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Nestlé to acquire Pfizer Nutrition in strategic move to enhance its position in global infant nutrition

Monday April 23rd 2012 12:00:00 AM

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• Nestlé agrees to acquire Pfizer Nutrition for USD 11.85 billion
• Strategic fit with Nestlé’s infant nutrition business: complementary portfolio and strong presence in high-growth markets
• Pfizer Nutrition: a high-quality, high-growth infant nutrition business with strong brands, value-creating and accretive to the Nestlé model
• Transaction subject to regulatory approval

Paul Bulcke, Nestlé CEO: “Infant nutrition has been at the heart of our company since it was founded in 1866. Pfizer Nutrition is an excellent strategic fit and this acquisition underlines our commitment to be the world’s leading nutrition, health and wellness company. Its strong brands and product portfolio, its talented people dedicated to the success of its business, together with its geographic presence - 85% of its sales are in emerging markets - will complement our existing infant nutrition business perfectly. The combined entities will enable us to deepen our engagement with consumers, offering them a wider choice of nutritious food to ensure their children make a healthy start to a healthy life.”

Vevey, 23 April 2012 - In a strategic move to enhance its position in global infant nutrition, Nestlé has agreed to acquire Pfizer Nutrition for USD 11.85 billion. The acquisition, which is subject to regulatory approval, will be accretive to the Nestlé model both for growth and margins as well as the group’s earnings per share in the full first year. Nestlé estimates the acquired business’ 2012 sales at USD 2.4 billion. Eighty five percent of Pfizer Nutrition’s sales are in emerging markets, many of them with large, fast-growing populations.

Infant nutrition is a high-value, science-led category. Pfizer Nutrition is a dynamic, high-quality infant nutrition business that complements Nestlé’s existing portfolio with strong brands in key segments and geographies. It will enhance our infant nutrition business, building on our growth-focused strategy, global presence and pioneering research and development. We will be able to combine well-known brands like S-26 Gold, SMA and Promil with our existing portfolio of trusted and successful brands such as Nan, Gerber, Lactogen, Nestogen and Cerelac infant cereal.

Contacts:

Media        Robin Tickle               Tel.: +41 21 924 22 00  
Investors    Roddy Child-Villiers     Tel.: +41 21 924 36 22  

PDF press releases:

• English (pdf, 187 Kb)
• Français (pdf, 189 Kb)
• Deutsch (pdf, 190 Kb)

Nestlé first-quarter sales: 7.2% organic growth, full-year outlook confirmed

Friday April 20th 2012 12:00:00 AM

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• Sales of CHF 21.4 billion, 7.2% organic growth, 2.8% real internal growth
• 3.1% organic growth in developed markets, 13.0% organic growth in emerging markets
• Full-year outlook unchanged: organic growth of 5-6%, improved margin and underlying earnings per share in constant currencies

Paul Bulcke, Nestlé CEO: “As anticipated, 2012 is already confirming itself to be a challenging year. In many developed markets where consumer confidence is low, the trading environment is subdued whilst in most emerging markets, conditions remain dynamic and rich in growth opportunities. Our past and present investments, and continuing innovation, have enabled us to deliver good growth in the first quarter. This, together with the pricing effect for the rest of the year and a likely improved raw material environment in the second half, allows us to confirm our full-year outlook of delivering 5-6% organic growth together with an improvement in the year-end margin and underlying earnings per share in constant currencies.”

Vevey, 20 April 2012 – In the first three months of 2012, sales increased by 5.6% to CHF 21.4 billion. Organic growth was 7.2%, composed of 2.8% real internal growth and pricing of 4.4%. Acquisitions net of divestitures, added 3% to sales, whilst foreign exchange had a negative impact of 4.6%.

Business Review

Our three geographies contributed positively to the first quarter’s growth: the Americas achieved organic growth of 6.8%, Europe delivered 3.4% and Asia, Oceania and Africa 12.2%. Our business grew 13.0% in emerging markets and 3.1% in developed markets. This performance reflects the contrasting market conditions in the developed and emerging worlds: the trading environment in many developed markets with low consumer confidence is sluggish whilst conditions in most emerging markets remain dynamic and rich in growth opportunities.

Zone Americas

Sales of CHF 6.5 billion, 6.2% organic growth, -0.4% real internal growth

• The North American market continued to be impacted by weak consumer sentiment with declining growth in a number of categories where pricing was higher, including frozen food. From a growth perspective soluble coffee was our strongest category, and we gained share also in pizza and chocolate. Nescafé performed well, and Coffee-Mate Natural Bliss, launched in April 2011, continued to build good momentum in the liquid coffee whitener segment. Petcare also grew and gained market share with strong performances in Friskies, Purina ONE Beyond and Beneful Baked Delights.
• Latin America achieved double-digit growth, with good performances in both Brazil and Mexico. The chocolate, coffee, biscuit and ice cream categories all performed strongly in the region. Petcare also grew by double-digits with Purina Pro Plan doing well.

Zone Europe

Sales of CHF 3.6 billion, 2.3% organic growth, 0.2% real internal growth

• In Western Europe we continued to achieve growth in most markets including Great Britain, France, Italy, the Iberian peninsula and Switzerland. Nescafé performed well across the region, whilst Herta continued to grow strongly in France, as did Maggi in the UK following the Juicy launch there in 2011. The petcare business did well across the region.
• In Eastern Europe, we achieved good growth in Ukraine, Romania and the Adriatic region. Russia’s performance was impacted by a realignment of our distribution networks aimed at improving future performance.
• There were strong achievements in many of the Zone’s categories: chilled culinary and frozen pizza all grew well. The Zone’s growth platforms were key contributors, in particular Nescafé Dolce Gusto, and in petcare, Purina Felix.

Zone Asia, Oceania and Africa

Sales of CHF 4.6 billion, 11.4% organic growth, 7.2% real internal growth

• The Zone’s emerging markets grew strongly in the first quarter, and realised higher prices. Greater China, South Asia, Africa and the Middle East all achieved double-digit growth. We continued to expand our distribution for all consumer segments from popularly positioned products to premium. Strong brand performances included Maggi in Africa, Nescafé in China, and Milo. The new partnerships in China (Yinlu and Hsu Fu Chi) performed to expectations.
• Growth in Japan and Oceania was constrained by the strong 2011 comparatives and prevailing economic conditions. KitKat performed well in Japan and Maggi in Oceania.
• Many of the Zone’s product categories contributed well with double digit growth in chocolate, ambient culinary, dairy, powdered and ready-to-drink beverages.

Nestlé Waters

Sales of CHF 1.6 billion, 8.0% organic growth, 5.0% real internal growth

• The North American business showed strong growth, building on its momentum in 2011. There were good performances from Nestlé Pure Life, which grew double-digit, and the premium international brands S. Pellegrino and Perrier. Regional brands such as Poland Spring and Ice Mountain grew solidly.
• The European business grew well with France, the UK, Germany and Italy the highlights. The international brands, including Vittel, were strong, as were local brands such as Buxton in the UK.
• The emerging market business where Nestlé Pure Life is our key brand grew double-digit.

Nestlé Nutrition

Sales of CHF 1.9 billion, 5.8% organic growth, 2.0% real internal growth

• Infant Nutrition performed well globally, its growth building on a particularly strong start to 2011. The division’s dynamic growth in Asia, Africa and Latin America more than compensated for the impact of slower or declining birth rates in many developed markets. Infant formula and infant cereals, with a high exposure to emerging markets, were the growth engines. The meals and drinks business, which has a greater exposure to developed markets, also contributed positively.
• Performance Nutrition had a good start to the year in the USA, following a sharpened focus in 2011 on its core activities, products and consumers. Its international businesses continued to perform well. Weight management continued to be affected by a high level of competitive activity and weak consumer spending in the USA. The recent launches in Europe made steady progress.

Other

Sales of CHF 3.3 billion, 10.4% organic growth, 6.9% real internal growth

• Nestlé Professional’s performance was driven by investment in its growth pillars both in emerging and developed markets. Its growth was positive in all three zones, with emerging markets growing double-digit. The beverage business’s focus on premium and super-premium solutions drove growth, whilst the food business was driven by a strong performance of culinary flavour solutions.
• Nespresso continued to deliver organic growth of around 20%, with consumer demand growing around the world. The highly popular Limited Edition Kazaar coffee was relaunched successfully and the global roll-out of boutiques continued with openings in Doha, Innsbruck and Seoul. The Nespresso retail network is expected to exceed 300 boutiques by the end of the year.
• Nestlé Health Science started its second year well, with North America, Latin America and Asia as highlights. The 2011 acquisitions performed in line with expectations.
• Joint ventures: Cereal Partners Worldwide’s strong emerging market performance was balanced by slower growth in developed markets. The realignment of Beverage Partners Worldwide to focus more on developed markets, mainly in Europe, is changing the joint venture’s growth profile. Its brands in faster growth emerging markets will now be managed by the Nestlé zones. Our pharmaceutical joint ventures had a solid start to the year, with positive growth.

Outlook

As anticipated, the trading environment in 2012 is challenging. The good growth in the first quarter together with the pricing effect for the rest of the year and a likely improved raw material environment in the second half, allows us to confirm our full-year outlook of delivering 5-6% organic growth together with an improvement in the year-end margin and underlying earnings per share in constant currencies.

Annex

First Quarter sales overview 2012

Contacts:

Media        Robin Tickle               Tel.: +41 21 924 22 00  
Investors    Roddy Child-Villiers     Tel.: +41 21 924 36 22  

PDF press releases:

• English (pdf, 214 Kb)
• Français (pdf, 222 Kb)
• Deutsch (pdf, 215 Kb)

Annual General Meeting: Strong support from shareholders for Board proposals - Henri de Castries new member of the Board

Thursday April 19th 2012 12:00:00 AM

2 689 shareholders attended the Nestlé S.A. Annual General Meeting today in Lausanne. They represented 38.689 percent of the total capital and 61.134 percent of the shares entitled to vote. The annual report and the accounts were approved and the shareholders agreed to the release of the Board of Directors and the Management. The Nestlé Compensation Report was accepted in a separate advisory vote, in line with the Swiss Code of Best Practice for Corporate Governance. The shareholders further approved the proposed dividend of CHF 1.95 per share, and agreed to the capital reduction. All proposals of the Board of Directors were approved with strong majorities.

Shareholders re-elected Mr Daniel Borel to the Board for a further term of three years and elected Mr Henri de Castries as a new member of the Board for a three-year term. Mr de Castries is the Chairman and Chief Executive Officer of the AXA Group. He had a distinguished career in the French Finance Ministry before taking on several important executive roles within the AXA Group. The Board thanked Ms Carolina Müller-Möhl and Mr Jean-René Fourtou, who were not standing for re-election, for their highly appreciated services provided to Nestlé over the past years.

At the meeting, Nestlé Chairman Peter Brabeck-Letmathe highlighted Nestlé’s constant strong performance over time: “Our growth drive has not once been interrupted in spite of a very difficult external environment. Since the beginning of 2006, Nestlé has created CHF 85 billion of additional shareholder value.” He also underlined that Nestlé today is the largest company by sales and market capitalisation in the fast moving consumer goods industry worldwide.

In addition to a review of the Board’s activities in 2011 and the targets for 2012, Mr Brabeck-Letmathe’s address also touched on the global water crisis. He said: “Water is the single most critical factor for the long term sustainability of our business. Water is needed all along the value chain, from the cultivation of our agricultural raw materials to the manufacturing of our products, to their preparation by consumers”. Mr Brabeck-Letmathe continued that “in order to feed the future 10 billion inhabitants of the planet, food production will nearly have to double. If the problem of the overuse of water is not addressed with urgency and determination by all actors involved, today’s global water crisis will be compounded by a future global food crisis.” With regards to energy policies subsidising the crop production for biofuel, he said: “Food is for feeding people, not for feeding cars. Food is the power of life, not the power of engines. Therefore our strong policy claim: no food for fuel.”

Mr Brabeck-Letmathe reiterated that Nestlé was awarded the Stockholm Industry Water Award, the highest international distinction for innovation and leadership in water sustainability, and concluded that “Nestlé can have an impact through its own operations, but truly sustainable solutions can only come from a collaborative response from multiple stakeholders. Nestlé has been, and wants to continue to be, part of the solution to the global water crisis.” This public-private partnership is also the principle behind the 2030 Water Resources Group, an initiative established at the World Economic Forum in 2009, and chaired by Mr Brabeck-Letmathe.

In his review of the Nestlé 2011 results, Nestlé CEO Paul Bulcke said: “Nestlé achieved a solid performance in 2011, with excellent results in both emerging and developed markets and across all categories. These results were achieved in what was a particularly challenging year. Unprecedented events have been unfolding that are changing the face of the world in many unexpected ways – economically, financially, politically and socially. These changes are fundamental and are here to stay; they form what we might call a new reality.” Mr Bulcke concluded: “As we look to the challenges of 2012 and beyond, my message today is that Nestlé is well positioned. We have the mindset and the right structure in place to respond to these challenges and to grasp the many opportunities presented to us in emerging and developed markets.”

