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H1 2010 results, ahead of expectations, once more highlight the quality of the Nestlé “model” (+6.1% organic growth, +80bp progression of the margin excluding Alcon, CHF 5.8 billion operating cash flow). Nestlé has again demonstrated its ability to maintain a certain pricing power in an environment of rising costs. In a context of dynamic emerging countries and only a modest recovery in the USA and Europe, the details provided about the prospects for improved organic growth and margin progression in 2010 are certainly welcome! PLUS code confirmed.
Nestlé is a safe investment in the Food & Beverages sector. Resilient in the depressed environment of 2008 and 2009, the quality of the “model” is once again highlighted at the start of this year: capacity to grow volumes at an increasingly rapid pace and ability to maintain a positive price effect in an environment of economic recovery (emerging countries, USA) still fragile in Europe. That being so, prospects for 2010 are highly encouraging.
The publication of better than expected sales figures for Q1 2010 (organic growth +6.5% against +5%), once again highlights the quality of the Nestlé model, its capacity to grow volumes at an increasingly rapid pace and its ability to maintain a positive price effect in an environment of still fragile (Europe) economic recovery (emerging countries, USA). That being so, prospects for better organic growth in 2010 than in 2009 (+3.9%) and improved margins are looking almost certain! PLUS code maintained.
Publication of better than expected 2009 results once again highlights the quality of the Nestlé model and confirms its safe haven status. Organic growth has reached +4.1%, the EBIT margin has risen by +30pb, free cash flow stands at CHF 12.4 billion and the group offers a still better return for shareholders (dividend +14.6% at 1.6CHF and new share buyback worth CHF 10 billion in 2010). That being so, the prospects for even stronger organic growth than in 2009 (+3.9%) with improved margins at constant exchange rates might even seem secondary considerations! PLUS code confirmed.
Nestlé is a safe investment in the Food & Beverages sector. Its ability to deliver a robust performance in a depressed economic environment in 2009 proves it: organic growth target of +4% with an improved operating margin. The sale of Alcon will help the group to reduce its debt, finalize its large share buyback program (CHF 25 bn) and target growth relays (acquisitions) for 2010 and beyond.
The improvement of organic business growth in Q3 (+3.8% vs +3.4% in H1) is reassuring. It benefited from rising volumes (+2% in Q3 vs +0.5% in H1) and a sustained price effect (+1.9%). This performance and the prospect of a favourable Q4 in terms of volumes confirm our scenario of improved margins and organic growth approaching 4% in 2009: those targets are within Nestlé’s grasp. The faster share buyback programme will be another factor supporting the share. PLUS code confirmed.
1st half 2009 results are good. Organic growth (+3.5%) did admittedly fall slightly short of forecasts (+3.9%), but Nestlé has confirmed an acceleration in the 2nd half. Furthermore, improvement of the operating margin (+30bp) and the published net profit figure (5.1 billion CHF) are better than expected: this is a remarkable performance in a difficult economic environment for consumer spending. Growth prospects remain strong for the whole year. PLUS code confirmed.
Nestlé is a safe investment in the Food & Beverage sector. The strength of its pricing power and its ability to deliver sustained growth in an environment of depressed consumer spending are guarantees for 2009: organic growth target of +5/6% with an improved operating margin. The successful sale of Alcon will help the group’s debt and pursue its major share buyback programme (CHF 20 bn).
In today’s difficult economic environment, Nestlé has published sales for Q1 2009 down 2.1% at CHF 25.2 billion. Despite the highest comparison base of the year, organic growth stood at +3.8% in Q1, in line with expectations. The volume effect is just +0.3% but the group’s pricing power remains unchanged (+3.5%). Nestlé looks forward to ongoing improvement in the next quarters and is very confident in its prospects for 2009: organic growth “close to at least 5%” and improvement of its operating margin. PLUS code maintained.
Results for 2008 are good in every respect: organic growth +8.3%, operating margin +30bp, profit per share +75% to 4.87 CHF (25% of Alcon sold), dividend +14.8% to 1.4CHF. Nestlé has proved its pricing power in a difficult economic environment and benefits from the success of its products, the integration of Gerber and increased productivity (Globe). The message for 2009 is reassuring: minimum +5% organic growth and improved margin assuming constant exchange rates. PLUS code confirmed.
Nestlé is a safe investment in the Food sector. Its ability to deliver sustained growth in a difficult environment for consumer spending and a strong pricing power are guarantees for the future. The successful sale of Alcon will help to reduce debt and pursue its share buyback program (CHF 20 bn). Note that the speculative aspect surrounding L’Oréal (sale of the 30% shareholding/total buyout) is likely to emerge once again.
