and Zone EMENA. Zone AOA saw a sharp sales decline.
  • Total reported sales decreased by 6.2% to CHF 20.8 billion (3M-2019: CHF 22.2 billion). Acquisitions net of divestitures reduced sales by 4.7%, foreign exchange reduced sales by 5.8%.
  • Portfolio management is on track. The divestment of the U.S. ice cream business for USD 4 billion to Froneri was completed on January 31, 2020. The sale of a 60% stake in the Herta charcuterie (cold cuts and meat-based products) business to Casa Tarradellas is expected to close in the first half of 2020.
  • Nestlé has decided to explore strategic options, including a potential sale, for its Yinlu peanut milk and canned rice porridge businesses in China. Nestlé will retain and develop its existing Nescafé ready-to-drink coffee business.
  • As it is still too early to assess the full impact of COVID-19, we maintain our original full-year 2020 guidance for the time being. We expect continued improvement in organic sales growth and underlying trading operating profit margin. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Mark Schneider, Nestlé chief executive officer, commented, “The COVID-19 crisis continues to impact all our lives in powerful and sometimes tragic ways. Our thoughts are with all those who have been affected and we extend our deepest sympathies to those who have lost loved ones. Nestlé has a special responsibility at this time. Our food and beverage products help keep people healthy, provide comfort and support recovery.”

“Our people, in particular our frontline workers, have shown extraordinary commitment in keeping our business running and meeting consumer needs. We will continue to work hard to provide food and beverages to people across the world, every day.”

He further stated, “Our company remained resilient in the first quarter, reflecting our diversified product portfolio and our strong local presence in 187 countries. However, this crisis is far from over and we will face many uncertainties in the coming quarters. We will continue to adapt quickly to changing consumer needs and to challenges in our global supply chains. As a reliable employer and business partner we are meeting our commitments. As a good citizen and trusted neighbor, we continue to offer our help, in particular to the most vulnerable in society. Over the last 154 years, Nestlé has successfully overcome many challenges. We are confident that – together with all those who are fighting against the pandemic and its consequences – we will also overcome this one.”

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