For the year to come, the Board and its different Committees will be composed as follows:

Board of Directors
Peter Brabeck-Letmathe, Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Beat Hess, Daniel Borel, Jean-Pierre Meyers, André Kudelski, Steven G. Hoch, Naina Lal Kidwai, Titia de Lange, Jean-Pierre Roth, Ann M. Veneman, Henri de Castries

Chairman's and Corporate Governance Committee
Peter Brabeck-Letmathe, Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Beat Hess

Compensation Committee
Daniel Borel, Andreas Koopmann, Jean-Pierre Meyers, Jean-Pierre Roth

Nomination Committee
Andreas Koopmann, Peter Brabeck-Letmathe, Steven G. Hoch, Ann M. Veneman

Audit Committee
Rolf Hänggi, André Kudelski, Naina Lal Kidwai, Henri de Castries

The Chairman's and the CEO’s addresses to the AGM can be found on the Nestlé corporate website.

For more information about the global water challenge, see our new Creating Shared Value report.

Contacts:
    Media        Robin Tickle               Tel.: +41 21 924 22 00  
    Investors    Roddy Child-Villiers     Tel.: +41 21 924 36 22  

PDF Press Releases

• English (pdf, 163 Kb)
• French (pdf, 190 Kb)
• German (pdf, 212 Kb)

Full Year 2011: 7.5% organic growth, +60 basis points margin improvement

Thursday February 16th 2012 12:00:00 AM

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• Sales of CHF 83.6 billion, 7.5% organic growth, 3.9% real internal growth
• Trading operating profit of CHF 12.5 billion, margin 15.0%, +60 basis points, +90 basis points in constant currencies on continuing operations
• Strengthened market positions globally, with emerging markets growth 13.3% and developed markets 4.3%
• Continued investment in innovation and platforms for growth including the Chinese partnerships and Nestlé Health Science
• Underlying earnings per share CHF 3.08 up 7.8% in constant currencies
• Proposed dividend of CHF 1.95 per share.
• Positive 2012 Outlook: Organic growth of 5-6%, improved margin and underlying earnings per share in constant currencies

Paul Bulcke, Nestlé CEO: “We delivered good performance, top and bottom line, in both emerging and developed markets in 2011. It was a challenging year, and we do not expect 2012 to be any easier. We have continued to invest for the future and strengthen our capabilities across the world. We have established new partnerships in China. Nestlé Health Science has got off to a good start. Our innovation is creating opportunities in all categories, whether bringing new consumers to our brands in emerging markets, or building on our consumers’ engagement with our brands in the developed world. Our people are aligned behind our strategic roadmap, which is as relevant in today’s new reality as ever, to drive sustainable performance improvement. We are therefore well positioned in 2012 to deliver the Nestlé Model of organic growth between 5% and 6% as well as an improved margin and underlying earnings per share in constant currencies.”

Note: As previously announced, Nestlé made certain changes in presentation for revenue and operating profit as of January 2011 which have no impact on net profit and earnings per share. The 2010 figures have been restated for the changes to be on a comparable basis, which excludes Alcon, except for earnings per share and cash flow which include the contribution from Alcon. This is reflected in the analysis below.

Vevey, 16 February 2012 - For 2011 the Nestlé Group reported sales of CHF 83.6 billion and 7.5% organic growth on top of good growth in recent years. The organic growth was composed of 3.9% real internal growth and pricing of 3.6%. Foreign exchange had a negative impact of 13.4% and divestitures, net of acquisitions, a further 4.2%, mainly Alcon. Excluding the impact of the sale of Alcon, sales were down by 4.8%.

• The Group's trading operating profit was CHF 12.5 billion. The margin increased 60 basis points (90 basis points in constant currencies) to 15.0%.
• Nestlé Continuous Excellence in all areas of the company continued to create significant savings ahead of target, helping to partially offset major input cost pressures.
• Higher input costs increased the cost of goods sold by 190 basis points.
• Total marketing costs were down 100 basis points, mainly the result of leveraging our sales and marketing structures. Consumer facing marketing remained at almost the same level after two years of double-digit increases, which allowed us to further build our market positions in most categories.
• Administrative costs were down 80 basis points.
• Net profit was CHF 9.5 billion, up 8.1% on a continuing basis.
• The underlying earnings per share (EPS) increased 7.8% in constant currencies.
• Operating cash flow was CHF 9.8 billion, a similar level to 2010 excluding Alcon’s cash flow in 2010 and the impact of foreign exchange in 2011.

Business Review

• The Nestlé Group continued to grow in all regions of the world, with 5.0% organic growth in Europe, 6.4% in the Americas and 13.1% in Asia, Oceania and Africa. Our business grew 13.3% in emerging markets and 4.3% in developed markets.
• Trading operating profit margin for the Group as a whole and in many of our businesses improved in a year characterised by severe cost pressure and intensified competition around the world. Growth leverage combined with Nestlé Continuous Excellence contributed significantly.
• We continued to build our capabilities, investing in areas for future growth. Our two new partnerships with Yinlu and Hsu Fu Chi will deepen our engagement with Chinese consumers. Nestlé Health Science and the Nestlé Institute of Health Sciences are off to a good start in their first year of operation. These initiatives along with other investments are creating major growth platforms for the future.

Zone Americas

Sales of CHF 26.8 billion, 6.2% organic growth, 1.1% real internal growth; 18.4% trading operating profit margin, -30 basis points.

• The Zone achieved growth in both North America and Latin America.
• In North America most of our businesses contributed to the positive performance despite subdued consumer confidence. Pizza strengthened its lead over its competitors with a good performance by DiGiorno. Ice cream saw growth in snacks, Häagen-Dazs and Skinny Cow. The extension of the Skinny Cow brand into the chocolate category helped to drive growth there. Soluble coffee achieved good growth with Taster's Choice and Nescafé Clásico. Coffee-mate benefited from the successful launch of Natural Bliss. The frozen segment continued to be challenging but Lean Cuisine held share. Petcare built on its leading market position with strong growth from Purina ONE Beyond and Dog Chow,and achieved share gains in all categories and channels.
• There was double-digit growth in Latin America where demand remained strong. Several markets recorded growth in double digits with Mexico a highlight. It was a similar story in many categories including powdered beverages with Nescau and Nestea, soluble coffee with Nescafé and ambient culinary. Maggi achieved excellent growth in key markets helped by the successful launches of new innovations, Maggi Doble Gusto bouillon cubes and Maggi Caldo Casero bouillon. For petcare Purina Proplan, Dog Chow and Cat Chow also saw double-digit growth.
• The Zone’s trading operating profit margin was 30 basis points lower as higher input costs were not fully compensated by efficiencies and pricing.

Zone Europe

Sales of CHF 15.2 billion, 4.0% organic growth, 1.8% real internal growth; 15.6% trading operating profit margin, +230 basis points.

• The Zone achieved growth in Western and Central / Eastern Europe.
• In Western Europe all markets overcame tough economic conditions to deliver real internal growth. Portugal, Italy, Greece and Spain collectively achieved 3.7% organic growth. France, the Benelux countries and Great Britain did well. All the key categories grew with soluble coffee, chilled culinary, frozen pizza and petcare among the highlights.
• In Central and Eastern Europe there were strong performances in Ukraine and Romania and in the Adriatic region. Trading conditions remained tough in Russia and Poland.
• Innovation continued to drive our European growth with a major contribution from brands like Nescafé Dolce Gusto, Nescafé Sensazione in soluble coffee and Herta in chilled culinary. The Juicy range of spice-filled roasting bags continued to be a strong contributor for Maggi in culinary. Growth in Popularly Positioned Products (PPPs) was more than twice the level of that achieved by the Zone as whole. In petcare Felix did well, particularly the successful rollout into Central and Eastern Europe.
• The Zone’s trading operating profit margin improved 230 basis points. Key drivers included the growth in Western Europe, pricing, efficiencies, as well as the benefits of past restructuring including changes to retirement plans.

Zone Asia, Oceania and Africa

Sales of CHF 15.3 billion, 11.9% organic growth, 7.9% real internal growth; 18.9% trading operating profit margin, +90 basis points.

• The Zone achieved growth in emerging and developed markets.
• Nestlé’s presence in the region is deep-rooted, demonstrated by four 100 year anniversaries: Turkey in 2009, Philippines in 2011, and Malaysia and India in 2012.
• The emerging markets produced double-digit growth. The highlights included China, India, Pakistan, North Africa, Central West Africa despite the conflict in Côte d’Ivoire, and Egypt in spite of the turmoil endured for much of the year. In a volatile environment the Zone remained focused on deepening distribution, aiming to service an additional one million small retail outlets between 2010 and 2012. We invested in line extensions and new factories across the Zone. We also established promising partnerships in China with Yinlu and Hsu Fu Chi.
• There were many successful initiatives involving Popularly Positioned Products (PPPs) which were the key drivers of the Zone’s growth. For example, Maggi bouillons in Africa and Nido Essentia in Egypt. Innovation also played a significant role with successful launches for Nescafé Milky in China, Nescafé 3:1 in Thailand, Nido Fortified in several African countries and the continuing roll-out of peelable ice cream. The Maggi flavour world and noodles range was expanded in markets across the Zone.
• The developed markets’ performance was helped by a strong year for Japan, our people reacting fast and creatively in a market badly affected by natural disasters. There was a good performance in the coffee systems market by Nescafé Dolce Gusto and Barista, as well as in premium with Nescafé Koumibaisen. KitKat Black also continued to enjoy strong sales there.
• The Zone’s trading operating profit margin was up 90 basis points largely thanks to innovation and renovation across all areas and initiatives such as distribution, manufacturing and procurement supported by Nestlé Continuous Excellence.

Nestlé Waters

Sales of CHF 6.5 billion, 5.2% organic growth, 3.4% real internal growth; 8.0% trading operating profit margin, +90 basis points.

• Nestlé Waters grew in all three zones.
• North America grew both in the retail channel and home & office. Nestlé Pure Life and the international brands S.Pellegrino, Perrier and Aqua Panna performed well, offsetting a tough competitive environment for the regional brands.
• The European business gained share with strong performances in most markets including France, Italy, Germany and the UK.
• We continued to grow double-digit and build a stronger presence in the emerging markets, where our sales exceeded CHF 1 billion.
• Nestlé Pure Life continued to produce double-digit growth worldwide. There was high single-digit growth from the international brands, all strong contributors globally. Vittel and Hépar performed well in Europe, whilst Ice Mountain and Ozarka were the strongest of the regional US brands.
• The Nestlé Waters trading operating profit margin increased 90 basis points due to rigorous cost management, especially in Europe, pricing and the strong growth in Europe and emerging markets.

Nestlé Nutrition

Sales of CHF 7.2 billion, 7.3% organic growth, 4.5% real internal growth; 20.0% trading operating profit margin, - 30 basis points.

• Infant Nutrition, representing about 90% of the division’s sales, enjoyed good growth overcoming relatively subdued developed market trading conditions. This was due to a well supported strong innovation pipeline, broad-based market share gains and double-digit growth in emerging markets for both infant formula and infant cereals. The launch of the BabyNes system in Switzerland, a promising breakthrough innovation, had a good reception in its first months.
• Weight Management in North America was affected by weak consumer spending and intensified competition. We are taking steps to address the situation. The international Jenny Craig business is performing well with good growth in Oceania and promising momentum in Europe. Growth at Performance Nutrition was strong in Europe and Oceania.
• The Nestlé Nutrition trading operating profit margin declined by 30 basis points. The main impacts were input cost pressures and the tough trading environment for weight management in the US.

Other

Sales of CHF 12.6 billion, 11.4% organic growth, 8.3% real internal growth; 16.8% trading operating profit margin unchanged.

• Nestlé Professional achieved good growth both in developed and emerging markets, especially in China, India and Brazil, in both beverages and food. We continued to roll out our innovative premium and super-premium beverage solutions (Nescafé Alegria, Nescafé Milano and Viaggi) to all regions. The established Nescafé and creamers businesses continued to perform well. The food business benefited from innovations such as Maggi Premium Bouillons and Chef Natural Flakes for sauces, with continued focus on growing our customised solutions, services capability and customer intimacy.
• Nespresso had another strong year, with growth over 20% on a sales base well in excess of CHF 3 billion. The continued strong consumption in Nespresso’s core markets, as well as geographical expansion and the constant innovation of products and systems, ensured a strong performance in the face of intensified competition. The unique Nespresso service proposition including boutiques, e-commerce and call centres builds intimacy with our consumers which helps further reinforce our prospects for future growth.
• Nestlé Health Science in its first year of operations built up its capabilities with three significant investments. At the same time it achieved strong growth with contributions from innovative products like Resource Thicken Up Clear, the Peptamen range, and the relaunch of Boost which achieved high-teens growth in the US. Its core platforms; ageing medical care, critical care and surgery, and paediatric medical care all grew well, most of them double-digit. The 2011 acquisitions have been integrated and are delivering to expectation. Prometheus achieved double-digit sales growth. Vitaflo, acquired in 2010, also reported double-digit growth, driven by innovations for patients with metabolic conditions.
• CPW grew mid-single digit, achieving share gains in the majority of its markets. Trading conditions were toughest in Southern Europe, but growth was resilient in the rest of Europe and double-digit in many emerging markets. BPW had a positive year and will benefit in 2012 from its reshaping to cover Europe and Canada.
• Galderma grew double-digit and has successfully integrated Q-Med, acquired in March and accretive to growth. Laboratoires innéov made good progress with a particularly strong performance in Latin America.
• The ‘Other’ trading operating profit margin was unchanged at 16.8%, reflecting a mixed picture by constituent. Nespresso, Nestlé Health Science and the food and beverages joint ventures performed well, whilst Nestlé Professional was impacted by input costs despite a strong programme of savings.

