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Nestlé records five-year-high organic growth in 2020

Nestlé organic growth

Coffee and food giant Nestlé has reported its full-year results for 2020, with organic growth reaching 3.6 per cent, its highest levels in the past five years.

Nestlé says this included real internal growth of 3.2 per cent and pricing of 0.4 per cent and was supported by strong momentum in the Americas.

“In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability, and return on invested capital,” says Nestlé CEO Mark Schneider.

“2020 was a year of hardship for so many, yet I am inspired by the way it has brought all of us closer together. I want to thank our employees and our partners – from farmers to retailers – who worked with us to ensure the supply of food and beverages to communities globally.”

Coffee reported mid-single-digit growth, boosted by strong consumer demand for Starbucks products, Nespresso, and Nescafé. Sales of Starbucks products reached CHF 2.7 billion (about US$3 billion), generating incremental sales of over CHF 400 million (about US$445 million) in 2020.

In 2020, Nestlé’s COVID-19-related incremental costs were CHF 420 million (about US$420 million), including expenses for bonuses paid to frontline workers, employee safety protocols, donations, and other staff and customer allowances. Around CHF 260 million (about US$290 million) of these costs impacted underlying trading operating profit, partially offset by savings such as travel expenses.

In addition, the Group absorbed costs of CHF 170 million (about US$190 million) related to staff and facilities made idle due to lockdown measures. Overall COVID-19-related costs decreased in the second half of the year, as movement restrictions eased.

“The global pandemic did not slow us down. Our nutrition expertise, digital capabilities, decentralised structure and innovation engine allowed us to adapt quickly to changing consumer behaviours and trends,” Schneider says.

“At the same time, we remained focused on sustainability and set out our path to achieve net zero greenhouse gas emissions by 2050. This journey is expected to support future growth and be earnings neutral – it will generate value for society and our shareholders.”

For the year ahead, Nestlé projects continued increase in organic sales growth towards a mid-single-digit rate.

“Looking to 2021, we expect continued improvement in organic growth, profitability and capital efficiency in line with our value creation model,” Schneider says.

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