Vevey, February 16, 2023
- Total reported sales increased by 8.4% to CHF 94.4 billion. Net acquisitions had a positive impact of 1.1%. Foreign exchange decreased sales by 0.9%.
- Organic growth reached 8.3%. Pricing was 8.2%, reflecting significant cost inflation. Real internal growth (RIG) was positive at 0.1%. Organic growth was broad-based across most geographies and categories.
- The underlying trading operating profit (UTOP) margin was 17.1%, decreasing by 30 basis points on a reported basis and by 40 basis points in constant currency. The trading operating profit (TOP) margin was unchanged at 14.0%.
- Underlying earnings per share increased by 9.4% in constant currency and by 8.4% on a reported basis to CHF 4.80. Earnings per share decreased by 43.5% to CHF 3.42 on a reported basis, mainly reflecting the 2021 gain on the disposal of L’Oréal shares.
- Free cash flow was CHF 6.6 billion, as working capital increased temporarily in the context of supply chain constraints and capital expenditure remained above historic trendlines.
- Board proposes a dividend of CHF 2.95 per share, an increase of 15 centimes, marking 28 consecutive years of dividend growth. In total, CHF 18.2 billion were returned to shareholders in 2022 through a combination of dividend and share buybacks.
- 2023 outlook: we expect organic sales growth between 6% and 8% and underlying trading operating profit margin between 17.0% and 17.5%. Underlying earnings per share in constant currency is expected to increase between 6% and 10%.
- 2025 targets fully confirmed: we expect sustainable mid single-digit organic sales growth and a return to an underlying trading operating profit margin range of 17.5% to 18.5% by 2025. We expect annual underlying earnings per share growth to be in the range of 6% to 10% in constant currency.
Mark Schneider, Nestlé CEO, commented:“Last year brought many challenges and tough choices for families, communities and businesses. Inflation surged to unprecedented levels, cost of living pressures intensified, and the effects of geopolitical tensions were felt around the world.
The entire Nestlé team demonstrated dependability, as we navigated this difficult environment. Organic growth was solid, margins continued to be resilient, and our underlying earnings per share development was strong. At the same time, we ensured access to nutritious products and affordable offerings globally.
During 2022, we also confirmed our longstanding nutrition strategy, with Good for You, Good for the Planet at its heart. We took important actions to further strengthen our industry-leading responsible marketing practices and to provide transparency on the nutritional value of our global portfolio. At the same time, we also advanced the implementation of our climate roadmap.
Looking to 2023, we expect another year of robust organic growth, with a focus on restoring our gross margin, stepping up marketing investments and increasing free cash flow. Nestlé’s value creation model puts us in a strong position to achieve our 2025 targets and to generate reliable, sustainable shareholder returns.”
Business as a force for good: Making progress on ‘Good for You, Good for the Planet’
Two important pillars of Nestlé’s strategy include: ‘Good for You’, which covers the company’s products and their nutritional value, and ‘Good for the Planet’, which encompasses the company’s sustainability efforts.
On ‘Good for You’, the company has a long heritage of supporting peoples’ nutrition and has made great progress in reducing the sodium, sugar and saturated fat in its products over the past decade. Starting next month, the company will begin making the nutritional value of its global portfolio transparent, using an external, internationally recognized model for reporting. Nestlé will also start reporting on local portfolios in 14 countries, using local external benchmarks. In addition, Nestlé recently strengthened its responsible marketing practices, voluntarily restricting its marketing to kids under the age of 16. The company wants to be at the forefront of the industry when it comes to bringing balanced diets within reach for people around the world.
On ‘Good for the Planet’ , Nestlé’s greenhouse gas emissions are now below the 2018 levels, based on SBTi standards, even as the company has continued to grow since then. The biggest part of Nestlé’s emissions come from activities within its supply chain (Scope 3), which is why the company is heavily focused on reducing them through the sourcing of its raw materials and regenerative agriculture. It is working with farmers all over the world to help them make the transition to regenerative agriculture. It is sourcing more volumes from farmers who make that transition, while providing technical and financial support to help other farmers start. Through the Nescafé Plan 2030, for example, Nestlé is piloting a financial support scheme to encourage coffee farmers to accelerate the shift.