Board proposals to the Annual General Meeting

At the Annual General Meeting on 19 April, the Board of Directors will propose a dividend of CHF 1.95 per share. The net dividend will be payable as from 26 April 2012. The Board will also propose the cancellation of the shares bought back under the CHF 10 billion buy-back programme completed in 2011.

The Board will propose the re-election of Daniel Borel as a director for a further term of three years, as well as the election of Henri de Castries. Mr de Castries is the Chairman and Chief Executive Officer of the AXA Group. He had a distinguished career in the French Finance Ministry before taking on several important executive roles within the AXA Group. Carolina Müller-Möhl and Jean-René Fourtou are not standing for re-election. The Board wishes to thank them for their highly appreciated services provided to our company over the past years.

Positive 2012 outlook

In view of continuing economic uncertainties and volatility, we don’t expect 2012 to be any easier than previous years. But we continue to invest for the future and strengthen our capabilities across the world. Our innovation is creating opportunities in all categories, bringing new consumers to our brands in emerging markets, building on our consumers’ engagement with our brands in the developed world. Our people are aligned behind our strategic roadmap, which is as relevant as ever, to drive sustainable performance improvement. We are therefore well positioned in 2012 to deliver the Nestlé Model of organic growth between 5% and 6%, as well as an improvement in the trading operating profit margin and underlying earnings per share in constant currencies.

Annex

Full-year sales and trading operating profit margins overview

Contacts:

Media        Robin Tickle               Tel.: +41 21 924 22 00  
Investors    Roddy Child-Villiers     Tel.: +41 21 924 36 22  

PDF press releases:

• English (pdf, 51 Kb)
• Français (pdf, 63 Kb)
• Deutsch (pdf, 63 Kb)

Reports published today:

• 2011 Financial Statements (pdf, 4 Mb)
• Rapports financiers 2011 (pdf, 5 Mb)
• Finanzielle Berichterstattung 2011 (pdf, 5 Mb)
• Corporate Governance Report 2011 (pdf, 1 Mb)

Nestlé nine-month sales: strong, broad-based organic growth of 7.3%

Thursday October 20th 2011 12:00:00 AM

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Nestlé nine-month sales:
strong, broad-based organic growth of 7.3%

• Sales of CHF 60.9 billion, 7.3% organic growth, 4.1% real internal growth
• Market positions stronger across regions and categories
• Good growth in developed markets; double-digit growth in emerging markets
• Full-year outlook: slight over-performance against our 5-6% long-term organic growth range and we continue to strive for a margin improvement in constant currencies

Paul Bulcke, Nestlé CEO: “In a tough environment, we continued to build our capabilities and positions for the future while maintaining strong growth across regions and categories. The constant renovation of our existing product portfolio together with our strong pipeline of game-changing innovations resulted in many market share gains. A high rate of innovation also requires significant consumer-facing marketing support. For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6% and continue to strive for a margin improvement in constant currencies”.

Vevey, 20 October 2011 – In the first nine months of 2011, the Nestlé Group’s organic growth was 7.3%, including 4.1% real internal growth and pricing of 3.2%. Foreign exchange decreased sales by 15.1%, and divestitures (mainly Alcon) net of acquisitions by 5.7%.

Organic growth of 7.3% for the nine months constitutes broad-based outperformance against the growth rates in our categories and markets. The organic growth was 5.8% in the Americas, 5.0% in Europe and 13.1% in Asia, Oceania and Africa. Developed markets grew 4.0%, while emerging markets achieved around 13.1% organic growth.

Business Review

Zone Americas

Sales of CHF 19.1 billion, 5.6% organic growth, 0.8% real internal growth

• In North America the tough economic conditions and increased pricing led to a decline in consumption in several categories, but new lines like DiGiorno Pizza Combos, Lean Cuisine snacks, and Dreyer’s Smoothies helped mitigate the effects of the slowdown. PetCare saw accelerated growth and market share gains as did frozen pizza. Coffee-mate enjoyed strong growth thanks to new varieties of Café Collections and a successful launch of Coffee-mate Natural Bliss. Nescafé also performed well.

• In Latin America the business continued to deliver strong growth. We pushed distribution deeper into the markets across the continent and introduced new product lines. Most categories benefited, recording double-digit growth. Among market launches were Nescafé Molienda, a new soluble coffee product with micro-granules in Mexico, and KitKat in Brazil.

Zone Europe

Sales of CHF 11.1 billion, 3.8% organic growth, 2.2% real internal growth

• In a challenging environment Nestlé outgrew the European market. In Western Europe there were market share gains in two thirds of the categories. This was achieved by our continued roll-out of innovations like Nescafé Dolce Gusto and Maggi Juicy Roasting across Europe. France was a particular highlight but there was also good growth across most of Western Europe including Italy, Switzerland and the Benelux countries. Despite the economic crisis, Greece and the Iberian region did well.

• In Central and Eastern Europe, Russia continued to be a tough market, although culinary performed well. Elsewhere in Eastern Europe growth was stronger with Ukraine achieving good results and the Adriatic region growing more than 10%. PetCare performed strongly, with innovations like single serve pouches from Felix helping the business build market share.

• Across the Zone, soluble coffee, chilled culinary, ambient culinary, frozen pizza, sugar confectionery and PetCare all delivered good levels of growth thanks to the added value created by innovations. The ice cream category had a poor season and as a result our performance was below our expectations. Strong brand performances included Nescafé, pursuing a clear segmentation strategy with products like Nescafé Green Blend and Nescafé 3-in-1, and also Maggi, Herta and Purina ONE.

Zone Asia, Oceania and Africa

Sales of CHF 11.1 billion, 11.7% organic growth, 8.2% real internal growth

• The Zone’s emerging markets delivered double digit growth, and most categories were high single or double digit. We continued to deepen our involvement in the development of Africa, making new investments and expanding our distribution networks to support popularly positioned product rollouts for categories including culinary, dairy, powdered beverages and soluble coffee. In Greater China, South Asia and Indochina we continued to achieve double-digit growth.

• The Zone’s developed markets recorded positive growth. In Japan there were market share gains for soluble coffee, chocolate and ready-to-drink beverages. Our Nescafé coffee systems, Dolce Gusto and Barista continued to perform well there and we launched successfully the new KitKat Black. In Australia the confectionery, ice cream and PetCare businesses all added market share.

• Across the Zone as a whole, growth was broad-based with pricing increasing over the course of the year. In particular, there was strong growth in ambient dairy with the Nestlé Nido brand. Nescafé, Maggi, Milo, ice cream and ready-to-drink beverages also grew rapidly.

Nestlé Waters

Sales of CHF 5.1 billion, 4.7% organic growth, 3.2% real internal growth

• In Europe our brands delivered growth and gained market share. In France and Belgium the growth in volumes was driven by Hépar, Vittel, Perrier and S.Pellegrino. There were gains in the UK, Switzerland and Germany.

• In North America our regional brands came under competitive price pressure, but overall our growth was positive thanks to strong performances from our international brands Perrier and S.Pellegrino.

• The emerging market business continued to achieve double-digit growth. Nestlé Pure Life recorded a strong performance across Africa, Asia and Latin America.

Nestlé Nutrition

Sales of CHF 5.4 billion, 7.6% organic growth, 5.2% real internal growth

• New products helped drive growth for Nutrition, with the Infant Nutrition division continuing its strong performance both in formula and cereals. Successful launches of new infant cereal products with pro-biotics and infant formula designed to reduce colic helped achieve the strong growth in emerging markets. Market conditions were tough in the United States. Europe showed continued strong momentum, especially in France. Nestlé BabyNes was launched in Switzerland in May. It has showed promising early results with very high consumer satisfaction ratings.

• Jenny Craig remained at low levels in the face of intense competition in the US. The European rollout continued to go well though. Performance Nutrition faced similar challenges in the US but grew well in Zone Asia, Oceania and Africa.

Other

Sales of CHF 9.1 billion, 11.4% organic growth, 8.8% real internal growth.

• Nestlé Professional achieved strong worldwide growth, continuing to introduce innovative products and systems in both beverages and food. Our beverage business was the main driver, recording double-digit growth. Our premium Nescafé Milano beverage solution was rolled out to North America, France, Malaysia and Germany, capitalising on its unique branded products, system and service. Launched first in France, Viaggi, our new super premium system is now being rolled out to other markets in Europe. Our branded food business continued to perform particularly well in Asia and in Latin America where the out-of-home market enjoyed good momentum. In an effort to stimulate additional growth in Europe, we have introduced Maggi bouillons incorporating the latest granulation technology, as well as the second wave of Chef Jus and Fonds in flakes.

• Nespresso continued its strong growth in Europe while the rollout to the rest of the world continued. Four new machines, the Pixie, Lattissima+, Aguila and Zenius were launched this year. Nespresso is on track to extend its retail network to more than 250 boutiques this year to meet growing consumer demand, with new boutiques opening in locations as far apart as Paris, Johannesburg, Auckland and Osaka.

• Nestlé Health Science, established in January, enjoyed good growth and market share gains while at the same time building up its operational capabilities and acquiring Prometheus Laboratories Inc, a US firm specialising in diagnostics and licensed speciality pharmaceuticals; Vitaflo, a provider of clinical products and CM&D Pharma Ltd, a company that specialises in the development of products for patients with conditions like kidney disease and inflammatory bowel disease.

• Among the Group’s joint ventures, Cereal Partners Worldwide and Beverage Partners Worldwide achieved mid-single digit organic growth, whilst Galderma grew high single-digit, with strong performances in the emerging markets.

Outlook

For the year as a whole, in spite of input cost pressures, we expect to slightly over-perform against our long-term organic growth range of 5-6% and we continue to strive for a margin improvement in constant currencies.

Contacts

Media: Robin Tickle Tel.: +41 21 924 22 00

Investors: Roddy Child-Villiers Tel.: +41 21 924 36 22

PDF press releases:

• English (pdf, 252 Kb)
• Français (pdf, 255 Kb)
• Deutsch (pdf, 248 Kb)

Annex
9-month sales overview 2011

Retirement of Chief Financial Officer Jim Singh - Appointment of Wan Ling Martello

Tuesday September 27th 2011 12:00:00 AM

Jim Singh, Executive Vice President and Chief Financial Officer of Nestlé S.A.,  will retire on 31 March 2012 after a long and distinguished career of 35 years with Nestlé. The Board of Directors of Nestlé S.A. appointed Wan Ling Martello, currently Executive Vice President of Global e-Commerce, Emerging Markets Walmart, to succeed Jim Singh as Executive Vice President and Chief Financial Officer of Nestlé, effective 1 April 2012.

Ms. Martello, U.S. citizen of Chinese and Philippine origin, is a Certified Public Accountant with a MBA from the University of Minnesota and a Bachelor of Science in Business Administration and Accountancy from the University of the Philippines. She has vast knowledge of the finance and control area and solid experience in the food and beverage business as well as the retail segment. She formerly worked with Kraft Foods (1985-1995) in finance and business administration as well as with Borden Foods Corporation (1995-1998) as Corporate Controller. From 1998-2005 she was with NCH Marketing Services Inc., a former subsidiary of Nielsen, as Chief Financial Officer, Chief Operating Officer and then President USA. From 2005-2011, Ms. Martello gained in-depth knowledge of the retail and e-commerce business at Walmart where she was Senior Vice President, Chief Finance Officer & Strategy, Walmart International and then Executive Vice President, Chief Operating Officer, Global eCommerce, Emerging Markets. Besides her financial background, Wan Ling also has extensive insight of the consumer and branded goods category and is perfectly prepared to assume this crucial role in our Group.

Paul Bulcke, CEO of Nestlé, said: “Jim Singh has strong human qualities and is a highly respected professional. Since I became CEO I have been able to appreciate the full extent to which Jim has been instrumental in steering Nestlé through these last challenging years. I am confident that Wan Ling will blend well into the Nestlé culture and that her strong experience in finance and the food and beverage business, both from the industry and retail angle, will allow her to further enhance the Nestlé model combining top-line growth with continuous margin improvement and an improved return on invested capital.”

Press releases:

• English (pdf, 98 Kb)
• Français (pdf, 126 Kb)
• Deutsch (pdf, 126 Kb)

Curriculum vitae:

• Wan Ling Martello(pdf, 105 Kb)

First half 2011: solid performance in a volatile environment

Wednesday August 10th 2011 12:00:00 AM

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• Sales of CHF 41.0 billion, 7.5% organic growth, 4.8% real internal growth
• Trading operating profit of CHF 6.2 billion, margin of 15.1%; +20 basis points, +40 basis points in constant currencies
• Consumer facing marketing spend up 6.2% in constant currencies
• Underlying earnings per share up 5.2% in constant currencies
• Strong Swiss franc: major impact on consolidation, little effect on operational performance
• Full-year outlook: organic growth at top end of 5% to 6% range, combined with a margin increase in constant currencies

Paul Bulcke, Nestlé CEO: “Nestlé continued to make good progress in a period characterised by political and economic instability, natural disasters, rising raw material prices and, yes, a strong Swiss franc. This has made for an extremely tough, volatile and competitive environment. But by leveraging our competitive advantages, investing behind our growth drivers and excelling in operational efficiency and effectiveness, we managed to drive growth not only in emerging markets but also in developed countries, especially in Europe. Furthermore we improved our trading operating margin while increasing investment in our brands. For the full year, we expect organic growth at the top end of the 5% to 6% range, combined with a margin increase in constant currencies.”

Vevey, 10 August 2011 – The Group reported organic growth of 7.5% and a trading operating profit margin of 15.1%, up 20 basis points reported, up 40 basis points in constant currencies, from that achieved by the continuing operations in the first half of 2010.

