Reporting nine-month sales for 2018, Nestlé says an organic growth of 2.8 percent, with 2.3 percent real internal growth (RIG) and pricing of 0.5 percent, in line with company expectations.

 

Total reported sales increased by 2.0 percent to CHF 66.4 billion (US$66.8 billion). Net acquisitions had a positive impact of 0.1 percent and foreign exchange reduced sales by 0.9 percent.

According to Nestlé, further progress was made in positioning its portfolio towards attractive high-growth categories. Nestlé is diversifying and expanding into growth categories such as coffee, water and nutrition. 

Nestlé acquired the global perpetual license of Starbucks consumer packaged goods and foodservice products. The company also reached an agreement for the sale of Gerber Life Insurance Co. and has started to explore strategic options for Nestlé Skin Health.

Full-year guidance for 2018 /confirm/ied, with organic sales growth expected to be around 3 percent; underlying trading operating profit margin improvement in line with the company’s 2020 target. 

Restructuring costs are expected to be around CHF 700 million (US$704 million) and underlying earnings per share in constant currency and capital efficiency are expected to increase.

"We are encouraged by the progress on our path of accelerated value creation. The nine-month sales show solid growth across most geographies and product categories,” says Mark Schneider, Nestlé CEO.

“We are starting to see improved momentum in North America and in our infant nutrition category globally. Our business in China continued to grow at a mid-single-digit pace. Our growth was supported by disciplined execution and faster innovation.”

“We have reached significant milestones in portfolio management and are particularly pleased with the early closing of the Starbucks transaction. We have also made good progress on our various cost reduction programs. Our growth and efficiency initiatives put us on track to meet our full-year 2018 guidance and 2020 targets.”

Nestlé and Starbucks closed their partnership deal in August granting Nestlé the perpetual rights to market Starbucks Consumer Packaged Goods and Foodservice products globally, outside of the company’s coffee shops. The US$7.15 billion deal means that Nestlé can sell Starbucks products such as Seattle’s Best Coffee and TeavanaTM/MC outside of the US.

The Swiss food group has also announced the departure of its head of Asia, which has been the group’s fastest-growing region. Wan Ling Martello, CEO of Zone Asia, Oceania and Sub-Saharan Africa (AOA) and a member of the Nestlé Group Executive Board, has decided to leave Nestlé after seven years at the company to explore new horizons. Martello joined the Group in 2011 as Chief Financial Officer and will leave on December 31.

Danone: Weaker baby formula sales in China and Morocco boycott weighs in on results
French dairy group Danone reported slower growth in its third quarter with weaker infant nutrition sales in China which comes after 12 months of exceptional growth. A consumer boycott in Morocco, which began earlier this year on a social media with protestors criticizing large companies setting unfair prices, is also having an impact. However, the company says it delivered strong momentum in essential dairy & plant-based and waters, offsetting early life nutrition contraction in China.

The multinational says that for the three months ending September 30, 2018, consolidated sales stood at €6.2 billion, up +1.4 percent on a like-for-like basis, with a +3.3 percent rise in value more than offsetting a -1.9 percent decline in volume. 

Sales were up +2.2 percent on a like-for-like basis in the third quarter and +3.8 percent for the nine months, excluding Morocco. There was also strong growth in Waters and a significant acceleration of EDP in all regions. Danone has confirmed its full-year guidance.

“In the latest quarter, we have seen an encouraging return to growth in Essential Dairy and Plant-based, alongside strong momentum in Waters. This demonstrates how Danone is balancing growth across its businesses,” says Chairman and CEO, Emmanuel Faber.

“Our performance in EDP and Waters compensated for challenging conditions in China wher Early Life Nutrition shows changes in market dynamics following a period of exceptional growth. We also have the foundations in place to navigate current emerging market volatility and currency headwinds, which will enable us to continue to deliver sustainable, profitable growth. As a result, we have today reaffirmed our guidance for the full year.”

Unilever: Sales growth accelerates
Unilever announced its results for the third quarter of 2018, which show underlying sales growth increased to 3.8 percent with growth accelerating across all three Divisions.

The group says that price growth in Argentina is excluded from Q3 USG due to hyperinflationary status. Reported growth would otherwise have been 4.5 percent. 

Growth was high-quality with an improvement in all three Divisions and strong volume growth in Asia AMET RUB. Turnover was impacted by an adverse translational currency impact of 5.2 percent and the net impact of acquisitions and disposals, which included the spreads disposal, reduced turnover by 3.3 percent. 

“Growth accelerated in the third quarter across all Divisions. We were able to increase prices while still maintaining good volume growth which reflects the strength of our brands and the quality of our innovation program. Our focus on building our business for the long-term continues to deliver high-quality growth,” says CEO, Paul Polman.

“We are progressively reaping the benefits of our Connected 4 Growth program, which is now well embedded throughout the organization, making us simpler, faster and better connected with our consumers. It is helping us accelerate growth in Asia AMET RUB, manage through the economic volatility in Latin America and shift our portfolio into faster-growing segments and channels in all of our markets.”

Unilever completed the sale of its Spreads business – which includes brands such as Becel, Flora, Country Crock, Blue Band, I Can’t Believe It’s Not Butter, Rama and ProActiv – to KKR in July in a deal worth almost US$7 billion. 

“Our innovation pipeline continues to strengthen and in the third-quarter alone we have launched four new brands. We have now successfully completed the disposal of our spreads business and continue the acceleration of our efficiency programs.”

“We continue to expect underlying sales growth in the 3-5 percent range, an improvement in underlying operating margin and strong cash flow. We remain on track for our 2020 goals.”

Unilever’s results come shortly after the British-Dutch multinational ditched a plan to move out of its UK headquarters in the wake of Brexit and concentrate on Rotterdam instead. This idea has now been shelved with Unilever recently announcing that it will remain co-headquartered in London and Rotterdam after not all shareholders were on board with the idea. 

Unilever’s Foods & Refreshment underlying sales growth in the quarter improved to 3.2 percent with ice cream delivering strong growth led by innovations including the new Kinder ice cream and the new Magnum Praline variant.

In tea, Unilever’s emerging markets growth was driven by good performance on core brands like Brooke Bond in India. In developed markets, black tea continues to be challenging, said the company. However, the ongoing transformation of Unilever’s portfolio is helped by the TAZO and Pukka acquisitions, and innovations like the organic Lipton range.

Last November Unilever announced it was to buy the Tazo brand from Starbucks, a leading brand in the fast-growing specialty tea category which closely followed Unilever snapping up organic herb tea business, Pukka Herbs Ltd. 

Growth in foods was driven by cooking products and Unilever’s foodservice business which caters to professional chefs. Knorr continued to modernize the portfolio with more “organic and natural” innovations including a new “soup in glass” range, while Unilever’s snacking brands Red Red, Prepco and Mãe Terra performed well.

In dressings, Hellmann’s was helped by a campaign to activate its purpose to “fight food waste,” but growth was held back by the continued promotional intensity in the US. Sir Kensington’s performed well and Unilever also launched Del Huerto, a new tier three dressings brand in Colombia.