Nestlé has reported an excellent level of business for the first 9 months (sales worth CHF 81.4 billion) generated by better than expected organic growth (+8.9%) which shows no sign of slackening in Q3 despite a difficult environment. The management seems very relaxed over the 2008 prospects, reviewing its organic growth target upwards by 8%, and announced that it was satisfied with the consensus expectations for its margin improvement (+30pb). The high quality of this announcement and the impressive statements further enhance our positive sentiment on this share.
Results for the first half of 2008 are of good quality both in terms of organic growth (+8.9%) and progression of the operating margin, which exceeded expectations (+30bp to 13.8% versus a consensus of +15-20bp) as well as growth in net profit (+9.8% to CHF 5.21billion). Nestlé demonstrates the strength of its “pricing power” in a difficult commodities context whilst at the same time benefiting from enhanced productivity. The group is quietly confident about its prospects for 2008. Plus code reiterated.
Nestlé is a safe investment in the F&B sector. Its ability to deliver sustained growth in a difficult environment for commodities and its strong pricing power are future guarantees. Profitability should improve thanks to price rises, a better mix and productivity gains. The successful sale of Alcon will help to reduce debt and pursue a substantial share buyback program (CHF 20 bn over 2008/2009).
Nestlé recorded an excellent level of activity in Q1 2008 (+6% to Sfr25.7 billion) buoyed by organic growth (+9.8%) above expectations (+8.9%), despite a high base of comparison (+7.4% in Q1 2007). Even if the prior announcement (13/03) made by Peter Brabeck reduces the importance of this good publication, it removes none of its qualities: acceleration of organic growth and the strength of “pricing power”. Management is very serene with regard to prospects for 2008. Plus code reiterated.
The 2007 results are excellent and above market expectations in all sectors: +7.4% organic growth, +50 bp operating margin, +16.4% increase in profit per share to 27.8 CHF and dividend +17.3% to 12.2 CHF. Nestlé has demonstrated its pricing power in a difficult economic environment for materials; it is also benefiting from the success of its products, the successful integration of Gerber and higher productivity (Globe). The management is very confident over 2008 prospects. PLUS code confirmed.
The market has overreacted to the appointment of Paul Bulcke as the new CEO to replace Peter Brabeck in 2008. Mr Bulcke has spent his entire career at Nestlé and his efforts have been rewarded: the Americas have become the group’s best performing region (growth and profits). The risk that Mr Polman, the current CFO, might leave Nestlé now seems unlikely after this morning’s meeting. The group’s successful strategy remains on course and should become still more dynamic with leaders of such quality. PLUS code confirmed.
Nestlé surprised the market favourably by publishing quarterly sales of 24.25 billion CHF with organic growth (+7.4%) well above expectations (+5.6%). The management has strengthened the credibility of its target of sustaining longterm 56% organic growth, while improving its operational performance (effect of the ExcellenceGlobe savings plans). Nestlé is proving confident in its 2007 targets and in the 30 bp improvement of its margin for which the market is looking. PLUS code confirmed on this share.
2006 results have exceeded expectations as much in terms of organic growth (+6.2% against 6%) as in the improvement of the operating margin (+50 bp at 13.5% against +30 bp). Nestlé’s results come as a pleasant surprise and strengthen the credibility of the 56% longterm organic growth ambition with improved operating performance (Excellence and Globe cost cutting programs). The confidence expressed by the management in respect of the 2007 targets points in this direction. PLUS code confirmed.
Alcon, the pharmaceutical subsidiary in which Nestlé has a 75% interest, has published strong sales growth figures for Q4 06 (+16.1% at 1.22 billion) and a 40% higher net result than in Q4 05. The profit per share stood at $1.16, above the consensus forecast ($1.03). These very good results and the fact that the management of Alcon is proposing higher targets for 2007 (sales and profit per share) are good news for the Nestlé share. PLUS code confirmed.
The 9 months sales figures come as no surprise. They are in line with market expectations. The confirmation of high organic growth (+6.1%) and the announcement of an expected improvement in the MOP for 2006, similar to that reported in H1 06 (+40pb), are good news. Although Nestlé does expect challenges in 2007, the aim of achieving growth at the lower end of the 5% to 6% bracket accompanied by higher profits is consistent with the business model and size of the group. PLUS code maintained for this share.
