Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on NESTLE SA-REG. We currently have 8 research reports from 2 professional analysts.
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New CEO resets targets: cost savings ahead, mid single-digit top-line target by 2020
16 Feb 17
Nestle’s FY and Q4 update: In Q4, sales grew organically +2.9% (weaker than 3.5% expected). In Q4, Zone Americas, EMENA and Others slowed down compared to the previous quarter. Zone AOA (+4.4%), Waters (+5.4%) and Nestle Nutrition performed better than in Q3. On a FY basis, organic sales are up +3.2% (cons. 3.4%) with RIG +2.4% and pricing of 0.8%. On reported figures, sales are up +0.8 (FX: -1.6%). The trading operating margin is up 30bp on constant FX and +20bp on reported figures (in line with consensus). FY17 outlook: top-line growth of 2-4%, stable operating margin as a result of a considerable increase in restructuring costs to drive future profitability. EPS is expected to rise at constant FX and capital efficiency is also expected to rise. For the mid-term, Nestlé targets mid single-digit top-line growth and 200bp in structural cost savings by 2020. The proposed dividend is CHF2.30 (vs. CHF2.25 last year).
Q3 disappoints, FY guidance adjusted downwards
20 Oct 16
Nestle’s 9M update: sales grew organically +3.3% (cons. +3.6%, Q3: +2.9% – a very weak quarter) with real internal growth (RIG) up 2.5% and pricing 0.8%. On reported figures, sales were up +1%. OG by division: the Americas +4.5% (cons. +4.7%, both price and RIG driven), EMENA +2.2% (cons. +2.5%, RIG driven, negative pricing), AOA 2.8% (cons. +2.9%, RIG driven), Waters +4.2% (cons. +3.9%, RIG driven, negative pricing), Nestle Nutrition +1.3% (cons. +1%, RIG driven), Other Businesses +4.6% (cons. 4.7%, RIG driven). In Q3, the Americas and EMENA performed more softly than in Q2; other divisions improved their performance. Emerging markets slowed to 5.1% OG; developed markets remain unchanged. For the FY, Nestle expects organic top-line growth of c. 3.5% (down from around 4%) with an in margins at constant FX and including restructuring charges.
Q2 with weak OG but better margins, expects acceleration in H2
18 Aug 16
Nestlé’s H1 update: organic revenue was up +3.5% (cons. +3.7%, Q2: 3.1%) with RIG +2.8% and pricing of +0.6%. Reported figures were up 0.7% (FX:-2%, net acquisitions: -0.8%). OG by division: the Americas +5.1% (cons. +4%, both price and RIG driven), EMENA +2.6% (cons. +2.9%, RIG driven, negative pricing), AOA 2.3% (cons. +2.1%, RIG driven, negative pricing), Waters +4.2% (cons. 5.4%, RIG driven, negative pricing), Nestle Nutrition +1.3% (cons. +2.8%, RIG driven), Other Businesses +4.2% (cons. 5.1%, RIG driven). Developed markets recorded OG of +1.9% whereas emerging markets grew +5.4%. The trading operating margin for period was up +30bp (cons. +20bp) on the back of an improvement in cost and portfolio management, premiumisation and input tailwinds. All divisions improved their margins with the exception of the Americas. The group maintains its FY guidance: organic growth in line with 2015 (4.2%) with improvements in margins and EPS at constant currencies.
A decent Q1
14 Apr 16
Nestlé released its Q1 trading update. The OG stood at 3.9% (cons. +3.6%) driven strongly by real internal growth (RIG) of 3% whereas pricing stood at 0.9%. The negative FX headwinds were 2.8%. Net acquisitions stood at -1%. OG by division: the Americas +5.5% (cons. +4.2%, price and RIG driven), EMENA +3% (cons. +1.8%, RIG driven), AOA 2.3% (cons. +2.4%, RIG driven), Waters +5.3% (cons. 5.2%, RIG driven), Nestle Nutrition +2.6% (cons. +3.4%, RIG driven), Other Businesses +5.2% (cons. 5%). The developed markets grew 2.5% organically (driven uniquely by +2.9% RIG with some negative pricing). Emerging markets grew +5.6% (both RIG and price driven). The group confirmed its FY outlook (organic growth in line with 2015 with improvements in margins and EPS at constant currencies).