We continued to deliver growth both in emerging and developed markets, with organic growth of 5.7% in the Americas, 5.8% in Europe and 13.3% in Asia, Oceania and Africa. This performance reflects strong alignment and investment in our strategic growth priorities and brands to support our fast-flowing innovation pipeline. We also continued to step up our investment in R&D, factories and capabilities to support our growth in both emerging and developed markets.

First-half results

As announced in February 2011, Nestlé has made certain changes in presentation for Revenue and Operating Profit, as from January 2011, which have no impact on net profit and earnings per share. The 2010 figures have been restated for all the changes as a comparable basis. Following the disposal of Alcon in August 2010, the 2010 comparatives are reported on a continuing basis, which excludes Alcon, except for net profit and earnings per share figures, which include the contribution from Alcon. This is reflected in the analysis below.

• In the first half of 2011, the Nestlé Group’s organic growth was 7.5%, including real internal growth of 4.8%. Pricing increased in the second quarter to 3.8% compared to 1.5% in the first quarter, resulting in 2.7% pricing for the half year. There was a decrease in Group sales of 12.9% to CHF 41 billion, due to an impact of 13.8% from foreign exchange and of 6.6% from divestitures, net of acquisitions.
• The Group’s trading operating profit margin increased by 20 basis points and by 40 basis points in constant currencies.
• The cost of goods sold was higher by 180 basis points. The increase in input costs was partially offset by Nestlé Continuous Excellence savings, innovation, growth, sales mix and pricing.
• Distribution costs increased by 10 basis points, as sales mix and savings compensated much of the higher oil-related costs compared to the first half of 2010.
• Total marketing costs, including the cost of the sales and marketing organisations, were down by 20 basis points. More specifically, the consumer facing marketing spend increased by 6.2% in constant currencies. This was on top of a 14% increase in the first half of 2010.
• Administrative costs were down by 150 basis points. This demonstrates a rigorous approach to efficiency and shows the benefit of rolling out Nestlé Continuous Excellence, enabled by GLOBE, to areas beyond operations, and continues the trend we experienced last year.
• Nestlé Continuous Excellence savings are in line with our target of at least CHF 1.5 billion for the full year.
• The net other trading income and expenses improved by 40 basis points, resulting mainly from lower restructuring costs in the half year.
• The underlying earnings per share (EPS) rose 5.2% in constant currencies. The reported EPS were CHF 1.46 compared with CHF 1.60 last year. Net profit was CHF 4.7 billion.
• The Group’s operating cash flow was CHF 1.7 billion. This number is impacted by the sale of Alcon, foreign exchange and higher commodity costs.

Business Review

Zone Americas

Sales of CHF12.8 billion; 5.6% organic growth; 1.1% real internal growth; trading operating profit margin 17.3%, - 10 basis points

• In North America, where consumer confidence is subdued, we continued to grow our business. The frozen business saw gains in pizza, in the US for DiGiorno and in Canada for Delissio. Stouffer’s also gained market share, and Lean Cuisine picked up momentum in recent months through launches such as Market Creations and by increasing its presence in snacking. Necessary pricing in ice cream impacted volumes for Dreyer’s, although Häagen Dazs proved more resilient and Nestlé Drumstick continued to grow well. Skinny Cow was launched into the chocolate category. Both Nescafé in soluble coffee and Coffee-Mate in non-dairy creamers performed well. The launch of Coffee-Mate Natural Bliss was very well received. The pet care business gained market share in a weak category.
• Latin America had a strong first half. Brazil achieved high single-digit growth while the rest of the markets or regions were double-digit. Highlights included Nescafé, powdered beverages such as Nescau and Nesquik, pet care with products such as Dog Chow and Cat Chow, culinary, chocolate, dairy and biscuits as well as Popularly Positioned Products (PPPs) in many categories.
• The Zone’s trading operating profit performance reflects the impact of severe cost pressure, compensated by necessary pricing action and efficiencies. The level of marketing spend was higher than in the first half of last year.

Zone Europe

Sales of CHF 7.5 billion; 4.1% organic growth; 2.7% real internal growth; trading operating profit margin 16.4%, + 200 basis points

• In Western Europe there were strong performances in France, Italy, Benelux, the Nordic region and Switzerland, while Greece and the Iberian region managed to achieve positive growth despite severe economic conditions. Key innovations such as Maggi Juicy Roasting, Nescafé Dolce Gusto and Felix were strong contributors to the performance of their categories.
• In Eastern Europe there was double-digit growth in Ukraine and the Adriatic region. Russia’s growth continued to be subdued, particularly in the confectionery category, our largest in the country.
• In general, there was a strong, broad-based performance across the Zone’s markets and categories in what remains a challenging environment, resulting in market share gains in the great majority of them. Ice cream was strong, with some good innovation in impulse-driven products; Maggi culinary products, the Herta chilled range and Buitoni and Wagner frozen pizzas all contributed well, while Nescafé and pet care were accretive to the Zone’s growth. Popularly Positioned Products (PPPs) grew high single-digit, with good growth in both Eastern and Western Europe.
• The Zone’s trading operating profit benefited from the robust underlying performance, encompassing volume growth, pricing and savings, as well as lower restructuring and pension costs.

Zone Asia, Oceania and Africa

Sales of CHF 7.5 billion; 11.7% organic growth; 8.8% real internal growth; trading operating profit margin 19.5%, +50 basis points

• The start of the trading period was one of extreme challenges, with natural disasters and civil unrest in a number of countries, the consequences of which continue to affect the region. In this context, the Zone produced an extremely strong performance with double-digit growth, gaining market share in the majority of categories.
• Growth was high across the emerging markets, being double-digit in Asia, Africa and the Middle East, with particular highlights in China, South Asia, Pakistan, North-East and South Africa, Indonesia and the Indochina region. A key driver is the continued roll-out of our Popularly Positioned Product (PPP) business model, including deeper distribution into more rural areas as we target an additional one million retail outlets by the end of 2012. Popularly Positioned Products (PPPs) were accretive to the Zone’s growth.
• Growth continued to be positive in our Oceania and Japan region. There were good performances in soluble coffee, confectionery and ready-to-drink beverages in particular.
• The big categories in the Zone - ambient dairy, ambient culinary and soluble coffee - were all double-digit. Maggi saw strong growth across its range, including noodles in India and seasonings in Africa. Nescafé grew in all segments, from Popularly Positioned Products (PPPs) and 3-in-1s to its premium range and single-serve systems. The Munch and Shark brands performed well in chocolate, while the ice cream category benefited from good innovations in South East Asia and China.
• The Zone’s trading operating profit benefited from the strong volume growth, savings in manufacturing and administration, efficiencies in brand communication, as well as pricing.

Nestlé Waters

Sales of CHF 3.4 billion; 5.8% organic growth; 4.8% real internal growth; trading operating profit margin 8.6%, - 140 basis points

• Nestlé Waters achieved growth in all three Zones. Market shares were generally positive, with Europe being a highlight. The international brands, S. Pellegrino, Vittel, Acqua Panna, Contrex and Perrier, performed particularly well.
• In North America the competitive environment is tough, and increased pricing is impacting volume for the regional brands such as Poland Spring and Arrowhead, as well as for Nestlé Pure Life. However, the US was a key contributor to the good performance of the international brands.
• Growth continued to be dynamic in Europe. France enjoyed double-digit growth, Germany and Eastern Europe achieved good growth, while Italy and the UK were also positive. Market shares were held in Italy and up in the UK, France and Germany.
• Nestlé Waters continued to roll out in emerging markets, with double-digit growth in Brazil and Mexico, as well as Turkey, Pakistan and Vietnam, amongst others.
• The Nestlé Waters’ trading operating profit margin fell due to the sharp increase in oil-related costs, both distribution and packaging, despite a high level of savings, leverage from growth, increased prices, further light-weighting of bottles and continuous increases in distribution efficiencies.

Nestlé Nutrition

Sales of CHF 3.7 billion; 8.8% organic growth; 6.5% real internal growth; trading operating profit margin 21.1%, - 90 basis points

• Infant nutrition, which represents about 90% of the division’s sales, achieved double-digit organic growth in the first half. There were strong performances from all areas, both by category and geography, resulting in market share gains in key markets and on a global basis. All three Zones grew, with highlights including France and Russia, the Greater China and South Asia regions, the US and Mexico. Amongst the brands, Cerelac, Good Start and Lactogen achieved double-digit growth. Switzerland saw the launch of Nestlé’s newest innovation, BabyNes, the first comprehensive nutrition system for babies.
• Performance nutrition enjoyed a high level of growth in Oceania and Europe, with successful innovations such as PowerBar fruit gels. A high level of promotions in North America also drove strong volume growth.
• Jenny Craig had a tough first half in North America, due to the weak economic environment and a high level of competitive pressure. Its launch in France and the UK continues to make good progress, while the Oceania business is performing well.
• Nestlé Nutrition’s trading operating profit margin was impacted by high raw material costs, reduced sales in weight management and the phasing of investment behind new product launches. The benefit of pricing taken in the first half will be more evident in the second half.

Other

Sales of CHF 6.2 billion; 11.5% organic growth; 9.7% real internal growth; trading operating profit margin 17.5%, - 140 basis points

• Nestlé Professional gained momentum in both beverages and food. It delivered high single-digit organic growth, with double-digit growth in Latin America and Zone Asia, Oceania and Africa. Emerging markets represent about a third of sales, and highlights include the Greater China region and India, both growing around 20%. The beverages business as a whole grew double-digit and performed well in North America despite the tough environment. The new premium and super-premium Nescafé machines are making good inroads following their launch in 2010, and the geographic roll-out continues. The food business reported mid single-digit growth, with Maggi culinary and Nestlé milk products, Davigel and Erlenbacher as drivers. The trading operating profit margin was held at last year’s level despite increased cost pressures.
• Nespresso achieved double-digit organic growth, having continued to perform at a high level around the world, including in its biggest European markets and the US, despite intensified competition. The global roll-out of boutiques continued with new openings in St. Petersburg, Stockholm and Barcelona, and the number of boutiques is expected to exceed 250 by the end of the year. Nespresso’s marketing spend was first half weighted due to the successful global launch of the Pixie machine as well as an intense programme of boutique openings.
• Nestlé Health Science’s healthcare nutrition business achieved high single-digit growth. Nestlé Health Science acquired the US-based Prometheus Laboratories Inc., specialised in gastrointestinal diagnostics, and an interest in the New Zealand-based Vital Foods. It continued to invest in its new structures, including the Nestlé Institute of Health Sciences.
• The Food and Beverages joint ventures, Cereal Partners Worldwide (CPW) and Beverage Partners Worldwide (BPW), and the Pharmaceutical joint ventures, Galderma and Laboratoires innéov, all achieved a good level of growth.
• The “Other” trading operating profit margin was mainly impacted by the first half weighting of Nespresso’s marketing investments, and increased costs at Nestlé Health Science.

Financial flexibility

We recognise significant opportunities to advance our strategic growth agenda both organically and through bolt-on acquisitions. In 2011, we have already committed to significant levels of capital expenditure weighted to the high-growth emerging markets and we have announced several strategic bolt-on acquisitions in different parts of the world. In view of these significant financial commitments, and taking into consideration the difficult economic environment which has prevailed for some time now, we will continue to maintain an appropriate level of financial flexibility to pursue with confidence our strategic growth agenda. Consequently, after completing CHF 35 billion in share buybacks since 2007, the Board of Directors has made a decision not to launch a new programme at this time.

Outlook

As we look forward to the second half of 2011, we expect continued challenging conditions including political and economic instability, volatile raw material prices and subdued consumer confidence in the developed world. But our momentum is strong, our efficiency drive continues and we expect our pricing to have a fuller impact in the second half of the year. We are therefore confident of achieving organic growth at the top end of the 5% to 6% range, combined with a margin increase in constant currencies.

PDF press releases:

• English (pdf, 48 Kb)
• Français (pdf, 51 Kb)
• Deutsch (pdf, 260 Kb)

Reports published today

• 2011 Half-Yearly Report (pdf, 213 Kb)
• 2011 Rapport Semestriel(pdf, 227 Kb)
• 2011 Halbjahresbericht(pdf, 227 Kb)

Annex

Half-year sales and trading operating profit margins overview

2010 and 2011 are not directly comparable due to the changes of presentation made to the Income Statement as of 1/1/2011 and the disposal of Alcon in August 2010. The 2010 figures have been restated for all the changes as a comparable basis and reported for continuing operations only. Other changes include the reclassification of Healthcare Nutrition, now part of Nestlé Health Science, from Nestlé Nutrition to “Other”, which also includes Nestlé Professional, Nespresso and joint ventures managed on a worldwide basis. In the product groups, “Nutrition and healthcare” includes nutrition, healthcare and pharmaceutical products.

Nestlé to enter partnership with Chinese confectionery company Hsu Fu Chi

Monday July 11th 2011 12:00:00 AM

Nestlé today announced that it has entered into a partnership agreement with the founding family of Hsu Fu Chi, a leading manufacturer and distributor of confectionery products in China, listed in Singapore (HFCI:SP). Under the proposed agreement, Nestlé intends to acquire 60% of Hsu Fu Chi whilst the Hsu family will own the remaining 40%. Hsu Fu Chi’s current CEO and Chairman, Mr. Hsu Chen, will continue to lead the company in the new partnership.