The result for the 1st half of 06 was much better than expected. The 6.4% organic growth is reassuring and the steep increase in the MOP (+40 bp against +10 bp consensus) comes as a very nice surprise. These good figures and full confirmation of the guidance for 2006 (organic growth in the region of 6%, improved margins) should facilitate strong performance of the share during the 2nd half. PLUS code maintained.
In brief: Alcon, Nestlé’s pharmaceutical subsidiary, has published its results for Q2 06 – they are significantly higher than expected with sales totalling $1.31 billion and profit per share at $1.5 (consensus $1.29 billion and BPA $1.16). This good quarter and the higher annual guidance indicated by the Alcon management could boost the Nestlé share; the company’s halfyearly result is due to be published on 23 August next. PLUS code maintained.
Nestlé has announced Q1 06 sales totalling CHF 22.8 billion, up 14.1%. At 6.7%, organic growth exceeded market expectations. The agrofood business part of the portfolio was the most dynamic factor in Q1 with 6.4% growth including beverages (9.7%) and pet care (6.8%). The pharmaceuticals business (10.5%) began the year with very strong performance. The group confirms its guidelines for 2006, i.e. organic sales growth of between 5 and 6% and a progression of its EBITA margin. PLUS code maintained.
Nestlé has published sales for Q3 above market expectations. Organic growth stood at 5.8%. The group benefited from strong performance in the Americas and Asia. However, despite the improvement of the situation, Europe remains difficult. The management has confirmed its targets for 2005, i.e. internal growth of between 56% and an improved operating margin. This publication is reassuring following the bad figures reported by Cadbury Schweppes and Kraft. Raw material prices will in all probability continue to have a negative impact on the profitability of the industry. In this environment, we clearly favour quality. PLUS code maintined.
Today, Nestlé announced the appointment of a new CFO: in January 2006, Paul Polman is to replace Wolfgang Reichenberger; after occupying this position for five years, the latter is to manage a new investment fund with a capital endowment of EUR 500 million. The new CFO is unlikely to revolutionise the group’s strategy. We believe that this change of management will not affect our investment rating in any way. We maintain our positive opinion on the share.
Results published by Nestlé for the first half of 2005 were better than the market had expected. Organic growth stands at 5.2%. The group benefited from strong numbers in America. On the other hand, the situation in Europe remains difficult, despite some improvement. The management has confirmed its growth targets and a share buyback programme which will exceed the figure for 2005 in coming years. At this stage, we remain convinced that the group has the ability to achieve its growth objective and improve its margins. PLUS code confirmed.
The results published by Nestlé are generally better than we had expected and of very good quality. Margins have progressed well. But real internal growth is slightly disappointing. A share buyback programme is planned. Prospects for 2005 are in line with expectations. PLUS code maintained.
Nestlé has published satisfactory third quarter figures. All the growth is accounted for by the Americas and AOA (Asia, Oceania and Africa), while performance in Europe remains stable. The group forecasts: 1/Faster organic sales growth in the 4th quarter. On the other hand, the group has not confirmed its internal growth target of 56% for 2004. 2/A better margin (at constant exchange rates). Following profit warnings from Unilever, Coca Cola and Cadbury Schweppes, this announcement should help to reassure the markets. We confirm our positive opinion of this share.
Perrier affair: sale or restructuring?The conflict between the management of Nestlé and the CGT trade union is currently the subject of a polemic. Only two solutions remain for Perrier: the staff reduction plan is either accepted by the CGT and the measures necessary to enhance profitability measures implemented; or else Nestlé will sell Perrier. The decision will be taken before Tuesday. Reminder: the brand accounts for less than 1% of sales by the Swiss giant. We remain confident in the share. The current price represents a buy opportunity.
1st half 2004 resultsAt the end of the first half of 2004, Nestlé reported disappointing sales and profitability figures. The group was mainly penalised by difficult markets in Western Europe and the rising price of raw materials. However, we remain convinced that the company is capable of achieving its target growth and improving its margins in 2004.
Nestlé’s annual seminar was held this year in SaintLouis (USA). The meeting ended with a question and answer session with group CEO, Peter Brabeck. Several points caught our attention: 1/Raston Purina is exceeding synergy targets and Chef America is delivering solid growth. 2/The increase in the price of raw materials is likely to have an impact on profitability. However, this increase should be offset partially by various costsaving plans. 3/The group pointed out that surplus liquidity will allow a reduction of debt in the short term, in order to maintain the AAA rating.
According to Bloomberg, Nestlé may be interested in acquiring General Mills (USA). The two groups involved did not wish to comment on this information. Such an operation is possible, but in our opinion lacks credibility. The management has recently announced that it did not intend to make a substantial middleterm acquisition. An acquisition of this size would have a negative impact on the share. PLUS code maintained.