Disappointing FY and bearish guidance
18 Feb 16
Nestle released its FY results. Revenue grew organically by 4.2% (in line with consensus, RIG: +2.2% and pricing: +2%). On reported figures, sales were down 3.1% (FX: -7.4%). Net acquisitions stood at 0.1%. Sales OG by zone: AMS +5.5%, EMENA +3.7%, AOA +0.5%, Nestle Waters: +6.7%, Nestle Nutrition +3.1% and Others +5.3%. The operating margin was up 10bp on organic basis and down 20bp (15.1%) on a reported basis due to the strong Swiss franc. Net profit was down to CHF9.1bn due to the lower income from JVs as well as other operating expenses linked to rebate adjustments in Nestlé Skin Health in the US. The proposed dividend is CHF2.25. In Q4, sales grew organically by 4.2% (with RIG: +2.8% and pricing: 1.4%). Q4 OG by zone: AMS +4.6%, EMENA +2.5%, AOA +3.5%, Nestle Waters: +6.4%, Nestle Nutrition +2.2% and Others +4.7%. For 2016, Nestle expects a similar trading environment to FY15's with even softer pricing. The group expects to deliver organic growth in line with 2015 with improvements in margins and EPS at constant currencies.
Nestlé publishes disappointing Q3 numbers and lowers and its FY guidance
16 Oct 15
Nestle released its 9M trading statement. Organic growth stood at 4.2% (cons. at 4.7%, 3.6% in Q3) with pricing at 2.2% and RIG at 2% (cons. at 2.1%). FX impacted by -6.7% whereas net acquisitions added 0.4% to sales. On a reported basis, sales were down -2.1% for 9M and -5.7% in Q3. Organic growth by operating segment in Q3: Zone AMS +7%, Zone EMENA +4.7%, Zone AOA -3.1%, Nestlé Waters +9.8%, Nestlé Nutrition +2.4% (tough comparable coupled with slightly lower growth on a global basis) and Other (Nestlé professional, Nespresso, Nestlé Skin Science & health) +0.3%. The weaker than expected results are linked to AOA's poor performance in Q3 (withdrawal of Maggie Noodles and slower pace of recovery in China) as well as a one-off charge linked to a more conservative approach to the Nestlé Skin Health prescription drug rebate policy in the US. The company revised downward its full-year guidance to 4.5% OG (around 5% previously vs. 4.5% in FY14).
Salient play in a healthy industry
16 Feb 17
PepsiCo’s (PEP US, N/R) full year figures reconfirmed growth expectations for the US FMCG giant in 2017. PepsiCo – which generates one third of its revenue from North American beverages – looks for 3% organic sales growth in 2017. Our own view about UK soft drinks remains positive. Flexibility around sugar, ongoing innovation, potential price support from a sugar tax and further M&A are all consistent with the industry maintaining sales growth and delivering positive share price performances.
13 Feb 17
Middlesbrough-based pawnbroker Ramsdens Holdings is set to join AIM on 15 February. Its growth is not coming from its core business but from providing foreign currency, pre-paid travel cards and international payments. The strategy is to increase the group’s online activities and grow the number of branches. In the year to March 2016, group revenues improved from £29.2m to £30m. The accounts of the main subsidiary show that foreign-currency margin rose from £5.36m to £7.59m. This contributes 35% of group gross profit. By contrast, the core business of pawnbroking, precious metal purchases and retail sales fell from £21.3m to £19.8m. Revenues from other financial services were flat at £2.6m. Ramsdens has 127 sites and last year it made an operating profit of £3.19m. In the six months to September 2016, revenues increased from £16.2m to £18.4m and operating profit improved from £2.81m to £3.48m. The placing will raise £15.6m at 86p a share, valuing the company at £26.5m. NorthEdge Capital, which backed a buyout in September 2014, will receive just over £10m from share sales. The NorthEdge stake will fall from 75.6% to 30.7%. The other £5m will go to the company and be used to repay the remaining loan notes and the costs of the flotation. By the end of March 2016, there were still £4m of loan notes outstanding to NorthEdge, with £4.86m paid off during the previous year.
The Quest for Dividends
01 Feb 17
The Dow Jones Index has just breached the 20,000 mark, the first time in its 131- year history that it has done so, whilst the FTSE-100 Index has also been at record levels in recent weeks. The election of the controversial Donald Trump as the new US President, and more specifically the impact of his planned expansionist economic policies, have boosted stock markets, both in the US and in the UK.
PG: Growth Prospects in Healthcare
26 Jan 17
We expect the volatility of the last 3 months to continue, with macro events, particularly the uncertainty brought by President Trump and his focus on pharma pricing and dismantling the Affordable Care Act, likely to keep healthcare in the headlines for the wrong reasons. We believe the more highly valued larger stocks are likely to struggle to break out to new trading levels, but note there remains good value within the smaller end of the sector for stockpickers, with company specific events likely to drive some stocks well ahead of the crowd.
Foundations laid; building starts
15 Feb 17
Last week RM posted a reassuring set of prelims (adj. PBT 4% ahead) that showed continued progress within RM Education (+6% EBIT gr’th) and RM Results (+22% EBIT gr’th) – achievements that shouldn’t be overshadowed by the challenging (but temporary) external market, which is weighing on RM Resources (-9% EBIT). Indeed, combined with Connect Education & Care, we are bullish on the division’s long-term prospects, and as such we raise our target price to 207p and retain our Buy recommendation.