Consequently, Nestlé proposes to acquire the shares of Hsu Fu Chi’s independent shareholders, representing 43.5% of the shares in Hsu Fu Chi, by way of a scheme of arrangement. Nestlé offers a cash price of SGD 4.35 per Hsu Fu Chi share which represents a premium of 24.7% over the volume-weighted average share price over the last 180 days. If the scheme is approved by the independent shareholders, Nestlé will acquire in addition a 16.5% stake in Hsu Fu Chi from the Hsu family’s current holding of 56.5%. Nestlé has secured irrevocable undertakings from the two largest independent shareholders - Arisaig Partners Holdings and subsidiaries of the Baring Asia Private Equity Fund which hold 9.0% and 16.5% respectively - to vote in favour of the scheme. The total price to be paid by Nestlé to acquire 60% of Hsu Fu Chi  is approximately SGD 2.1 billion (CHF 1.4 billion).

The completion of the transaction is subject to regulatory approval in China and certain other conditions related to the scheme of arrangement.

Hsu Fu Chi’s portfolio includes sugar confectionery, cereal-based snacks, packaged cakes and the traditional Chinese snack sachima. Hsu Fu Chi’s products are tailored to Chinese consumers’ needs and habits, and complement Nestlé’s existing product portfolio in China, which includes culinary products, soluble coffee, bottled water, milk powder and products for the foodservice industry. Hsu Fu Chi’s large portfolio of affordable products, with the potential for enhanced nutritional value, fits perfectly into Nestlé’s global portfolio.

In 2010, Hsu Fu Chi reported sales of CHF 669 million and an EBIT margin of 17.3%. The company operates four large-scale factories in China, has excellent route-to-market capabilities and employs 16,000 people.

Nestlé CEO Paul Bulcke: “This proposed partnership will greatly reinforce our presence in China. It combines Hsu Fu Chi’s strong brands, its large portfolio of products at affordable price points, its efficient operations and entrepreneurship with our proven innovation and renovation capabilities, supported by our R&D Centres in China. It also demonstrates our long-term commitment to China and enhances our ability to grow our portfolio of international and local brands in this dynamic market.”

Hsu Fu Chi’s CEO and Chairman Hsu Chen: “We are delighted to partner with Nestlé. Their offer is a recognition of the strength and quality of our company and a very attractive proposition for our shareholders. Together with Nestlé, we will accelerate the development of the Hsu Fu Chi brand, its production and distribution capabilities and ensure Hsu Fu Chi’s continued growth momentum and brand legacy for the future.”

Nestlé has been present in China for over twenty years and today operates 23 factories, two R&D Centres and employs 14,000 people. Its China region achieved sales of CHF 2.8 billion in 2010. Main Nestlé brands in China include Nescafé, Nan and Maggi as well as local brands such as Totole, Haoji and Dashan. Nestlé has established several technical assistance initiatives for milk and coffee farmers in China. For example, Nestlé buys fresh milk from thousands of farmers and assists them in increasing the quality, quantity and efficiency of their production. In Yunnan province, Nestlé has been encouraging and supporting coffee cultivation for almost twenty years and providing local farmers with direct training on planting, quality control and processing techniques.

Further details of the terms, conditions and statements relating to the transaction and the scheme of arrangement are set out in the Joint Announcement of Nestlé and Hsu Fu Chi filed earlier today with Singapore Exchange Securities Trading Limited (SGX).

Contacts
International Media: Robin Tickle Tel.: +41 (0)21 924 34 24
Chinese media: Jonathan Dong Tel.: + 86 10 84 34 76 31
Investors: Roddy Child-Villiers Tel.: +41 (0)21 924 36 22

PDF press releases:

• English (pdf, 166 Kb)
• Chinese (pdf, 184 Kb)
• Français (pdf, 149 Kb)
• Deutsch (pdf, 153 Kb)

Nestlé Health Science acquires leading US gastrointestinal diagnostics company

Tuesday May 24th 2011 12:00:00 AM

Nestlé Health Science S.A. today announced that it has agreed to acquire Prometheus Laboratories Inc., a San Diego-based company. Prometheus specialises in diagnostics and in-licensed specialty pharmaceuticals in gastroenterology and oncology, and has a dedicated team of highly qualified medical sales representatives. The company focuses on conditions such as inflammatory bowel diseases, including Crohn’s disease and ulcerative colitis. The terms of the transaction, which is subject to regulatory approval, are not being disclosed.

Luis Cantarell, Nestlé Health Science President and CEO: “This acquisition is a strategic move into gastrointestinal diagnostics. Prometheus’s leading edge diagnostics and highly experienced medical sales representatives together constitute a robust platform for Nestlé Health Science to accelerate its current and future healthcare business. It will enable new personalised healthcare solutions based on diagnostics, pharma and nutrition.”

Prometheus’s strong expertise and R&D in gastrointestinal diagnostics will accelerate the research program that is being established in the newly-created Nestlé Institute of Health Sciences. It will create new opportunities for developing personalised nutrition strategies that will help in the management and prevention of chronic health conditions. The R&D pipeline will encompass other areas of strategic interest for Nestlé Health Science, such as metabolic conditions and brain health.

Joseph M Limber, Prometheus Laboratories Inc. President and CEO: “We are delighted to join Nestlé Health Science, and share their commitment to personalised healthcare. Together, we will accelerate the development of our innovative diagnostic platforms for gastroenterology and oncology. We intend to leverage Nestlé Health Science’s products and geographic presence to add the nutritional dimension to our successful business model.”

About 500 employees of Prometheus will join Nestlé Health Science as a result of the acquisition. In 2012 Prometheus’s annualised sales are expected to be around USD 250 million.

Prometheus’s capabilities strongly support Nestlé Health Science’s ambition of pioneering science-based nutritional solutions to deliver improved personalised health care for medical conditions.

Contacts
Media: Robin Tickle Tel.: +41 21 924 22 00
Investors: Roddy Child-Villiers Tel.: +41 21 924 36 22

Website

PDF press releases:

• English (pdf, 22 Kb)
• French (pdf, 22 Kb)
• Deutsch (pdf, 22 Kb)

Nestlé to enter partnership with Chinese food company Yinlu

Monday April 18th 2011 12:00:00 AM

Nestlé today announced that it had signed a partnership agreement taking a 60% stake in the Chinese food company Yinlu Foods Group (Yinlu). Yinlu’s Chairman, Mr. Chen Qingyuan, will continue to lead the company in the new partnership.

The transaction is subject to regulatory approval in China. Other details of the transaction, including the acquisition price, are not being disclosed.

Family-owned Yinlu is a well established household brand in China and a significant marketer for ready-to-drink peanut milk and ready-to-eat canned rice porridge. The agreement builds on an already successful partnership between the two companies, as Yinlu is a co-manufacturer for ready-to-drink Nescafé coffee in China. Yinlu’s 2010 sales amounted to around CHF 750 million. Yinlu’s products are tailored to Chinese consumers’ taste and habits, and complement Nestlé’s existing product portfolio in China, which includes culinary products, coffee, confectionery, bottled water, milk powder and products for the foodservice industry. The healthy and nutritious Yinlu products perfectly fit into Nestlé’s global portfolio and emphasise its core strategy as the world’s leading nutrition, health and wellness company.

Nestlé CEO Paul Bulcke: “We will submit this partnership proposal to the Chinese authorities shortly. It demonstrates our long-term investment in China and our commitment to further developing local brands. We are proud to build this partnership to bring healthy, affordable and tasty products to our consumers in China by combining Yinlu’s entrepreneurship, product expertise and consumer understanding with Nestlé’s innovation and renovation capabilities.”

Yinlu Chairman Chen Qingyuan: “This partnership represents a very important landmark in Yinlu’s long-standing aspiration to be a relevant and favourite brand for consumers.  Nestlé’s proven expertise will undoubtedly provide solid support for Yinlu’s continued growth.  Together we will continue to develop our brand and manufacturing capabilities, in particular in the Central and Western part of China.”

Nestlé has been present in China for over twenty years and today operates 23 factories, two R&D Centres and employs 14,000 people. Nestlé in the China region achieved sales of CHF 2.8 billion in 2010. Main Nestlé brands in China include Nescafé, Nan, Maggi, KitKat as well as local brands such as Haoji and Totole. Nestlé has established several technical assistance initiatives for milk and coffee farmers in China. For example, Nestlé buys fresh milk from thousands of farmers across the country, offering them assistance to increase the quality, quantity and efficiency of their production. In Yunnan province, Nestlé has been encouraging and supporting coffee cultivation for almost twenty years, and nearly 4,100 farmers have received direct training on planting, quality control and processing techniques.

Contacts
International Media: Robin Tickle Tel.: +41 (0)21 924 22 00
Chinese media: Jonathan Dong Tel.: + 86 10 84 34 76 31
Investors: Roddy Child-Villiers Tel.: +41 (0)21 924 36 22

Website:

PDF press releases:

• English (pdf, 127 Kb)
• Chinese (pdf, 174 Kb)
• Français (pdf, 152 Kb)
• Deutsch (pdf, 134 Kb)

Nestlé first-quarter sales: continuation of strong momentum

Friday April 15th 2011 12:00:00 AM

• Sales of CHF 20.3 billion, 6.4% organic growth, 4.9% real internal growth
• Growth in developed markets, double-digit growth in emerging markets
• Market share gains in all three Zones
• Full-year outlook unchanged: organic growth of 5-6% combined with margin increase in constant currencies

Paul Bulcke, Nestlé CEO: “We achieved growth in all categories in the first three months of 2011, maintaining last year’s momentum. We continue to invest for the future, particularly in R&D and consumer-facing marketing, while addressing the challenge of higher input costs by accelerating the pace of innovation as well as ensuring the appropriate balance between savings from Nestlé Continuous Excellence and pricing. In view of the strong start to the year, we are able to reconfirm our guidance for 2011 as a whole.”

Vevey, 15 April 2011 – In the first three months of 2011, sales amounted to CHF 20.3 billion, consisting of 6.4% organic growth, including 4.9% real internal growth. Sales were impacted by -9.8% from foreign exchange and by -5.9% from divestitures (mainly Alcon) net of acquisitions (mainly Kraft Pizza). For the continuing business, sales in Swiss francs were down 1.2%.

The first quarter organic sales development of +6.4% reflects strong, broad-based growth, building on the momentum in 2010. The organic growth was 4.3% in the Americas, 3.9% in Europe and 13.8% in Asia, Oceania and Africa. Developed markets grew 3%, while emerging markets achieved around 12% organic growth.

Business Review

Zone Americas

Sales of CHF 6.4 billion, 3.7% organic growth, 1.2% real internal growth

• The North American market remained subdued but our market share performance was good in most categories. The trends in frozen food have improved, halting the decline seen in 2010. New launches, Market Creations by Lean Cuisine and Farmers’ Harvest by Stouffer’s, have been well received. In petcare, Purina entered the ultra-premium category with Purina One Beyond. Nescafé and Coffee-mate grew in the first quarter, but chocolate’s growth was impacted by tough comparisons with the same period last year which saw the launch of Wonka. Volumes in ice cream were impacted by price increases, but our market shares were up.
• Latin America continued to grow well, with all regions contributing. Brazil enjoyed double-digit growth in a number of categories, but the late Easter season held back growth in its large chocolate business. Mexico continued to perform well, whilst the Austral-American and Bolivarian regions achieved double-digit growth, as did the regional petcare business.
• There were good performances in most categories in the Americas. Soluble coffee, ambient culinary, powdered beverages and chilled culinary all grew double-digit, and there was high single-digit growth in both ambient and chilled dairy, as well as in biscuits.

Zone Europe

Sales of CHF 3.7 billion, 2.3% organic growth, 1.9% real internal growth

• Western Europe achieved positive real internal growth and organic growth as well as market share gains in most categories, building on good momentum in 2010 and a strong innovation pipeline. France and Italy were particularly strong, whilst Switzerland and the Iberian region also performed well. Growth in the Great Britain region was impacted by Easter being later in 2011 than in 2010 and by consumers’ reduced levels of disposable income.
• The Central and Eastern European region was accretive to the Zone’s growth. Improving momentum in the region seen already in the second half of 2010 continued into 2011. The Ukrainian and the Adriatic regions were particular highlights. The Russian market for confectionery, an impulse category, continued to be subdued though growth was double-digit in most of the other categories there.
• The Zone’s performance was broad-based by category. Soluble coffee, petcare, chilled culinary and frozen pizza were highlights. The chocolate business was the only major category not to report positive real internal growth as Easter is later this year.

Zone Asia, Oceania and Africa

Sales of CHF 3.8 billion, 11.8% organic growth, 9.1% real internal growth

• The Zone’s operations have continued to perform well despite the numerous events in the first quarter, such as natural disasters in New Zealand, Japan and Australia, as well as political tension in Côte d’Ivoire, North Africa and some Gulf countries. Our performance reflects our preparedness and particularly the great commitment and solidarity shown by our people in the affected areas. We continue to take all necessary measures to ensure the protection of our staff and assets, keep our operations going and mitigate any economic impact.
• The Zone’s emerging markets continued to achieve double-digit organic growth, as they did in 2010, demonstrating the strong momentum we have in these countries. We continue to drive deeper distribution as part of our Popularly Positioned Products business model and are targeting one million additional retail outlets in the Zone by 2012. All regions performed well, including China, the South Asia region, the Middle East, Africa, Indonesia and Indochina.
• Growth in the Zone’s developed markets was positive overall. This was due to a strong performance in Japan, where Nescafé has continued to see good growth both in its core jars business and from its Dolce Gusto and Barista systems. Growth in Australia was impacted by floods and a typhoon in Queensland.
• The Zone’s performance reflects high single-digit or double-digit organic growth in most categories. In soluble coffee, Nescafé saw good growth across its range, from its Popularly Positioned Products and 3-in-1s to its premium and single-serve systems business. In ambient culinary, Maggi saw strong growth across its range, including noodles in India and seasonings in Africa and elsewhere. Chocolate continued to perform well in many markets, including in China with Shark, and in India with Munch. Growth was also strong in ambient dairy and ready-to-drink beverages among other categories.