Organic sales growth reached 5.1%. The management adopted a cautious position in February and pointed out that organic growth at the end of Q1 would certainly fall short of the target for the year as a whole (5 to 6%). These figures are above our expectations and strengthen our positive opinion of this share. We are still anticipating improved margins thanks to the cost cutting programmes, and the share valuation is attractive in comparison with its competitors.
Nestlé has published mixed results for 2003. The operational performance is particularly disappointing. The group has been penalized by higher primary commodity prices and the strength of the Swiss franc. However, our opinion on this share remains positive. We expect margins to improve as a result of the costcutting programmes. Moreover, the valuation is attractive compared to other shares in the same sector.
L’Oréal and Nestlé have announced a merger project between Gesparal and L’Oréal. As a result of this operation, the capital of L’Oréal will be directly controlled by Nestlé and the Bettencourt family. This merger will have no impact on the L’Oréal accounts and the organization chart will be simplified. Nestlé, which currently holds 49% of Gesparal shares, will become a direct L’Oréal shareholder with a 26.4% interest. PLUS code maintained for L’Oréal and Nestlé.
Nestlé has published adequate 3rd quarter figures. The management is confident that it will attain its objecives. The improvement of margins is guaranteed by costcutting programmes. In addition, the company has a solid balance sheet while its share shows an excessive markdown compared it his Peers. We maintain our positive opinion of the share.
Nestle's first quarter sales were down 7.5%. This fall is explained mainly by a higher than expected currency impact and real internal growth below market expectations. But we maintain our Plus code because of the group's financial strength and its valuation compared to its competitors.
At the end of September, Nestle published turnover in line with expectations. On the other hand, real internal growth is disappointing. The group suffered from the negative impact of Latin America and a strong Swiss franc. However, we maintain our positive opinion on this share. On the one hand, growth of a majority of its business activities is excellent; and on the other, the group is the best available compromise between fundamentals and price.
Nestlé’s first half results are mixed. The improved operating margin and lower debt are excellent news. On the other hand, the internal growth target is looking hard to achieve in the current year at this stage. However, this factor does not call into question the group’s longterm strength. We are maintaining our favourable opinion.
Nestle has just published its sales for the first quarter of 2002. They are above our expectations at CHF 21.3 billion (+ 10.1%). For the first time, this figure includes the consolidation of Ralston Purina (Nestle is now world leader in the animal food business). However, we are slightly disappointed by the real internal growth of just 3.3% (4% target. In the first quarter of 2001, this figure was 4.6%). Nestle is still the leader in its sector (versus Unilever and Danone). We are keeping our Plus code.
Nestl§Û announced a satisfactory result yesterday. The company is standing firm in an environment of economic downturn. With 4.4% real internal growth and a 15.9% net result increase, the group is the strongest of the big European agrifood companies with the best performance. We are maintaining our plus code.
Nestl§Û published its sales figures for the first 9 months, indicating a rise of 4.9%, to CHF 62.4 billion (against 6.3% during the first half year). This is lower than our forecasts and the consensus opinion and is due mainly to the impact of exchange rates, which was stronger than expected. The figures are disappointing, but still better than those reported by Unilever and Danone. Also, despite a very difficult environment, the group has once again demonstrated its capacity to maintain solid real internal growth. We therefore maintain our buy rating unchanged.
Results for the first halfyear are excellent overall (sales +6.3%, retained earnings +12.1%). However, the operating margin is down from 11.1% to 10.5% (operating profit is below our expectations). Management has blamed oneoff factors for this decline and therefore, logically, the margin should improve in the second halfyear. In view of its defensive character and attractive valuation, we are maintaining our recommendation: BUY.
The company has announced very good results. Sales have risen by 4.5% during the first quarter of 2001. Its real domestic growth is now around 4.6%. The Management seems to be confident enough to announce even at this early stage record Sales and profits for the year under review. We confirm our BUY recommendation.
Results for the year 2000 are in line with expectations and confirm the pertinence of the strategy put in place by Nestlé. One pleasant surprise is the fact that real internal growth reached 4.4%, its highest level since 1991, thereby exceeding the Swiss company's target (4%). Mineral water, pet food and icecreams are the three segments where Nestlé has given itself the means to be world leader. However, the group currently prefers to focus on "nutritional food" as a platform for future growth. In fact, Nestlé sees significant growth potential and high margins in consumption by senior citizens and young people. In view of a clear strategy and attractive development prospects, we are changing the rating from NEUTRAL to BUY with a target at CHF 4'100.
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