Press Release: Nestle: Nestlé reports half-year -3-

Zone Asia, Oceania and sub-Saharan Africa (AOA)

-- 6.8% organic growth: 6.3% RIG; 0.5% pricing.

-- China posted double-digit organic growth, based on strong RIG and

positive pricing.

-- South-East Asia reported slightly negative organic growth, with positive

RIG and negative pricing.

-- South Asia saw double-digit organic growth, with strong RIG and positive

pricing.

-- Sub-Saharan Africa recorded double-digit organic growth, led by strong

RIG and positive pricing.

-- Japan, South Korea and Oceania combined saw mid single-digit organic

growth. Strong RIG was partially offset by slightly negative pricing.

-- The underlying trading operating profit margin decreased by 40 basis

points to 22.3%.

Sales Sales Organic UTOP UTOP Margin Margin

6M-2021 6M-2020 RIG Pricing growth 6M-2021 6M-2020 6M-2021 6M-2020

Zone CHF 10.2 CHF 10.1 CHF 2.3 CHF 2.3

AOA bn bn 6.3% 0.5% 6.8% bn bn 22.3% 22.7%

Organic growth was 6.8%, with strong RIG of 6.3% and pricing of 0.5%. Net divestitures had a negative impact of 3.7%, largely related to the divestment of the Yinlu peanut milk and canned rice porridge businesses in China. Foreign exchange reduced sales by 1.7%. Reported sales in Zone AOA increased by 1.5% to CHF 10.2 billion.

Zone AOA reported high single-digit organic growth, showing resilience in a difficult environment. Most categories gained market share, particularly pet food, coffee, confectionery and culinary.

China recorded double-digit growth, helped by a recovery in out-of-home channels and the timing of Chinese New Year. The largest growth contributor was Nestlé Professional, with sales exceeding 2019 levels. Coffee, culinary, dairy and Purina PetCare all grew at strong double-digit rates. Infant Nutrition posted a sales decrease, with market shares declining but slowly stabilizing.

South-East Asia saw slightly negative growth in a difficult economic environment. High single-digit growth in Malaysia and Vietnam was offset by a sales decrease in the Philippines due to a high base of comparison in 2020. South Asia reported double-digit growth, with continued strong momentum in e-commerce. Growth was broad-based across most categories, led by Maggi, KitKat and Nescafé. Sub-Saharan Africa recorded double-digit growth, based on strong sales developments for Maggi, Milo and Nescafé, along with Golden Morn in Nigeria.

Japan posted high single-digit growth, led by Nescafé and Purina PetCare. Sales in South Korea grew at a strong double-digit rate, driven by coffee. Oceania reported slightly positive growth, with strong demand for KitKat and Purina PetCare.

By product category, the key growth drivers were culinary, coffee and Nestlé Professional. Sales in confectionery and ice cream grew at a double-digit rate, with particularly strong momentum in Malaysia. Dairy saw mid single-digit growth, led by strong demand for fortified milks. Infant Nutrition posted negative growth and continued to gain market share in South Asia and Africa.

The Zone's underlying trading operating profit margin decreased by 40 basis points. Commodity inflation and product mix more than offset operating leverage and structural cost reductions.

Nespresso

-- 14.6% organic growth: 13.8% RIG; 0.8% pricing.

-- The underlying trading operating profit margin increased by 10 basis

points to 26.0%.

Sales Sales Organic UTOP UTOP Margin Margin

6M-2021 6M-2020 RIG Pricing growth 6M-2021 6M-2020 6M-2021 6M-2020

CHF 3.2 CHF 2.8 CHF 0.8 CHF 0.7

Nespresso bn bn 13.8% 0.8% 14.6% bn bn 26.0% 25.9%

Organic growth reached 14.6%, based on strong RIG of 13.8% and pricing of 0.8%. Foreign exchange reduced sales by 0.1%. Reported sales in Nespresso increased by 14.3% to CHF 3.2 billion.

Nespresso saw double-digit organic growth, reflecting continued expansion of the Vertuo system and robust demand for the Original system. Growth was fueled by new consumer adoption, a return to positive growth in boutiques and out-of-home channels, as well as innovation. New products included Kahawa ya Congo, the first organic coffee in the Reviving Origins range, and the roll-out of Momento, a versatile touchless machine that creates specialty coffees with fresh milk for out-of-home channels.

By geography, the Americas, EMENA and AOA all posted double-digit growth. Overall Nespresso gained market share, with contributions from most markets.