Nestlé Waters

Sales of CHF 1.5 billion, 4.4% organic growth, 5.0% real internal growth

• The business grew in Europe and North America and achieved double-digit organic growth in emerging markets, a performance reflected by market share gains in all its major markets. This is the result of continued growth in the retail market in Europe and North America, as well as a return to growth in the Home and Office Delivery market. Both the S. Pellegrino premium brand and the Nestlé Pure Life value-priced brand enjoyed double-digit organic growth. There were also strong performances from Perrier, Vittel and a number of regional brands, including Ozarka and Ice Mountain in North America, and Hepar in France.

Nestlé Nutrition

Sales of CHF 1.9 billion, 8.9% organic growth, 7.3% real internal growth

• Infant Nutrition had a good start to the year, building on its momentum from 2010, achieving double-digit organic growth. Asia, Africa, Russia and Latin America all grew strongly, as did the United States and France amongst developed markets. All divisions contributed well, with infant cereals continuing to grow double-digit. The division’s big brands, Nestlé, Nan and Gerber, all performed well, and the business gained share globally.
• Jenny Craig, the weight management business, had a tough start to the year in the US due to continued weak levels of discretionary spend. The European roll-out is building momentum, with France particularly strong and a good consumer response in the UK.
• Performance Nutrition has started the year well, benefiting from innovation and increased brand support.

Other

Sales of CHF 3.0 billion, 10.8% organic growth, 10.0% real internal growth

• Nestlé Professional started the year well, its performance accretive to the Group’s organic growth. The emerging markets, which represent about a third of the business’s sales, had organic growth in the mid-teens. The developed markets also achieved a good level of growth relative to the industry. Both the food and the beverage business contributed to this good performance, with beverages growing near double-digit.
• Nespresso continued to perform at a high level around the world, including in its biggest European markets and the US, despite intensified competition. The global roll-out of boutiques continued, with openings in Hannover, Cairo, Lisbon, Liège and Barcelona in recent months. The number of boutiques is expected to exceed 250 around the world by the end of the year.
• Nestlé Health Science, established on 1 January 2011 and incorporating our Healthcare Nutrition business, enjoyed double-digit organic growth.
• Among the Group’s joint ventures, Cereal Partners Worldwide grew ahead of its category in the first quarter, whilst Beverage Partners Worldwide and Galderma both grew high single-digit.

Appointments to the Nestlé Executive Board

The Board of Directors appointed Nandu Nandkishore Executive Vice President responsible for Zone Asia, Oceania, Africa and Middle East, effective 1 October 2011. He will succeed Frits van Dijk, who is retiring in September after a long and distinguished career of 41 years with Nestlé. Nandu Nandkishore, 52, currently Deputy Executive Vice President responsible for Nestlé Nutrition, acquired extensive practical business experience in a global context over his past 22 years with the Group.

The Board also appointed Kurt Schmidt Deputy Executive Vice President responsible for Nestlé Nutrition, effective 1 September 2011, in succession to Nandu Nandkishore. Kurt Schmidt, 54, currently Regional Business Head for Infant Nutrition and responsible for the coordination of Nestlé Nutrition North America, joined Nestlé as President and CEO of Gerber when that company was acquired from Novartis in 2007, having previously acquired extensive international business experience over 22 years.

The Board thanks Frits van Dijk for his valuable contribution to the Company over the years and wishes Nandu Nandkishore and Kurt Schmidt all the best in their respective new assignments.

Outlook

The first quarter of 2011 saw a number of high-impact events ranging from civil unrest and natural disasters to extreme volatility in raw material prices. Nonetheless, our strong momentum, both in organic growth and our drive for improved efficiency and effectiveness, enables us to confirm our full-year guidance: to achieve the Nestlé Model of organic growth between 5% and 6% and a margin improvement in constant currencies.

PDF press releases:

• English (pdf, 252 Kb)
• Français (pdf, 263 Kb)
• Deutsch (pdf, 255 Kb)

Annex

First Quarter sales overview 2011

(a) 2010 figures restated on a Net-Net basis
(b) Healthcare Nutrition reclassified under “Other” as managed, as from January 2011, as part of Nestlé Health Science
(c) Mainly Nestlé Professional, Nespresso, Nestlé Health Science, and Joint Ventures managed on a worldwide basis
(d) Includes nutrition, healthcare and pharmaceutical products

Strong support for Board proposals at Nestlé S.A. Annual General Meeting

Thursday April 14th 2011 12:00:00 AM

2,659 shareholders attended the Nestlé S.A. Annual General Meeting today in Lausanne. They represented 37.065 percent of the total capital and 59.868 percent of the shares entitled to vote. The annual report and the accounts were approved and the shareholders agreed to the release of the Board of Directors and the Management. The Nestlé Compensation Report was accepted in a separate advisory vote, in line with the Swiss Code of Best Practice for Corporate Governance. The shareholders further approved the proposed dividend of CHF 1.85 per share, an increase of 15.6 percent over last year, and agreed to the capital reduction. All proposals of the Board of Directors were approved with strong majorities.

Shareholders re-elected Messrs. Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Jean-Pierre Meyers, Mrs. Naina Lal Kidwai and Mr. Beat Hess for further terms of three years to the Board. The Annual General Meeting further elected Ms. Ann Veneman as a new member of the Board for a three-year term.

At the meeting, Nestlé Chairman Peter Brabeck-Letmathe focused on corporate governance and the strategic direction of Nestlé.

Referring to Swiss corporate legislation on public limited companies, Mr Brabeck-Letmathe said that this legislation was well balanced and flexible: “It is undoubtedly one of the main reasons why Switzerland is home to so many multinational companies in relation to the total population. Should Switzerland give up its liberal legislation on public limited companies, it would needlessly relinquish this considerable advantage in global competition and lose one of the major reasons for companies to be located here”.  

On the creation of the Nestlé Institute of Health Sciences and the Nestlé Health Science company, he said: “It is becoming evident that our current healthcare system, which basically concentrates on treating sick people, is not sustainable and will need a radical rethink. We firmly believe that disease prevention must play a much bigger role. It is for this reason that the Nestlé Board of Directors crafted a vision to achieve leadership in this new industry between food and pharma by creating the Nestlé Institute of Health Sciences and Nestlé Health Science S.A.”

In his review of the Nestlé 2010 results, Nestlé CEO Paul Bulcke said: “Nestlé’s solid performance in 2010, in spite of a turbulent economy, was driven by our Company maintaining its strategic direction: as the leading nutrition, health and wellness company we enhance lives by offering tastier and healthier food and beverage choices at all stages of life and at any time of the day, helping consumers care for themselves and their families. This is the foundation of our promise of Good Food, Good Life which puts nutrition at the heart of everything we do.”

“As we look to the challenges of 2011 and beyond, my message today is that Nestlé has excellent growth potential, as long as we continue to take full advantage of the many new and varied opportunities in both emerging and developed markets. To do this we must remain close to our consumers’ existing and evolving needs, developing new ideas, products and growth channels with creativity and originality”, Mr Bulcke concluded.

For the year to come, the Board and its different Committees will be composed as follows:

Board of Directors             
Peter Brabeck-Letmathe, Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Jean-René Fourtou, Daniel Borel, Jean-Pierre Meyers, André Kudelski, Carolina Müller-Möhl, Steven G. Hoch, Naina Lal Kidwai, Beat Hess, Titia de Lange, Jean-Pierre Roth, Ann Veneman

Chairman's and Corporate Governance Committee
Peter Brabeck-Letmathe, Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Jean-René Fourtou

Compensation Committee
Daniel Borel, Andreas Koopmann, Jean-Pierre Meyers, Jean-René Fourtou

Nomination Committee
Andreas Koopmann, Peter Brabeck-Letmathe, Carolina Müller-Möhl, Steven G. Hoch

Audit Committee
Rolf Hänggi, André Kudelski, Naina Lal Kidwai, Beat Hess    

The Chairman's and the CEO’s addresses to the AGM can be found in our Events section.

Strong 2010 performance: 6.2% organic growth and increased EBIT margin - Growth in all regions and categories, continued momentum for 2011

Thursday February 17th 2011 12:00:00 AM

• Group sales of CHF 109.7 billion, 6.2% organic growth, 4.6% real internal growth
• Extraordinary net profit of CHF 34.2 billion including Alcon disposal
• Underlying earnings per share in constant currencies +10.3%
• Proposed dividend increase of 15.6% to CHF 1.85 per share
• CHF 15.5 billion cash returned to shareholders

• Sales of CHF 104.6 billion, 6.0% organic growth, 4.4% real internal growth
• EBIT margin +30 basis points to 13.4%
• Growth in all regions and categories, market share gains around the world

Vevey, 17 February 2011 – The Group achieved organic growth of 6.2% and an EBIT margin improvement of 20 basis points. The EBIT margin is not comparable to that of 2009 due to the disposal of Alcon in August 2010. The continuing operations achieved organic growth of 6.0%, real internal growth of 4.4% and an EBIT margin improvement of 30 basis points.

Food and Beverages achieved good growth with market share gains in all categories and regions. Organic growth in emerging markets stood at 11.5% which underlines the increasingly important role they will play in the future. Organic growth for Food and Beverages was 5.7% in the Americas, 3.7% in Europe and 10.2% in Asia, Oceania and Africa.

Our performance was driven by continued investment in our growth pillars in line with our strategic roadmap. These include increasing distribution of Popularly Positioned Products (PPPs) and the continued roll-out of premium products in both emerging and developed countries; our focus on adding nutritional value to our products; expanding our reach in the out-of-home market; accelerating innovation and increasing our consumer–facing marketing spend. We also continued to strive for operational excellence from farm to fork, resulting in significant improvements in efficiency and effectiveness. These actions contributed significantly to our 2010 results and, at the same time, laid the foundation for a good performance in 2011.

Full-Year Results

• For the full year 2010, organic growth was 6.2%, including real internal growth of 4.6%. Foreign exchange impacted sales by -3.6%, whilst divestitures, net of acquisitions, reduced sales by 0.6%. Overall, Group sales increased by 2% to CHF 109.7 billion. The EBIT margin increased by 20 basis points to 14.8% of sales. As stated above, the EBIT margin is not comparable to that of 2009.
• Net profit was CHF 34.2 billion, up from CHF 10.4 billion in 2009, and our earnings per share were CHF 10.16, up from CHF 2.92. These extraordinary increases in 2010 over 2009 reflect the net profit on disposal of CHF 24.5 billion resulting from the divestiture of our remaining holding in Alcon.
• Underlying earnings per share rose by 7.4% to CHF 3.32 and by 10.3% in constant currencies. These increases reflect the like-for-like improvement in the Group’s performance.
• Operating cash flow was CHF 13.6 billion. The working capital increased following the extraordinary low levels of 2009. The Group’s return on invested capital was 15.5% including goodwill, and 36.1% excluding goodwill.

• Organic growth was 6.0%, with real internal growth of 4.4%. The foreign exchange impact on sales was -3.8%, whilst acquisitions, net of divestitures, added 1.8%. Overall, continuing operations’ sales increased by 4.0%.
• The EBIT margin increased by 30 basis points to 13.4%, both reported and in constant currencies. This improvement was delivered at the same time as we increased the investment in our brands: our marketing expenses increased by 100 basis points, with consumer facing marketing spend up 13.2% in constant currencies. The improvement in EBIT margin was driven by our sales growth and business mix, as well as by the achievement of operating efficiencies of over CHF 1.5 billion through Nestlé Continuous Excellence, which had a positive impact on the cost of goods sold, distribution and administrative costs.
• The cost of goods sold declined by 40 basis points. Our savings, procurement strategy and leverage from growth more than compensated the cost pressures during the year, which increased in the second half. Our efficiency and effectiveness also contributed to an improved environmental performance in areas such as energy, water and packaging usage.
• The distribution costs fell by 20 basis points. This is another area of focus of efficiencies, particularly in our more distribution intensive businesses such as Nestlé Waters and ice cream. These savings are pursued as part of our ongoing drive for continuous improvement in both our financial and our environmental performance.
• The administrative costs fell by 70 basis points. There was a rigorous control of fixed costs, enabling leverage from growth.

Business Review

Zone Americas

Sales of CHF 34.3 billion, 5.9% organic growth, 3.0% real internal growth; EBIT margin 16.5%, -30 basis points.

