Nestlé (NESN) H1 2024 earnings summary

Executive summary

• Organic sales growth reached 2.1% for H1 2024, with RIG rebounding to 2.2% in Q2 and pricing slowing to 0.6% in Q2; broad-based gains across all zones and categories, led by coffee and pet care.

• Gross profit margin improved by 160 bps to 47.2%, supporting increased marketing investments and higher underlying trading operating profit margin.

• E-commerce sales grew 10.6%, now 18.2% of total sales, with strong gains in specialty and out-of-home channels.

• Market share gains for billionaire brands, with innovation and renovation launches up 15% year-over-year.

• Share buybacks totaled CHF 2.4 billion in H1 as part of a CHF 20 billion program.

Financial highlights

• Total reported sales for H1 2024 were CHF 45.0 billion, down 2.7% year-over-year, impacted by -4.4% FX and -0.4% net divestitures.

• Underlying trading operating profit margin rose to 17.4%, up 30 bps reported and 40 bps constant currency.

• Free cash flow increased to CHF 4.0 billion, up CHF 0.6 billion excluding prior year disposals.

• Underlying EPS in constant currency up 3.3% to CHF 2.51; reported EPS up 1.8% to CHF 2.16, but down 1% to CHF 2.40 due to FX.

• Net profit was stable at CHF 5.6 billion; net profit margin increased by 30 bps to 12.5%.

Outlook and guidance

• Organic sales growth guidance revised to at least 3% for 2024, reflecting a more challenging pricing environment.

• Underlying EPS in constant currency expected to increase at a mid single-digit rate.

• Underlying trading operating profit margin guidance unchanged, with a moderate increase expected.