China Food

Not easy! Under the epidemic situation, Nestle China’s revenue exceeded 44 billion yuan last year, and many businesses are growing

This afternoon, Nestle announced its full year results for 2020. Judging from this fresh report card, the world’s largest food company has survived the epidemic crisis.

According to the financial report, Nestle’s organic growth will reach 3.6% in 2020, the highest level in the past five years. Among them, real internal growth (rig) was 3.2%, and price factor contributed 0.4%, especially in emerging markets. The growth was mainly driven by strong momentum in the Americas, Purina pet care and Nestle Health Sciences.

Nestle said sales were down 7.9 per cent due to foreign exchange factors as the Swiss Franc continued to appreciate against most currencies. Business divestiture had a negative impact of 4.6%. As a result, total reported sales fell 8.9% to CHF 84.3 billion (2019: CHF 92.6 billion).

In addition, basic earnings per share increased by 3.5% at the fixed exchange rate and decreased by 4.5% to CHF 4.21 at the financial statements. Earnings per share remained unchanged on the basis of the results, at CHF 4.30.

“2020 is a tough year for a lot of people, but I’m also encouraged by the fact that all of us are more united. I want to thank our employees and our partners, from farmers to retailers, for working with us to ensure that food and drinks are delivered to our communities around the world. ” Mark Schneider, Nestle’s chief executive, said today.

“In this unprecedented environment, we have achieved organic growth, profitability and return on investment for three consecutive years.” Schneider said.

Chinese market

Let’s focus on the performance of the Chinese market, which is Nestle’s second largest market in the world.

According to the financial data released today, in 2020, Nestle’s sales in Greater China will be 5.986 billion Swiss francs, equivalent to about 44.028 billion yuan (calculated according to the weighted average annual exchange rate in 2020, 100 yuan will be converted to 13.596 Swiss francs in 2020).

In 2019, Nestle’s revenue in Greater China will be 6.913 billion Swiss francs, equivalent to about 48.121 billion yuan (according to Nestle’s disclosed exchange rate, in 2019, 100 yuan will be converted to 14.366 Swiss francs).

Behind the digital changes, Nestle’s China business is also undergoing profound adjustments in 2020. Xiaoshidai once introduced that nestle announced in China last year that it would sell its water business to Qingdao beer group, as well as Yinlu peanut milk and Babao porridge. At the same time, Nestle also announced a series of capital increase plans and projects with a total amount of more than 730 million yuan in Tianjin, and an investment of 400 million yuan in Harbin Shuangcheng, etc.

Today’s results show that China’s Nestle AOA region (Asia, Oceania and sub Saharan Africa) has an organic growth of 0.5%, of which the real internal growth is flat and the pricing growth is 0.5%. The divestiture had a negative impact of 0.1%. Foreign exchange reduced sales by 6.7%. AOA reported sales fell 6.3% to chf20.7 billion.

“China’s organic growth recorded a high single digit decline, including a decline in real internal growth (rig) and a slight decline in pricing.” Nestle pointed out in its financial report that “organic sales in AOA district have achieved positive growth, and the decline in sales in China has been offset by the median organic growth in other regions.”

Under the influence of last year’s epidemic, the performance of different product categories and channels of Nestle China is different.

“Due to the time of the lunar new year, the decline of channels outside the family, and the limited storage of consumers during the epidemic period, China’s market has negative growth.” Nestle disclosed in the financial report.

“Due to the strong growth of Nestle coffee and Starbucks products in e-commerce channels, the coffee business has achieved high single digit growth.” Nestle said sales of its cooking condiments and ice cream business grew in the single median. Driven by home baked products and adult nutrition products, room temperature dairy products have achieved positive growth. “

It is worth noting that Nestle’s Chinese culinary food business underwent a major adjustment earlier this year. Recently, xiaoshidai exclusively introduced that two major seasoning brands of Nestle China, Taitaile and Haoji, have basically completed the internal business integration. In the future, while retaining their own brand independence, Taitaile and Hodge will share their teams and resources in sales, marketing, supply chain, channel, product R & D, etc.

In 2020, the sales volume of Nestle’s infant formula business in the Chinese market will decline and improve in the second half of the year.

The company said the positive sales growth of Nunn was offset by negative growth of other brands. Wyeth zhenlang, a local brand, has made good progress. “Double digit growth in baby cereal.” Nestle said.

In addition, Nestle pointed out that in China last year, sales of Purina’s pet care business grew strongly at a double-digit rate, thanks to the launch of Purina Guanneng and veterinary products.

Nestl é professional reported a drop in sales, but recovered to almost flat growth in the fourth quarter.

This is the growth of

Let’s look at it by product category.

Despite the epidemic in 2020, Nestle’s businesses are still growing globally. According to the financial report, the biggest growth contributors are Purina petcare and its high-end brands Purina Pro plan, Purina one and Felix. Dairy business achieved high single digit growth, mainly due to increased demand for home baked products and affordable fortified milk.

Driven by strong consumer demand for Starbucks products, Nespresso and Nescaf é, the company’s coffee business also achieved median single digit growth. It is revealed that the sales volume of Starbucks products has reached 2.7 billion Swiss francs, creating an increase of more than 400 million Swiss francs in 2020.