The underlying trading operating profit margin of Nespresso increased by 10 basis points. Operating leverage and structural cost reductions more than offset increased consumer-facing marketing expenses.

Nestlé Health Science

-- 13.6% organic growth: 13.6% RIG; 0.0% pricing.

-- The underlying trading operating profit margin decreased by 580 basis

points to 13.5%.

Sales Sales Organic UTOP UTOP Margin Margin

6M-2021 6M-2020 RIG Pricing growth 6M-2021 6M-2020 6M-2021 6M-2020

Nestlé

Health CHF 1.9 CHF 1.5 CHF 0.3 CHF 0.3

Science bn bn 13.6% 0.0% 13.6% bn bn 13.5% 19.3%

Organic growth was 13.6%, entirely driven by RIG. Net acquisitions increased sales by 15.1%, largely related to the acquisitions of Vital Proteins, Zenpep and Aimmune. Foreign exchange negatively impacted sales by 4.4%. Reported sales in Nestlé Health Science increased by 24.3% to CHF 1.9 billion.

Nestlé Health Science posted double-digit organic growth, with a high base of comparison in 2020. Growth was driven by sustained momentum in e-commerce, new product launches and geographic expansion.

Consumer Care recorded double-digit growth. Vitamins, minerals and supplements that support health and the immune system continued to see strong demand. Vital Proteins and Persona more than doubled their sales. Garden of Life saw continued strength, particularly in e-commerce. Healthy aging products grew at a double-digit rate, supported by Boost in North America, Nutren in emerging markets and Meritene in Europe. Medical Nutrition reported mid single-digit growth, with robust demand for Compleat, an adult medical care product, and Althéra, Alfaré and Alfamino pediatric care products.

By geography, the Americas, EMENA and AOA all posted double-digit growth.

The underlying trading operating profit margin of Nestlé Health Science decreased by 580 basis points. As expected, investments in Aimmune and consumer-facing marketing expenses more than offset operating leverage. Aimmune's margin dilution reflects initial commercial investments behind Palforzia. The roll-out of this peanut allergy treatment has been impacted by the pandemic, but it is expected to accelerate as visits to allergists resume and schools reopen. Increased consumer-facing marketing expenses included a highly successful celebrity campaign for Vital Proteins.

Business as a force for good: Regenerating local water cycles to help create a positive water impact from 2025 onwards

Water is a vital resource that plays a crucial role in our communities and in our food systems. That's why Nestlé Waters is stepping up its work to manage water resources sustainably and plans to help regenerate local water cycles through more than 100 specific projects for its 48 sites. The company will define tailored solutions working in collaboration with multiple partners. As of 2025, these measures will help nature near each Nestlé Waters site retain more water than the business currently uses in its operations.

Nestlé will invest CHF 120 million to assist with the implementation of the 100 projects. This new water commitment builds on our strong heritage of nature protection and water stewardship to help ensure the future prosperity of ecosystems and the availability of safe and clean water.

The projects will focus on actions like reforestation, wetland restoration, rainwater harvesting and ways to improve quality of available water. Since each site is unique, the solutions will be adapted to the local water challenge and will go beyond Nestlé's own operations. Some project examples include:

-- Buxton -- Land conservation (protecting land from development) and

natural flood management interventions in Derbyshire, UK.

-- Nestlé Pure Life -- Support for farmers to use drip irrigation in

Sheikhupura, Pakistan.

-- Nestlé Pure Life -- Delivery of water treatment, filtration and

pipeline infrastructure for the municipal water supply in Benha, Egypt.

To assess whether these projects adequately address local and regional water challenges and reflect stakeholder priorities, Nestlé Waters has established an external panel of experts from civil society, academia and international development organizations.

Each of the projects will also be measured using the World Resources Institute's Volumetric Water Benefit Accounting (VWBA https://www.globenewswire.com/Tracker?data=G6144a9xKF9FfKP4srBOfIgGv3Igr9pdZHlXjKBPby0PfAOONhfcDAGneFPhbhxHc6ZUCAS5trS6MDG9wC3B9iHxHVy3l3co15IOsMnengOqJWroOHSO1jmZdTNpvh-SJWt_Yw1exaueNfO1ODdGOMlfdRcUAHGYCamNDftzfytZEGspnwkE5oyJMNl1AsqxaYOm3wVNCux_J8BstpAKVA== ) methodology. This methodology provides consistency and allows the company to track its progress. Nestlé Waters will report the water usage and the impact of the projects at each of its sites.

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July 29, 2021 01:15 ET (05:15 GMT)