Press Release: Nestle: Nestlé reports full-year -4-

By geography, the Americas and AOA posted double-digit growth. Sales in EMENA grew at a mid single-digit rate. Overall Nespresso gained market share, with contributions from most markets.

The underlying trading operating profit margin of Nespresso decreased by 60 basis points. Increased growth investments more than offset operating leverage.

Nestlé Health Science

-- 13.5% organic growth: 13.4% RIG; 0.1% pricing.

-- The underlying trading operating profit margin decreased by 290 basis

points to 13.6%.

Sales Sales Organic UTOP UTOP Margin Margin

2021 2020 RIG Pricing growth 2021 2020 2021 2020

Nestlé CHF CHF CHF CHF

Health 4.8 3.3 0.7 0.5

Science bn bn 13.4% 0.1% 13.5% bn bn 13.6% 16.5%

Organic growth was 13.5%, with strong RIG of 13.4% and 0.1% pricing. Net acquisitions increased sales by 33.2%, largely related to the acquisitions of the core brands of The Bountiful Company, Vital Proteins, Zenpep and Aimmune. Foreign exchange negatively impacted sales by 1.8%. Reported sales in Nestlé Health Science increased by 45.0% to CHF 4.8 billion.

Nestlé Health Science posted double-digit organic growth, building on a strong sales development in 2020, with broad-based market share gains across channels and markets. Growth was supported by e-commerce momentum, innovation, geographic expansion and strong execution in the supply chain.

Consumer Care posted double-digit growth. Vitamins, minerals and supplements that support health and the immune system continued to see strong demand. Vital Proteins almost doubled its sales. Garden of Life saw continued strength, driven by new product launches such as Dr. Formulated MD Protein for improved heart health and immunity. Sales for the newly acquired core brands of The Bountiful Company grew at a high single-digit rate, led by Nature's Bounty and Solgar. Healthy-aging products recorded double-digit growth, supported by Boost in North America.

Medical Nutrition reported high single-digit growth, with robust demand for pediatric care products Althéra, Alfaré and Alfamino, as well as for Compleat, a comprehensive nutritional tube-feeding formula. The rollout of Palforzia, the peanut allergy treatment, was impacted by the pandemic. In the fourth quarter, the product started to see increased adoption in the U.S. and was also launched in the United Kingdom and Germany.

By geography, the Americas and AOA posted double-digit growth. Sales in EMENA grew at a high single-digit rate.

The underlying trading operating profit margin of Nestlé Health Science decreased by 290 basis points, mainly due to investments in Palforzia, increased consumer-facing marketing expenses and one-off integration costs related to the acquisition of The Bountiful Company's core brands.

Business as a force for good: innovative plan to tackle child labor risks and achieve full traceability in cocoa

On January 27, 2022, Nestlé unveiled an innovative plan building on its longstanding efforts to tackle child labor risks in cocoa production. The company plans to invest a total of CHF 1.3 billion by 2030, more than tripling its current annual investment. A novel incentive program aims to help farmers and their families steadily and sustainably build social and economic stability. This new program focuses on complex root causes of child labor, including poverty, school enrollment and agricultural practices.

The program, which builds on the Nestlé Cocoa Plan, rewards practices that increase crop productivity and help secure additional sources of income. By engaging in these practices, families can earn up to CHF 500 in additional annual income for the first two years of the program (pdf, 10Mb) https://www.globenewswire.com/Tracker?data=UrE6SDiOG93jCmB4VK6BfpMtXtxCmP2CBQ6vnvl1R-0oR1NHKwYisyc_I4ChAcJTmmBPgtGG1bRXp_TEnm3FvslR1svejZ75umipjfOzD5FvhD0dZ9F_8U7slUhEDzs6zKow8i3sO6d6RTDTmvB28fPsfLE-lDy6VmBv2g-zj4cf6Wo_9Ah1eSagXWErh8rVIZBbgykO_tAuhRn3Z7HwLw== leveled at CHF 250 as the program starts delivering tangible results.

As the incentive is not paid based on volume of cocoa sold, it also provides smaller farmers meaningful support, leaving no one behind. These payments are on top of support provided by the government of producing countries and the premiums Nestlé pays for certified cocoa, independently audited against the Rainforest Alliance Sustainable Agriculture Standard.

The program divides the payments between the traditionally male farmer and his female spouse, typically responsible for the household and childcare, thereby helping to empower women and improve gender equality.

Practices that Nestlé is incentivizing through the program include:

-- Enrolling all children in the household aged 6-16 in school.

-- Implementing good agricultural practices, such as pruning, which increase

crop productivity.

