Nestle 2020 Was Broadly In Line; Organic Sales Growth Beat Consensus -- Earnings Review

By Giulia Petroni

Nestle SA reported full-year 2020 results earlier on Thursday. Here's what we watched:

PROFIT: The Swiss food-and-beverage company said net profit for the year was 12.23 billion Swiss francs ($13.65 billion), above analysts expectations of CHF11.97 billion, according to a company-compiled consensus.

SALES: Sales fell to CHF84.34 billion from CHF92.57 billion the previous year. A company-compiled consensus had forecast sales at CHF84.78 billion.

WHAT WE WATCHED:

-ORGANIC GROWTH: Nestle reached an organic growth of 3.6%, above a company-compiled consensus that had forecast it at 3.5%. This implies an improved fourth quarter with growth close to 4%, or 40 basis points above consensus, analysts at Citi say. The result was driven by a strong performance in the Americas, as well as petcare products and supplements sold by the Health Science division.

-PET FOOD: Purina PetCare was a key growth driver, with an organic sales growth of 10% on year. The category is outperforming on the back of consistent market share expansion over the last 20 years, Chief Executive Mark Schneider said.

-2021 GUIDANCE: Nestle points to continued improvement in organic sales growth toward mid single-digit levels and a moderate margin expansion--targets that analysts say might seem conservative against more upbeat expectations, but are deemed credible and uncontroversial given the challenging context. "We note that some peers were not able to hold their improved margin level and are now facing declining margins; therefore, in relative terms, Nestle is delivering more sustainably," Baader Helvea says.

Write to Giulia Petroni at [e-mail]

(END) Dow Jones Newswires

February 18, 2021 07:16 ET (12:16 GMT)

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