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Nestlé, the multinational Swiss-based company has reportedly reached its highest half-yearly sales since 2015 as a result of its popular pet food lines and particularly strong performance in the US and Brazil.
The company announced its half-year results for 2019 through an investor conference call and press release on Friday detailing data and statistics relevant to its sales products and country-wise sales information.
Mark Schneider, Nestlé Chief Executive Officer and François-Xavier Roger, Nestlé Chief Financial Officer hosted an investor conference call audio webcast to review the financial results of the first half year results. He went on to thank Nestlé team all across the globe for their “hard work, sense of urgency and dedication”
Our Starbucks launch has been a great success so far and we plan on further geographic expansion and product innovation to make the most of this unique opportunity.
Mr. Schneider, in his opening remarks, expressed his satisfaction with the results of the first half-year and second quarter year results. In his press release statement, Mr. Schneider added, “We are encouraged by our first half results and have made further progress toward our 2020 financial goals. Disciplined execution and fast innovation contributed to improved organic growth and profitability.
Our growth was broad-based with our largest market, the United States, performing particularly well. Across our categories increased investment behind our brands and in innovation is clearly paying off, as reflected in our strong momentum in PetCare and the return to mid-single-digit growth in coffee. Our Starbucks launch has been a great success so far and we plan on further geographic expansion and product innovation to make the most of this unique opportunity.
“Active portfolio management will continue to sharpen our strategic focus and position the company in attractive high-growth businesses. Our value creation model is clearly delivering the expected results and will support sustained profitable growth.”
Read more: Nestlé to continue its investments in Pakistan’s mango farming practices
The results come during chief executive Mark Schneider’s turnaround plan, a three-year effort to boost sales growth and margins. The Switzerland-based company’s underlying trading operating profit margin rose in the period to 17.1 per cent.
Details of the Half-year Report for 2019
The report indicated 3.6 percent of organic growth, with continued strong real internal growth (RIG) at 2.6 percent and pricing at 1.0 percent. The organic growth was particularly led by two countries, the United States and Brazil.
Total reported sales increased by 3.5% to Swiss franc (CHf) 45.5 billion (6M-2018: CHF 43.9 billion). Net acquisitions had a positive impact of 1.1% and foreign exchange reduced sales by 1.2%. The underlying trading operating profit (UTOP) margin reached 17.1%, up 100 basis points.
Underlying earnings per share increased by 15.7% in constant currency and by 14.6% on a reported basis to CHF 2.13. Earnings per share decreased by 12.3% to CHF 1.68 on a reported basis, as the prior year benefited from the disposal of the U.S. confectionery business. Free cash flow increased by 40.4% to CHF 4.1 billion
Nestle Pakistan has pledged to improve the livelihood of Pakistan’s agriculture and dairy farmers through its Agriculture Services for the purpose of farmers capacity building.
Portfolio management was also reported to be fully on track. Sale of Nestlé Skin Health is expected to be completed in the second half of 2019 at an agreed price of CHF 10.2 billion. The strategic review of the Herta charcuterie business is ongoing and expected to be completed in late 2019.
The company expects organic sales growth around 3.5% and the full-year underlying trading operating profit margin at or above 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.
Nestlé to Focus on Nutrition and Health for its Organic Sales Growth
The largest contributions to the rising sales were the company’s Purina Pet Care, coffee and infant nutrition product lines.
Like many of its peers, Nestlé has been pushing into healthier products as consumer tastes shift. It said vegetarian-based food products posted double-digit growth in Western Europe, as its plant-based ‘Garden Gourmet Incredible Burger’ was launched in nine markets in the second quarter.
Read more: Nestle Pakistan bags Sustainability award for the third time in a row
Net profit fell 15 per cent to CHf5bn, negatively affected by the sale of Nestlé’s US confectionery business in the comparative quarter a year ago. The Swiss group confirmed its full-year guidance for 2019 at organic sales growth of around 3.5 per cent and a profit margin of 17.5 per cent.
How is Nestlé Making a Difference in Pakistan?
Nestlé has remained consistent in Creating Shared Value as a fundamental part of its business. The company believes that its success is greatly determined by creating value for both our shareholders and for society in the long run.
Nestle Pakistan has pledged to improve the livelihood of Pakistan’s agriculture and dairy farmers through its Agriculture Services for the purpose of farmers capacity building, farm mechanization and transformation of farms in accordance to modern techniques. The company is also committed to build sustainable farm practices and Women Agripreneurship for female dairy farmers of the country.
Vast majority of the country’s water resources – some 90 percent – is used for agriculture, while the remaining share is split equally between the industry and the domestic use.
In order to implement its Agricultural Services Nestle had collaborated with seven commercial banks in 2018 with an objective to finance farmers. The Services including Farm Infrastructure Improvement, Cow Purchase and Farm Mechanization were at the core of this financial lending. According to a report published in 2018 by Nestle, Rs 634 million had been disbursed through this collaboration alone.
Through its Agripreneurship initiative for women, Nestle has successfully trained 3000 rural on Best Farm Practices in 2018. The program aims to strengthen capacity building and develop support for women entrepreneurs to start and help grow their business ideas. So far 11 rural women have benefited from the entrepreneur funding provided by Nestle’s Agricultural Services. Moreover, 300 female milk suppliers were also made a part of Nestlé’s milk collection value chain.
Nestlé Pakistan’s commitment to UNSDGs has been playing a pivotal role in contributing to agricultural economy through dairy development. In line with its sustainable-world ambition, Nestlé Pakistan aims to further contribute to agriculture economy through developing professional suppliers for other agricultural raw materials such as fruits, cereals and vegetables.
Read more: How is Nestle Pakistan Empowering Dairy Farmers?
Nestlé Pakistan has partnered with the Government of Punjab’s Agriculture Department to support local farmers to take up drip irrigation to protect the country’s water resources. At present, the yearly per-capita availability of water in Pakistan is estimated at about 1,100 cubic meters; below 1,000 cubic meters, countries begin experiencing chronic water stress according to Population Action International. Vast majority of the country’s water resources – some 90 percent – is used for agriculture, while the remaining share is split equally between the industry and the domestic use.
The company has so far installed water drips on 107 acres as of 2018 that has saved 301 mio liters of water annually; these farms are located in various parts of Punjab. Nestle Pakistan has pledged to increase the drip average from 107 to 143 acres to save 400 mio liters this year.