• In North America, we saw a continued strong performance from the Purina petcare business which grew its market share and achieved growth in all its segments, double-digit in snacks. Innovations included Purina ONE Shreds and Fancy Feast Gravy Lovers. Chocolate also had a good year, helped by a strong performance from our seasonal business, the launch of Wonka into the chocolate category as well as innovations such as Butterfinger Snackerz. Frozen prepared meals, particularly Lean Cuisine, continued to suffer from weak consumer demand for the category. There was a positive performance from our frozen pizza business in the first year of ownership, with market share gains for DiGiorno. The integration process is on track. Ice cream performed well in a tough market, achieving share gains. Strong performances came from brands such as Skinny Cow and Nestlé Drumstick which grew double-digit. Other successes included Häagen-Dazs as well as our new cups business which offers consumers a single-serve snacking occasion and provides them with the opportunity to try our brands. Soluble coffee also had a good year, with Nescafé Clásico continuing to be the key growth driver.
• In Latin America, growth was double-digit for the year. Brazil, where Nestlé will be celebrating its 90th anniversary in 2011, had a very strong year, with good performances across its categories, particularly in milk. In Mexico, soluble coffee, chocolate and powdered beverages were among the highlights. Across the region, all our categories grew, many of them double-digit, including the big three - dairy, chocolate and soluble coffee. There was also a very good performance from ready-to-drink beverages, in part due to the launch in Brazil into PET of brands such as Nescau and Alpino.
• The Zone’s EBIT margin fell by 30 basis points, reflecting increased investment in brands, distribution and innovation, not fully compensated by efficiency gains.

Zone Europe

Sales of CHF 21.6 billion, 2.5% organic growth, 1.7% real internal growth; EBIT margin 12.6%, +20 basis points.

• In Western Europe, our growth in all major markets was driven by strong innovation and was achieved despite difficult economic conditions and a tough competitive environment. France and Great Britain had particularly positive years, and there were resilient performances in Germany, the Iberian region, Italy and Switzerland. This reflects market share gains in many countries including Greece where the market declined.
• In Russia, soluble coffee and ambient culinary continued to do well. Impulse-driven categories, such as chocolate, which were impacted by the tough economic environment, showed signs of recovery.
• Amongst the Zone’s categories, soluble coffee, petcare, frozen food, in particular Wagner and Buitoni pizza, and chocolate, especially Kit Kat, stood out. The Zone’s big three regional innovation platforms, Maggi Juicy Chicken, Nescafé Dolce Gusto and Nescafé Green Blend, all performed well in 2010 and were key contributors to growth.
• The EBIT margin increased by 20 basis points as efficiency gains and the leverage of growth more than compensated the increased brand support and investment in innovation and product launches that drove the market share gains.

Zone Asia, Oceania and Africa

Sales of CHF 17.4 billion, 8.7% organic growth, 7.0% real internal growth; EBIT margin 16.9%, +20 basis points.

• The Zone’s emerging markets achieved double digit growth, with strong performances across the Zone: from Africa, Asia, including India and China, Indonesia and Indochina, and the Middle East.
• The developed markets, Japan, Australia and South Korea, also achieved growth. Particularly notable was the performance of Nescafé in Japan, where we sold about 500,000 coffee systems, either under the Nescafé barista or Nescafé Dolce Gusto brand, and where we also enjoyed success with the relaunch of our super-premium variant of pure soluble Nescafé.
• There were strong performances by most categories in the Zone. Ambient culinary, primarily Maggi, ambient dairy and ready-to-drink beverages, including brands such as Milo and Nescafé, all grew double-digit. Other categories, such as powdered beverages and chocolate enjoyed high single-digit growth. Innovation highlights included the roll-out in Africa and South Asia of a new flavour enhancer by Maggi, and PPPs across the Zone, including for confectionery in China, India and Indonesia.
• The EBIT margin increased by 20 basis points, again reflecting the benefits of growth and increased efficiencies.

Nestlé Waters

Sales of CHF 9.1 billion, 4.4% organic growth, 4.8% real internal growth; EBIT margin 7.4%, +40 basis points.

• Nestlé Waters achieved growth in all three Zones, with momentum building throughout the year, as growth returned to the industry in the developed world and continued to be very strong in emerging markets. We gained market share in Europe and North America, as well as in most emerging markets. Nestlé Pure Life, the biggest water brand in the world, had another year of double-digit growth. There were good performances also from Perrier and S. Pellegrino, as well as many regional brands.
• In North America, there was underlying growth driven by bottled water’s improved value proposition and helped by sunny weather conditions and consumers switching from other beverages. Among brands, Poland Spring, Ozarka, Deer Park and Ice Mountain were highlights.
• In Europe, all markets improved their growth levels over 2009, and it was double-digit in the UK. France, where Vittel and Contrex performed well, saw mid-single digit growth and a gain in market share.
• The emerging markets achieved double-digit growth and now represent 15% of water sales.
• The EBIT margin improvement was driven in part by the return to growth in the developed world. Significant improvements in efficiencies both in manufacturing and distribution also contributed, enabling increased brand support despite increased input costs and reduced pricing.

Nestlé Nutrition

Sales of CHF 10.4 billion, 6.7% organic growth, 5.5% real internal growth; EBIT margin 18.1% +70 basis points.

• Infant nutrition, the biggest division, had a very positive year, particularly in infant formula and infant cereals. There was growth in all three Zones, double digit in Asia, Oceania and Africa and market share was up on a global basis. The business performed well in the US and Canada, with high single-digit growth, as well as in Latin America, particularly Brazil. The trading environment was tough in Western Europe, but in the East, Russia again achieved double-digit growth. The division’s three biggest brands, Gerber, Cerelac and Nestlé Nan all grew double-digit, benefiting from increased brand support.
• Healthcare nutrition had a positive year both for growth and EBIT margin. All the key strategic platforms, such as critical care and pediatrics, performed well. Growth was particularly strong in emerging markets but also in France and Spain. Performance Nutrition also made good progress in the year, particularly in Europe and Oceania.
• Jenny Craig outperformed its market which remained subdued by the tough economic environment in the United States. Growth in Jenny Craig At Home (the Home delivery business) compensated the lower number of visitors to Jenny Craig Centers.
• Nestlé Nutrition’s EBIT margin increased by 70 basis points, reflecting the benefit of a high level of growth, of mix, and a good contribution from efficiencies.

Other Food and Beverages

Sales of CHF 11.0 billion, 9.8% organic growth, 8.5% real internal growth; EBIT margin 16.4%, +70 basis points.

• Nestlé Professional had a good year relative to its market, with mid single-digit growth. This reflects double-digit growth in the emerging markets of Asia and Latin America, as well as a good performance in the US. The beverage business saw strong growth in its proprietary Nescafé systems, bolstered by successful machine launches such as Milano and Viaggi in the premium and super-premium segments. The Vitality acquisition in the US performed to expectation, proving to be a highly complementary addition to our beverage business. Growth in the food business was led by Maggi and the Nestlé milk brands.
• Nespresso had another year of above 20% organic growth, and passed CHF 3 billion in annual sales for the first time. It opened its 215th boutique during a year which saw 36 openings, including in New York, Munich, and Sydney, and increased the share of coffee it sourced from the Nespresso AAA Sustainable Quality(TM) Program from 50% in 2009 to 60%. 2010 also saw the first expansion of the Avenches facility to meet anticipated demand for Nespresso capsules. In 2010, with the combined performances of Nespresso and Nescafé Dolce Gusto, Nestlé strengthened its leadership in the dynamic portioned coffee market.
• Cereal Partners Worldwide global brands such as Nestlé Fitness, Nesquik and Cheerios, grew three times as fast as the market with the business achieving double-digit growth in many emerging markets, including Russia, Brazil and Turkey, and strong performances in more developed cereal markets such as Mexico, France, Greece and Australia. Beverage Partners Worldwide achieved mid-single digit growth in 2010 and share gains in many of its markets.
• The EBIT margin increased by 70 basis points, with all constituents contributing.

Pharma

Sales of CHF 6.0 billion, 10.8% organic growth, 9.0% real internal growth; EBIT margin 38.7%, +520 basis points, +220 basis points like-for-like.

• These numbers are not comparable to 2009 due to no longer being allowed to depreciate the Alcon assets held for sale in 2010 by IFRS5, and due to the disposal of Alcon in August 2010.
• All constituents (Alcon, Galderma and Laboratoires innéov) performed well.

Corporate highlights 2010

• Sale of our remaining stake in Alcon to Novartis for USD 28.3 billion.
• Creation of Nestlé Health Science S.A. and the Nestlé Institute of Health Sciences to pioneer a new industry between food and pharma.
• Acquisitions of more than CHF 5 billion including Kraft’s frozen pizza business, Vitaflo (clinical nutrition products) and Waggin’ Train (dog snacks).
• Investment of CHF 4.6 billion in operations across the world with strong emphasis on emerging markets such as India, Indonesia, the Philippines, the Equatorial African Region and Poland.
• Opening of a R&D Centre for biscuits in Chile and groundbreaking of a R&D Centre for PPPs in India.
• Following the announcement of the Nestlé Cocoa Plan in 2009, launch of the Nescafé Plan, announcing investments of CHF 500 million over ten years in coffee projects and doubling of direct coffee purchases, thereby strengthening our commitment to rural development.
• Completion of our CHF 25 billion three-year share buy-back programme and launch of a new CHF 10 billion programme.
• Change of our sales recognition policy as from 2011.

Board proposals to the Annual General Meeting

At the Annual General Meeting of 14 April 2011, the Board of Directors will propose a dividend increase from CHF 1.60 to CHF 1.85 per share to shareholders, representing an increase of 15.6%. At the same time, it will propose the cancellation of shares which Nestlé bought back under the CHF 25 billion buyback programme completed in June 2010 and the ongoing CHF 10 billion programme to be completed during 2011.

Furthermore, the Board of Directors will propose the individual re-elections of Messrs. Paul Bulcke, Andreas Koopmann, Rolf Hänggi, Jean-Pierre Meyers and Beat Hess as well as of Mrs. Naïna Lal Kidwai, each for a further term of three years, as well as the election of a new member: Ms. Ann Veneman, a U.S. citizen and former Executive Director of the United Nations Children’s Fund (UNICEF). She also served as Secretary of the United States Department of Agriculture (USDA) and is a member of the Nestlé Creating Shared Value Advisory Board, with extensive experience in areas such as children’s health and education.

Outlook

We are starting 2011 with continued momentum, well placed to face uncertainties ahead, including volatile raw material prices. We are therefore confident of achieving the Nestlé Model in 2011: organic growth between 5% and 6% and an EBIT margin improvement in constant currencies.

Annex

Full-year sales and EBIT margin overview

PDF press releases:

• English (pdf, 83 Kb)
• Français (pdf, 85 Kb)
• Deutsch (pdf, 86 Kb)

Reports published today:

• 2010 Financial Statements (pdf, 689 Kb)
• Rapports financiers 2010 (pdf, 756 Kb)
• Finanzielle Berichterstattung 2010 (pdf, 773 Kb)
• Corporate Governance Report 2010 (pdf, 2 Mb)

Decisions of the Nestlé Board of Directors

Friday November 19th 2010 12:00:00 AM

Vevey, 19 November 2010 – At its meeting on 18 November 2010, the Nestlé Board of Directors took the following two market-relevant decisions:

Change to Nestlé’s sales recognition policy

Nestlé will change its sales recognition policy in line with the generally accepted interpretation of the International Financial Reporting Standards (IFRS), effective 1 January 2011.

This change will reduce Nestlé reported sales by about 15% as expenses such as discounts as well as certain allowances and promotions for retailers will in future be deducted from proceeds of sales, leading to a corresponding increase in profit margins. The change will, however, have no impact on absolute net profit, earnings per share, cash flows or items on the Group’s balance sheet.

The 2010 results will still be reported on the current basis since the change will not be effective before January 2011. Nestlé will communicate restated 2010 figures separately after the publication of the 2010 results to allow for comparability with subsequent results to be published from April 2011 onwards.

Appointment to the Nestlé Executive Board

The Board appointed Patrice Bula (pdf, 85 Kb) Executive Vice President in charge of the Strategic Business Units, Marketing and Sales as well as Nespresso, effective 1 May 2011. He will succeed Petraea Heynike (pdf, 47 Kb) , who is retiring at the end of April 2011 after a long and distinguished career of more than 38 years with Nestlé.

Patrice Bula, 54, currently Market Head for the Greater China Region, acquired extensive practical business experience in a global context over his past 30 years with Nestlé.

The Board thanks Petraea Heynike for her valuable contribution to the Company over the years.

Contacts:

• Media Robin Tickle Tel.: +41 (0)21 924 22 00
• Investors Roddy Child-Villiers Tel.: +41 (0)21 924 36 22

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PDF press releases:

• English (pdf, 40 Kb)
• Français (pdf, 41 Kb)
• Deutsch (pdf, 35 Kb)

Biographies:

• Petraea Heynike (pdf, 47 Kb)
• Patrice Bula (pdf, 85 Kb)

Nestlé 9-month sales: continuation of strong first-half momentum

Friday October 22nd 2010 12:00:00 AM

• Group sales of CHF 82.8 billion, 6.1% organic growth, 4.5% real internal growth
• Food and Beverages sales of CHF 77.0 billion, 5.7% organic growth, 4.2% real internal growth
• Growth in all regions and categories, double-digit organic growth in emerging markets
• Full-year Food and Beverages outlook unchanged: organic growth of around 5% combined with an EBIT margin increase in constant currencies

Paul Bulcke, Nestlé CEO: “Our performance is the result of clear strategic alignment and focus on execution throughout the whole organisation, both in developed and in emerging markets. Our ongoing efforts on the cost side combined with increased investment in our brands, innovation, capabilities and people have, as previously stated, prepared us well for the second half. Indeed, the first half’s growth momentum continued unabated in the third quarter, providing a good base for the full year as we face challenging comparatives in the final quarter. We therefore reconfirm that our Food and Beverages business will achieve organic growth of around 5% combined with an increase in EBIT margin in constant currencies for 2010 as a whole.”