“The sales of prefabricated food and cooking condiments showed a median single digit growth, and the sales momentum of most categories was strong during the epidemic period. Although the epidemic has reduced the demand for out of home channels, vegetarian and plant-based foods continue to grow strongly in double digits. ” Nestle mentioned in the financial report.

In China, the company is also adding to its plant base category. Xiaoshidai introduced it,

In addition, sales of Nestle health sciences are growing at a double-digit rate, reflecting increased demand for products that support health and immune systems.

Obviously, some businesses have been impacted by the epidemic. Nestle said in its financial report that the growth of its candy and chocolate business declined slightly, mainly due to the reduction of impulsive consumption and gift giving demand. Reported sales of the drinking water business declined due to its high dependence on outside home channels.

When it comes to the 2020 business impact, Nestle said in its earnings report that the impact of the epidemic on the organic growth of the group was different from product category and sales channel.

In terms of product categories, there is a strong demand for home consumption, reliable brands with nutritional value and products. Purina’s pet care, dairy, home coffee and Nestle Health Sciences businesses recorded strong growth. Sales of candy and drinking water decreased, reflecting the high proportion of these two businesses from outside home channels and travel consumption.

In terms of sales channels, retail sales have achieved a high single digit organic growth, reflecting the increase of home consumption demand. Sales of out of home channels fell sharply. E-commerce sales increased by 48.4%, accounting for 12.8% of the group’s total sales; coffee, Purina pet care, nutrition and health sciences were the main growth contributors, while all other categories also showed strong growth momentum.

Business adjustment

In 2020, Nestle will continue to adjust its product mix.

“Nestle divested its Yinlu peanut milk and Babao porridge businesses in China and agreed to sell its regional mountain spring water brand, purified water business and beverage distribution services in the United States and Canada.” The company said.

Xiaoshidai said that in November last year, Nestle group announced that it agreed to sell Yinlu peanut milk and Yinlu canned eight treasures porridge to food wise Co., Ltd. in China. The transaction included all the shares of Yinlu food group’s five enterprises in Fujian, Anhui, Hubei, Shandong and Sichuan. The sales volume of Yinlu brand in 2019 is CHF 700 million (according to Nestle group’s exchange rate, CHF 700 million is equivalent to RMB 5 billion).

It is worth noting that food wise Co., Ltd. is controlled by Chen Qingshui family, founder of Yinlu. The deal will allow Nestle to focus more on key areas in China: infant nutrition, candy, coffee, flavored food, dairy products and pet care, Nestle said in a circular.

Today, Nestle reported in its financial report that the divestiture led to a 4.6% drop in sales in 2020, mainly related to the sale of Nestle skin health, the US ice cream business and Herta charcuterie’s meat products business.

The company said that the changed product mix since 2017 has accounted for about 18% of its total sales in 2017. In 2020, the total value of Nestle’s acquisitions and divestitures will be about 8.4 billion Swiss francs.

Looking forward to 2021, Nestle expects that organic sales will continue to grow, reaching the median growth level; operating profit margin of basic transactions will continue to improve moderately; basic earnings per share calculated by fixed exchange rate and capital efficiency is expected to grow.

For the medium-term guidance, Nestle said that it expects the organic sales to continue to grow in the single digits; the operating profit margin of basic transactions will continue to improve moderately; the capital allocation will remain prudent and the capital efficiency will continue to improve.

Mark Schneider, CEO of Nestle

“The global epidemic has not slowed us down. Our nutrition expertise, digital capabilities, decentralized structure and innovation engine enable us to quickly adapt to changing consumer behavior and trends. We have promoted the transformation of our product portfolio, continued to build Nestle health sciences into a strong nutrition business, and expanded our business directly to consumers. ” At the same time, Nestle has put forward a plan to achieve net zero carbon emissions by 2050, Schneider said today.

Looking ahead to 2021, Nestle expects organic growth, profitability and capital efficiency to continue to improve, consistent with its value creation model, Schneider said.

2021: more than 4%

The annual report card of the global food giant has also attracted the attention of many foreign companies.

Today, Reuters news pointed out that Nestle’s net profit was 12.2 billion Swiss francs, exceeding the market expectation of 11.97 billion Swiss francs. It also quoted Schneider as saying that nestle hopes to maintain medium and single digit growth in the medium term and continue to make acquisitions.

The financial times pointed out today that although Nestle’s organic growth rate last year was lower than that of kraft Heinz (up 6.3%), it was already well ahead of Unilever (up 1.9%). According to the paper, this is due to people buying more vitamin and mineral supplements to strengthen their immunity, but the biggest source of growth is Nestle’s pet care business, especially services specifically for pet health.

Nestle achieved its highest sales growth in five years last year as consumers who stayed at home raised more cats and dogs, boosting demand for pet food, according to a report by Peng Bo today. The paper quoted Nestle CEO Mark Schneider as saying that revenue growth of more than 4% in 2021 is “something we have to work on.”.

The report also quoted Zurcher kantonalbank analyst Patrick schwendimann as saying that confidence in Nestle’s medium-term development is growing and that the company is expected to achieve at least 4% annual growth again by 2022.

Pay attention to “xiaoshidai” (wechat: foodinc) “and reply to” Nestle “to see the wonderful news.

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