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Nestle FY20 Profit Down, Organic Sales Rise; Lifts Dividend; Sees Growth Ahead

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Swiss food and beverage giant Nestle SA reported Thursday lower profit in its fiscal 2020 with weak sales. However, sales increased organically, and the company continues to expect organic sales growth in fiscal 2021 towards a mid single digit rate.

For fiscal 2021, the company projects an increase in underlying earnings per share in constant currency and underlying trading operating profit margin with continued moderate improvement.

For the mid-term, the company anticipates sustained mid single-digit organic sales growth and continued moderate underlying trading operating profit margin improvement.

Further, Nestle said its Board of Directors will propose a dividend of 2.75 francs per share, an increase of 5 centimes, at the Annual General Meeting on April 15. The recording date of the dividend will be April 16, and payable as from April 21.

Mark Schneider, Nestlé CEO, said, "In this unprecedented environment, we achieved our third consecutive year of improvement in organic growth, profitability and return on invested capital. The global pandemic did not slow us down. … Looking to 2021, we expect continued improvement in organic growth, profitability and capital efficiency in line with our value creation model."

For fiscal 2020, profit attributable to shareholders of the parent of 12.23 billion Swiss francs compared to 12.61 billion francs last year. Earnings per share were 4.29 francs, compared to 4.30 francs a year ago.

Underlying earnings per share decreased 4.5 percent to 4.21 francs.

Trading operating profit increased 4.1 percent to 14.2 billion francs. The trading operating profit margin increased 210 basis points to 16.9 percent. Underlying trading operating profit decreased 8.3 percent to 14.9 billion francs, while underlying trading operating profit margin reached 17.7 percent, up 10 basis points.

For the year, total sales decreased 8.9 percent to 84.34 billion francs from 92.57 billion francs last year with decline in all regions. Foreign exchange reduced sales by 7.9 percent.

Organic growth reached 3.6 percent, the highest level in the last five years. Real internal growth or RIG was 3.2 percent and pricing edged up 0.4 percent. The growth was supported by strong momentum in the Americas, Purina PetCare and Nestlé Health Science.

E-commerce sales grew by 48.4 percent, reaching 12.8 percent of total Group sales. Coffee, Purina PetCare and Nutrition & Health Science were the main growth contributors.

The company noted that COVID-19-related costs decreased in the second half of the year, as movement restrictions eased.

In Switzerland, Nestle shares were trading at 100.10 francs, down 0.26 percent.

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