Vevey, 22 October 2010 – In the first nine months of 2010, Group sales amounted to CHF 82.8 billion, consisting of 6.1% organic growth, including 4.5% real internal growth. Foreign exchange impacted sales by -2.7%, whilst acquisitions, net of divestitures, added 0.7%. Overall, Group sales increased by 4.1%. Food and Beverages sales reached CHF 77.0 billion, consisting of 5.7% organic growth, including 4.2% real internal growth. Foreign exchange impacted sales by -2.8%, whilst acquisitions, net of divestitures, added 1.6%. Overall, Food and Beverages sales rose by 4.5%.

The nine month sales reflect a continuation of the strong, broad-based growth seen earlier in the year, with the organic growth for both the Group and the Food and Beverages business unchanged from the first half.

• The organic growth for all Food and Beverages operations was 5.5% in the Americas, 3.3% in Europe and 10.7% in Asia, Oceania and Africa. Western Europe and North America grew and emerging markets achieved around 11% organic growth.

• Key drivers of this consistent performance included deeper distribution in emerging markets in support of our value-priced popularly positioned products (PPPs); a strong pipeline of targeted innovation combined with increased brand support; and the continued success of premium product initiatives around the world.

Business Review

Zone Americas

Sales of CHF 25.0 billion, 5.7% organic growth, 2.7% real internal growth

• The North American business performed well, achieving growth and broad-based improvements in market shares. A key contributor was innovation backed by increased brand support, including the launches of Willy Wonka in chocolate, Market Creations in Lean Cuisine, Café Collection in CoffeeMate, Nescafé Dolce Gusto, Dollar Cups in Dreyer’s and Häagen Dazs, as well as a range of innovations in petcare under the ONE and ProPlan brands.
  
  The trends in frozen food’s nutritional segment remained unchanged, with subdued consumer demand for Lean Cuisine and Lean Pockets. The family packs and more value-focused offerings of Stouffer’s and Hot Pockets saw a pick-up in growth, whilst frozen pizza and Buitoni, in chilled, continued to gain share. The petcare business performed well with all segments showing good growth, and a positive reception for the relaunches of ONE and Dog Chow. Confectionery also continued to achieve good growth. The premium segment of the ice cream market remained weak, but the snacks segment with brands such as Nestlé Drumstick and Skinny Cow, together with Häagen Dazs in super-premium, compensated.

• Latin America continued to perform strongly, particularly Brazil and Mexico. Culinary, beverages and petcare were among the categories which achieved double-digit organic growth. Milk benefited from launches in ready-to-drink and a range of nutritionally enhanced products with fortified or lactose-free options. The whole region benefited from a multi-tier strategy with products adapted to different price levels, from PPPs such as Nescafé sticks to premium offerings such as Nescafé Dolce Gusto, which is now launched in a number of markets including Brazil, Mexico, Argentina and Chile.

Zone Europe

Sales of CHF 15.9 billion, 2.0% organic growth, 1.3% real internal growth

• All key Western European markets, including Germany, France, the UK, Italy and the Iberian region, saw good growth, helped by the continued strong performance of recent innovations and roll-outs such as Nescafé Dolce Gusto, Nescafé Green Blend, Maggi Juicy Chicken and Nestlé Grand Chocolat. Our market share performance was good, with gains in most countries and categories. Increased distribution, improved customer service level and the development of PPPs as well as premium offerings were driving performance.

• Central and Eastern Europe were recovering. Consumption levels in Russia remained challenging, but our market shares are improving, and there are some signs of a pick-up in the market.

• The Zone’s performance was broad-based by category, with good contributions from frozen and chilled culinary, brands such as Herta in charcuterie, and Buitoni and Wagner in pizza, as well as Maggi in culinary and Friskies, Gourmet and ProPlan in petcare. Chocolate, in the 75th anniversary year of the launch of KitKat, also performed well in Western Europe.

Zone Asia, Oceania and Africa

Sales of CHF 12.9 billion, 9.2% organic growth, 7.7% real internal growth

• The Zone’s emerging markets achieved double-digit organic growth, with PPPs such as Maggi Noodles and Nestea Litro as a key growth driver. The performance was broad-based by market and region, with Greater China, Indonesia, the Philippines, Africa, the Middle East, South Asia, which includes India, and Indochina, which includes Vietnam, all contributing well.

• Growth in Oceania and Japan was good, driven primarily by Japan where the Nescafé systems Dolce Gusto and Barista performed well. Innovation also brought increased interest to the Nescafé sticks and jars segment.

• The Zone’s performance reflects high single-digit or double-digit organic growth in most categories. Among highlights were dairy and culinary, ready-to-drink and powdered beverages, as well as confectionery.

Nestlé Waters

Sales of CHF 7.3 billion, 4.3% organic growth, 4.6% real internal growth

• The global water market returned to growth in 2010. Nestlé Waters maintained its recent trend of acceleration and achieved share gains in many key markets including the United States, France, Switzerland and the UK.

• The business grew in both Europe and North America and achieved double-digit organic growth in the emerging markets with particularly strong performances in Asia and the Middle East, Brazil and Mexico. The whole portfolio contributed, with the premium brands, Perrier and S. Pellegrino, enjoying high single-digit organic growth, and the value-priced brand, Nestlé Pure Life, achieving mid-teens organic growth.

Nestlé Nutrition

Sales of CHF 7.8 billion, 6.8% organic growth, 5.9% real internal growth

• Infant Nutrition accelerated during the year with, in general, good market share performances. Infant formula achieved double-digit organic growth whilst baby food was high single-digit. Many emerging markets, including Russia, Brazil, South Asia, Indonesia, China and the Middle East, achieved double-digit organic growth. Recent launches such as anti-colic infant formula and infant cereals with probiotics were well received, with increased brand support adding further impetus to the division. The performance in the United States continued to be very strong, with Gerber bringing momentum to both the baby food and infant formula categories. In Western Europe, infant formula grew strongly.

• Healthcare Nutrition maintained its sales momentum with good contributions from France, Spain and the emerging markets. All key strategic platforms showed good growth with particularly strong performances in critical care and pediatrics.

• Weight Management remained challenged by the tough economic environment in the United States, but growth in Jenny Craig At Home (the Home delivery business) was compensating the lower number of visitors to Jenny Craig Centers. Europe saw encouraging early results of the French and British Jenny Craig roll-outs.

Other Food and Beverages

Sales of CHF 8.0 billion, 9.5% organic growth, 8.3% real internal growth

• Nestlé Professional achieved good growth, mainly due to its exposure to the emerging markets, where it continued to enjoy strong growth. The out-of-home industry in developed markets continued to be subdued in line with general economic conditions, but our business benefited from increased distribution in European commercial channels and from good performance in the North American beverage business. This was partly due to proprietary Nescafé solutions and the successful integration of the Vitality business acquired in 2009.

• Nespresso continued to perform at a high level around the world, including in its biggest European markets, with organic growth above 20%. It continued its global roll-out of boutiques, with openings in Shanghai, Munich and New York in recent months, and is expected to have over 220 boutiques around the world by the end of the year.

• The joint ventures, Cereal Partners Worldwide and Beverage Partners Worldwide, continued to achieve good growth.

Pharma

Sales of CHF 5.8 billion, 10.6% organic growth, 8.9% real internal growth

• This includes Alcon for about eight months only. All constituents contributed well.

Corporate highlights

• completed the sale of our remaining shares in Alcon to Novartis, representing around 52% of Alcon's share capital, for USD 28.3 billion

• announced the creation of Nestlé Health Science S.A. and the Nestlé Institute of Health Sciences to pioneer a new industry between food and pharma

• launched the Nescafé Plan in Mexico City, announcing investments of CHF 500 million over ten years in coffee projects and doubling of direct coffee purchases

• announced the establishment of an R&D Centre in India, mainly dedicated to the development of PPPs

• acquired Waggin’ Train, a leading marketer in the fast growing dog snacks segment based in the United States, as well as a majority participation in Malher Group in Guatemala, a marketer and distributer of culinary products and powdered beverages under brands such as Malher, Yus and Toki

• inaugurated new facilities in emerging markets such as an infant cereal plant in Ghana and a CoffeeMate factory for Latin America and the Caribbean in Mexico

• announced the investment of CHF 25 million in a new shared service center in L’viv, Ukraine, to consolidate our financial and Human Resources services in Central and Eastern Europe

Outlook

Our performance year-to-date, even as we face challenging comparatives in the final quarter, enables us to reconfirm our full-year guidance, that the Food and Beverages business will achieve organic growth around 5% as well as an improvement in the EBIT margin in constant currencies.

Contacts

Media: Robin Tickle Tel.: +41 21 924 22 00

Investors: Roddy Child-Villiers Tel.: +41 21 924 36 22

Annex
9-month sales overview 2010

Pharmaceutical activities include Alcon discontinued operations until August 25^th 2010, the date of the disposal of Nestlé's interest in Alcon to Novartis.

Nestlé Health Science S.A. and Nestlé Institute of Health Sciences established to target new opportunity between food and pharma

Monday September 27th 2010 12:00:00 AM

Nestlé today announced the creation of Nestlé Health Science S.A. and the Nestlé Institute of Health Sciences to pioneer a new industry between food and pharma. These two separate organisations will allow Nestlé to develop the innovative area of personalised health science nutrition to prevent and treat health conditions such as diabetes, obesity, cardiovascular disease and Alzheimer’s disease, which are placing an unsustainable burden on the world’s healthcare systems.

Nestlé Health Science S.A., a wholly-owned subsidiary of Nestlé S.A., will become operational on 1 January 2011. The new company will be run at arm’s length from Nestlé’s main food, beverages and nutrition activities, and incorporate the existing global Nestlé HealthCare Nutrition business, which had a turnover of CHF 1.6 billion in 2009. Nestlé Health Science S.A. will also have access to external scientific and technological know-how through Nestlé’s innovation network as well as a number of venture capital funds in which the group has interests. Luis Cantarell, the company’s designated President and CEO, will report to Paul Bulcke in his capacity as Administrateur délégué of the Board of Directors of Nestlé Health Science S.A., which is chaired by Peter Brabeck-Letmathe.

The Nestlé Institute of Health Sciences will be part of Nestlé’s global R&D network. The Institute will be run by Emmanuel E. Baetge, former Chief Scientific Officer of ViaCyte, a biotech company based in San Diego, who will report to Nestlé Chief Technology Officer Werner Bauer and a Steering Committee composed of both Nestlé and external members. Nestlé will invest hundreds of millions of Swiss francs over the next decade to build a world-class Institute of Health Sciences, which will conduct research in relevant areas of biomedical science to translate this knowledge into nutritional strategies to improve health and longevity. The Institute will be based in the multi-disciplinary scientific environment of the Swiss Federal Institute of Technology (EPFL) in Lausanne, where Nestlé is already involved in two life science initiatives.

Nestlé Chairman Peter Brabeck-Letmathe said that Nestlé will be a pioneer in helping to shape the space between the food and pharma industry. “The combination of health economics, changing demographics and advances in health science show that our existing healthcare systems, which focus on treating sick people, are not sustainable and need redesigning. Nestlé has the expertise, the science, the resources and the organisation to play a major role in seeking alternative solutions. Personalised health science nutrition is about finding efficient and cost effective ways to prevent and treat acute and chronic diseases in the 21st century,” he said.

Nestlé CEO Paul Bulcke said: “The creation of Nestlé Health Science S.A. and the Nestlé Institute of Health Sciences is the best way to focus our attention and organize our unique capabilities and competencies to seize this promising business opportunity. The new set-up will give us a pioneering and leading role in this entirely new industry, while at the same time allowing us to keep the necessary focus on Nestlé’s extremely important food, beverages and nutrition business, as embodied by our binding promise of Good Food, Good Life.”

Luis Cantarell, Nestlé Health Science President and CEO designate, said: “This is an exciting new business opportunity, the execution of which will have a positive long-term impact on peoples’ lives. Personalised health science nutrition will create shared value, both for Nestlé and for society, by successfully preventing, improving and treating acute and chronic medical conditions. I am looking forward to getting this ground-breaking work underway.”

Emmanuel E. Baetge, designated head of the Nestlé Institute of Health Sciences, said: “The Institute will create and deliver world class excellence in biomedical research to better understand human diseases and ageing as influenced by genetics, metabolism and environment. Translating this knowledge will allow us to advance the concept of daily personalised health science nutrition as the most important first step in disease prevention and treatment.”

Nestlé, the world’s leading nutrition, health and wellness company, first entered healthcare nutrition in 1986. Over the last three years, it has made a number of strategic acquisitions in this area such as Novartis Medical Nutrition and Vitaflo. Nestlé HealthCare Nutrition, currently an integral part of Nestlé Nutrition, has a long established reputation as a science-based organisation and has also been setting the trend for personalised nutrition and related services in recent years.

The press conference on this announcement will be webcast live today at 11 am CET on www.nestle.com and will thereafter also be available on-demand. Questions from attending journalists will be given precedence, although we will also take questions from media and investment community representatives via our website. Please see www.nestle.com for log-in details.

Contacts
Media: Robin Tickle Tel.: +41 21 924 22 00
Investors: Roddy Child-Villiers Tel.: +41 21 924 36 22
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Follow the webcast live at 11:00 CET.

Press release - English (pdf, 28 Kb)
Press release - Français (pdf, 24 Kb)
Press release - Deutsch

CV Luis Cantarell (pdf, 95 Kb)
CV Emmanuel E. Baetge (pdf, 97 Kb)