-- Performing agroforestry activities to increase climate resilience, like

planting shade trees.

-- Generating diversified incomes, for example through growing other crops,

raising livestock such as chickens, beekeeping or processing other

products like cassava.

In line with Nestlé's Creating Shared Value approach, the company will help ensure farmers have the resources, training, and social and financial structures to make lasting changes.

Building on the positive results of an initial pilot in 2020 Nestlé conducted with 1 000 farmers in Côte d'Ivoire, the company will run a sizeable test program with 10 000 families in the country starting this year. The aim is to reach approximately 160 000 cocoa-farming families in Nestlé's global cocoa supply chain by 2030.

As part of the program, Nestlé will transform the sourcing of cocoa to achieve full traceability and segregation of its cocoa products from origin to factory. This new effort will help drive accountability and transparency across Nestlé's supply chain and the broader industry at a time when customers, employees and communities increasingly expect companies to deliver on their shared values.

Nestlé will introduce a range of products with cocoa sourced from this innovative program, offering consumers the opportunity to support improvement in farmer family livelihoods and protection of children. This will start with a selection of KitKat products in 2023.

Outlook

2022 outlook: we expect organic sales growth around 5% and underlying trading operating profit margin between 17.0% and 17.5%. Underlying earnings per share in constant currency and capital efficiency are expected to increase.

Mid-term outlook: sustained mid single-digit organic sales growth. Continued moderate underlying trading operating profit margin improvements. Continued prudent capital allocation and capital efficiency improvements.

Annex

Full-year sales and underlying trading operating profit (UTOP) overview by operating segment

Nestlé

Total Zone Zone Zone Health Other

Group AMS EMENA AOA Nespresso Science Businesses

Sales

FY-2021

(CHF m) 87 088 33 779 21 128 20 735 6 418 4 822 206

Sales

FY-2020

(CHF m)* 84 343 34 010 20 226 20 730 5 885 3 326 166

Real

internal

growth

(RIG) 5.5% 4.8% 6.0% 3.5% 8.2% 13.4% 25.1%

Pricing 2.0% 3.7% 1.2% 0.8% 0.6% 0.1% 1.2%

Organic

growth 7.5% 8.5% 7.2% 4.2% 8.8% 13.5% 26.3%

Net M&A - 2.9% - 6.6% - 2.2% - 3.9% 0.0% 33.2% 0.0%

Foreign

exchange - 1.3% - 2.5% - 0.6% - 0.4% 0.3% - 1.8% - 1.8%

Reported

sales

growth 3.3% - 0.7% 4.5% 0.0% 9.1% 45.0% 24.5%

FY-2021

Underlying

TOP (CHF

m) 15 119 7 012 3 903 4 524 1 475 654 - 32

FY-2020

Underlying

TOP (CHF

m)* 14 903 6 975 3 766 4 599 1 392 549 - 73

FY-2021

Underlying

TOP

Margin 17.4% 20.8% 18.5% 21.8% 23.0% 13.6% - 15.6%

FY-2020

Underlying

TOP

Margin* 17.7% 20.5% 18.6% 22.2% 23.6% 16.5% - 43.9%

Full-year sales and underlying trading operating profit (UTOP) overview by product

Milk Prepared

Powdered products Nutrition dishes &

Total & liquid & ice & Health cooking

Group beverages Water cream Science aids Confec-tionery PetCare

Sales

FY-2021

(CHF m) 87 088 23 975 4 040 10 700 13 157 12 146 7 514 15 556

Sales

FY-2020

(CHF m) 84 343 22 256 6 421 11 007 12 160 11 523 6 975 14 001

Real

internal

growth

(RIG) 5.5% 7.8% 3.0% 3.0% 0.4% 4.6% 6.3% 9.4%

Pricing 2.0% 1.1% 3.7% 2.9% 1.0% 1.9% 1.6% 3.4%

Organic

growth 7.5% 8.9% 6.8% 5.9% 1.4% 6.6% 7.9% 12.7%

FY-2021

Underlying

TOP (CHF

m) 15 119 5 631 364 2 707 2 307 2 040 1 205 3 282

FY-2020

Underlying

TOP (CHF

m)* 14 903 5 035 639 2 652 2 640 2 171 990 3 081

FY-2021

Underlying

TOP

Margin 17.4% 23.5% 9.0% 25.3% 17.5% 16.8% 16.0% 21.1%

FY-2020

Underlying

TOP

Margin* 17.7% 22.6% 10.0% 24.1% 21.7% 18.8% 14.2% 22.0%

(MORE TO FOLLOW) Dow Jones Newswires

February 17, 2022 01:15 ET (06:15 GMT)