The Nestlé Group has communicated its financial statements for the first half of 2024, which show signs of improvement on various fronts. Organic growth was 2.1%, with positive real internal growth (RIG) of 0.1% for the first half and 2.2% for the second quarter, improving across all zones and categories. Total declared sales were down to 45 billion Swiss francs (-2.7%), with a foreign exchange impact of -4.4% and net disposals of -0.4%.

Underlying trading operating profit margin (Utop) increased 30 basis points to 17.4% on a reported basis and 40 basis points in constant currency. Trading operating profit margin (Top) increased 50 basis points to 16.4% on a reported basis.

Underlying earnings per share are up 3.3% on a constant currency basis (-1.0% on a reported basis at 2.40 Swiss francs). Earnings per share increased 1.8% to 2.16 Swiss francs on a reported basis. Free cash flow is increasing from 0.6 billion Swiss francs to 4.0 billion Swiss francs.

The company has therefore updated its forecast for the full year 2024. In particular, organic sales growth of at least 3% is expected. Underlying earnings per share in constant currency are expected to grow at a mid-single-digit rate. Guidance on underlying trading operating profit margin is unchanged with a moderate increase expected.

“Positive real domestic growth is back,” commented Mark Schneider (photo), CEO of Nestlé. “We saw improved growth in volume and mix across the Group in the second quarter. Nestlé Health Science is recovering as expected and is poised for a strong second half of the year. Looking ahead to the rest of the year, we will continue to lead Rig launching innovations that address consumer trends and growing our great, iconic brands. At the same time, we have seen prices fall faster than expected. Therefore, we believe it is prudent to change our forecast for the year, with organic growth of sales which should now be at least 3%."

Organic growth was 2.1%. Rig was 0.1%, strengthening in the second quarter to 2.2%, with a general improvement across all geographic areas and categories. Prices grew 2.0%, decelerating to 0.6% in the second quarter, largely reflecting a high comparison base in 2023 and higher growth investments. By geography, organic growth was led by Europe and emerging markets. In developed markets, organic growth was 1.0%, driven by negative Rig pricing. In emerging markets, organic growth was 3.7%, driven by pricing and an almost unchanged rig.

By product category, coffee was the leading organic growth driver with mid-single digit growth, supported by the three major global coffee brands Nescafé, Nespresso and Starbucks.

PetCare experienced mid-single-digit growth, driven by continued momentum from premium science-based brands, Purina Pro Plan, Fancy Feast and Purina One.

Confectionery sales grew at a high single-digit rate, led by KitKat and major local brands. Water posted mid-single-digit growth, supported by continued momentum from the Sanpellegrino brand and a recovery from Perrier. Baby food sales grew at a low single-digit rate, based on continued momentum from Nan, Lactogen and human milk oligosaccharide (HMO) products. Nestlé Health Science's growth turned positive, with sales improvements in most segments in the second quarter. The integration plan is fully on track. Dairy saw nearly flat growth, as dairy culinary solutions saw robust growth, offsetting a decline in sales of coffee creamers and room temperature dairy products.

In culinary, Maggi saw robust growth, offset by frozen food in North America. By channel, organic retail sales growth was 2.0%. E-commerce sales grew by 10.6%, reaching 18.2% of total Group sales. Organic growth in out-of-home channels was 3.8%.

Net divestitures had a sales impact of -0.4%, largely due to the creation of a joint venture with Pai Partners for Nestlé's frozen pizza business in Europe.